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Tax regulation is a shifting terrain, constantly evolving with technological advancement and changing business needs. Once, VAT reporting had the luxury of time; now, the demand is for real-time precision. Increasing digitalization in tax administration is reshaping conventional practices. One upcoming challenge is VAT in the Digital Age (ViDA), a directive proposed by the European Commission on December 8, 2022. Designed to modernize the VAT system of the European Union (EU) with its 27 member states, it eliminates tax fraud while embracing digitalization. With the growth of the platform economy and the existing globalized economy the significance for collecting indirect taxes, like VAT, has become more prominent for all tax authorities. Stay updated with SAP's analysis of how these changes impact their solutions, through the regulatory change manager.
Powering Progress: European Commission's Strategy for a Unified, Digital, and Efficient VAT System
European Commission's Strategy: Transformative Legislative Proposals under three pillars:
1. E-invoicing and E-reporting: as of July 1, 2030* (harmonization Jan 2035)**
The first pillar is mandating VAT-based e-invoicing within the European Union and real-time digital reporting. E-invoicing will become the default system for intra-EU business-to-business transactions with specific requirements and standards. The current EC Sales List will be replaced with real time Digital Reporting for cross border supplies.
**The requirement for existing domestic e-invoicing reporting to harmonize to the ViDA e-invoicing standard has been changed to January 2035. This is separate from the main e-invoicing launch date of July 2030
2. Platform Economy: Between July 1, 2028 and Jan 1, 2030 (voluntary July 2028)*
The second pillar harmonizes the framework to charge VAT for the Platform Economy. All platform operators in passenger transport and short-term accommodation sectors will become responsible for VAT collection and reporting.
3. Single VAT Registration and Reverse Charge: as of July 1, 2028*
The third pillar is the VAT registration process where businesses need to register just once to cater to customers across the EU. The One Stop Shop (OSS) will be expanded to reduce the need for multiple VAT registrations and covering more types of supplies.
There will be the introduction of a specific scheme for the transfer of own goods and the mandatory usage of reverse charge where suppliers are not established in the EU and not recognised for VAT purposes in the Member State where the VAT is due.
* Dates have been revised following the EU Ministers of Finance formally adopting ViDA package on March 11, 2025.
Embracing the Future: Navigating the Transformative Shifts of ViDA with SAP
SAP is analyzing the impacts of these changes associated with ViDA.
To help you stay on top of the changes that will come with the ViDA initiative, SAP will be publishing further blogs detailing SAP solutions that will be impacted. In the meantime, get to know how SAP solution can help to unlock your tax transformation by attending FREE OpenSAP course (Unlocking Tax Transformation with SAP).
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We will also be hosting webinars in the coming months, focusing on ViDA updates and the implications they have on your SAP system. Do not miss the webinar on ViDA hosted by USF on April, 24.
Stay tuned to our calendar of events on localization topics.
