Preparing for ViDA: what you need to know about EU VAT reform

Technology is moving at an unprecedented pace, fundamentally changing how tax systems work around the world. This rapid change is creating opportunities for both businesses and tax authorities – helping in-house finance and tax teams to operate and manage compliance more efficiently and effectively while streamlining how authorities receive data and perform audits.

Tax regulators around the world are embracing this trend, aiming to collect more and more real-time transactional data. Against this backdrop, the European Commission (EC) has introduced measures to modernise the EU’s VAT system. The new reporting obligations include reforms supporting digitalisation and automation that increase the speed and accuracy of tax reporting.

The VAT in the Digital Age (ViDA) Directive, officially adopted on March 11 2025 by the Council of the EU, is the biggest VAT reform since the EU single market. ViDA aims to introduce standardised protocols and encourage the use of digital technologies to streamline tax compliance processes, reduce errors, enhance transparency, and ultimately make the VAT system more efficient for businesses.

ViDA has three main pillars:

• Digital reporting (aka e-reporting) – introduces mandatory e-invoicing and VAT data reporting across all EU member states by 2030. Digital reporting requirements (DRR) for intra-EU supplies of goods and services mandate transactional and near-real-time data transmission from structured electronic invoices.

• Platform economy – seeks to update VAT rules for the platform economy (defined as businesses facilitating short-term accommodation rentals, ride-sharing, and e-commerce marketplaces).

• Single VAT registration – creates a single VAT registration for businesses selling to consumers across the EU, facilitating e-commerce across EU borders.

While the latter two pillars are aimed at specific sectors, the first pillar will have an impact on every company doing business in the EU. Digital reporting and e-invoicing standards for both domestic and cross-border transactions will be phased in by 2030. Some countries will need to adapt existing e-invoicing mandates, while others will use ViDA as a foundation for new regulatory initiatives and preparation for future digital reporting requirements.

Wide adoption of e-invoicing and e-reporting has multiple advantages. As a step towards real-time reporting, it is designed to maximise transaction visibility and fight tax evasion, reducing VAT fraud by up to €11 billion a year and lowering annual administrative and compliance costs for EU traders by more than €4.1 billion over the next ten years, according to the EC. The shift encourages eventual EU-wide convergence of existing national systems and paves the way for EU countries wishing to introduce national digital reporting systems for domestic trade.

DRR can help tax authorities to automate audits, detect non-compliance, and levy more accurate and timely penalties, as needed. For businesses, e-invoicing can accelerate the billing cycle, improve efficiency, and help to automate tax and finance processes. Electronic formats and automated workflows can minimise errors, reduce disputes, and improve the accuracy of tax and financial data. DRR can also improve compliance with tax and regulatory requirements and facilitate data retrieval and audit preparation.

While the potential benefits are impressive, companies will face challenges preparing their systems, people, and business partners for the changes. As it stands, the ViDA package will result in multiple reforms in EU member states, at different times and without uniform requirements. To create the most value while remaining compliant, businesses will need to plan carefully, modify existing processes, and adopt new technology – all while avoiding costly duplication of efforts.

The EU’s vision for ViDA was to standardise and harmonise invoicing and reporting among EU member states. Unfortunately, it has not entirely met that goal, saddling businesses operating in the region with a fragmented landscape until at least 2035. Member states – including Germany, Belgium, Poland, France, and Spain – have e-invoicing mandates in progress, many of them launching in 2026 or 2027. For these countries, formats and transmission protocols are different, creating difficulties for businesses active in multiple jurisdictions.

In this area, the focus is on intra-EU transactions – all goods and services (intra-EU supplies) bought and sold among EU member states in a B2B context. The intent is to oblige companies to issue e-invoices for cross-border transactions, all of them digitally reported to tax authorities. Even non-EU companies with operations in the EU must comply. This real-time DRR will give member states information they need to step up the fight against VAT fraud.

With the adoption of ViDA, EU countries will need the infrastructure to collect intra-EU transactional data by 2030. This deadline is likely to increase national e-invoicing and e-reporting mandates in the coming years within the EU.

The EU obliges all 27 member states to accept a common e-invoice format (EN 16931). But while ViDA focuses on standardising e-invoice formats, it does not include any recommendations for data transmission. How will data be transferred from companies to tax authorities, or between suppliers and customers? Amid the uncertainty, member states are free to choose from a variety of transmission protocols (Peppol, EDI, email, etc.). For the next few years at least, businesses operating in multiple countries must still cope with a complex web of different transmission requirements and government platforms. This lack of harmonisation creates an uncertain, constantly evolving, regulatory landscape that requires an ongoing, often costly, response.

There is no one-size-fits-all answer here. Each organisation must find solutions that align with its specific needs, existing IT architecture, and future IT investments. Even without clear insight into the future of ViDA, there are actions you can take now to prepare:

• Get smart – not all companies that operate or do business in the EU are fully aware of, or prepared for, the fundamental changes ViDA will bring. Understand how ViDA will affect your business, and educate your organisation about coming changes.

• Get compliant – many companies focus heavily on initial compliance – most often with local mandates – but it is just as important to understand how to stay compliant. ViDA implementation will occur in phases, with different countries introducing regulations at varying speeds. To prepare, understand the timeline. Identify when new e-invoicing and e-reporting rules apply in every geography where your business operates, focusing first on high-priority countries. The goal is to find a solution that works both now and in the future.

• Find the right technology solution – there are many e-invoicing solutions and providers to choose from. Before selecting one, step back and determine your requirements. Identify what is important for your success and what tech you currently have in place. Multiple data sources, such as ERP or billing systems and complex supply chains, can complicate matters, leading to inconsistent and poor-quality tax data. Now is the time to develop a thoughtful and complete request for proposal that not only addresses ViDA compliance but also allows you, over time, to streamline processes; improves overall data quality; and offers long-term flexibility.

• Be proactive with key stakeholders – you have multiple points of interaction related to e-invoicing and digital reporting, including customers, suppliers, and tax authorities. Internally, digital tax obligations touch finance, accounting, tax, sales, and other departments, and could even drive organisation-wide structural change. Reach out to all internal and external stakeholders, confirming that everyone is comfortable with, and ready to accept, coming changes and new obligations.

• Evaluate process impact – e-invoicing is not just an obligation; it is also an opportunity for process improvement. Fully automated invoicing is more accurate and efficient, supporting faster processing, better insights through enhanced data analytics, and better capture of payment discounts.

Whether you work with a consultant or go it alone to prepare for ViDA, consider these four practical steps:

• Discovery and strategy – identify and understand upcoming e-invoicing and e-reporting obligations. Analyse affected processes, systems, data needs, and pain points. Present solution options, guide discussions, and create a strategic plan outlining next steps and desired outcomes.

• Feasibility and vendor selection – evaluate solution compatibility with current systems and processes. Choose the right vendor for the job. Draft a high-level implementation plan and roadmap.

• Implementation – develop a detailed implementation plan that includes key milestones, timelines, data mapping, and resource allocation. Analyse business requirements and integrate components with tax, accounts payable/accounts receivable, and other processes. Perform end-to-end user acceptance testing.

• Continuous monitoring – monitor changing regulations. Regularly update stakeholders on industry-effective practices and recommendations. Offer assistance and timely support for issues and questions. Conduct periodic reviews.

Want to know where you stand in your e-invoicing and e-reporting journey? Take Deloitte’s free online self-test.