ViDA 2027: the next step in the EU VAT reform

The ViDA reform was formally adopted in March 2025 through Council Directive (EU) 2025/516. This reform represents one of the most significant changes to the common VAT system in recent years and will be implemented progressively, with different milestones scheduled until 2035.

In fact, some of its provisions entered into force in 2025, following the publication of the directive. In particular, EU member states were given the possibility to introduce mandatory electronic invoicing for domestic transactions without obtaining prior authorisation from the Council. Furthermore, member states exercising this option may remove the requirement for electronic invoices to be accepted by recipients established in their territory. These amendments represent the first legal effects of ViDA, although they do not yet entail the widespread introduction of mandatory electronic invoicing throughout the EU.

On January 1 2027, the first set of amendments under the reform with a common application date will take effect, mainly affecting e-commerce, the one-stop shop (OSS) schemes, and certain aspects of the VAT treatment of cross-border transactions.

These changes will precede the more far-reaching reforms scheduled for 2028 and 2030.

One of the most significant changes concerns the amendment to Article 14a(2) of the VAT Directive, which extends the circumstances in which a digital platform is treated as the supplier of the goods sold through it and, consequently, becomes responsible for collecting and remitting the VAT due on those supplies.

Until now, in the context of supplies of goods within the EU made by suppliers not established in the EU, this legal fiction applied to transactions involving final consumers.

From 2027, the rule will also apply to supplies made to members of the ‘group of four’, which are non-taxable legal persons, farmers covered by the common flat-rate scheme, SMEs covered by the special scheme, and taxable persons carrying out exclusively exempt transactions, provided that their intra-Community acquisitions are not subject to VAT.

This clarification is particularly important, as it prevents the provision from being interpreted as covering all B2B supplies of goods facilitated by a platform.

Another relevant amendment concerns Article 59c of the directive and the calculation of the €10,000 threshold used to determine the place of taxation of certain intra-Community distance sales of goods.

From 2027, only sales of goods dispatched from the member state in which the taxable person is established will be taken into account when calculating this threshold.

Consequently, sales made from locations in other member states will not be included in the calculation.

This does not mean that such sales may be taxed in the member state of dispatch by applying the threshold. They will remain subject to the applicable general place of supply rules, normally resulting in taxation in the member state of destination.

The reform also introduces several improvements aimed at facilitating VAT compliance through the special OSS schemes.

First, Article 359 of the directive is amended to allow taxable persons not established in the EU to declare any supplies of services to non-taxable persons through the non-Union scheme, provided that those services are deemed to take place in a member state.

The amendment also allows services supplied to consumers who do not reside in the EU to be included, where those services are taxable in a member state under the applicable place of supply rules.

Second, the scope of the Union scheme is temporarily extended to certain supplies of gas, electricity, heating, and cooling energy.

This measure, introduced through the new Article 369aa, is particularly relevant for businesses supplying electricity through electric vehicle charging stations located in different member states. Where the relevant conditions are met, these businesses will be able to use the OSS, avoiding additional VAT registrations.

The measure will apply on a transitional basis until June 30 2028, when broader amendments to the scheme will enter into force.

Article 66 of the directive is also amended to prevent member states from applying certain alternative national rules on the chargeability of VAT to transactions declared under the Union and non-Union OSS schemes.

The objective is to ensure a uniform approach across member states, avoiding divergent national rules on the chargeability of VAT for these cross-border transactions, which would make compliance particularly complex in practice.

Furthermore, the amendment to Article 369m expressly clarifies the incompatibility between the import OSS and the special exemption scheme for SMEs.

Consequently, a taxable person wishing to use the import scheme must cease applying the special scheme for small enterprises, and vice versa.

Finally, the reform introduces amendments to articles 368, 369j, and 369w concerning the recovery of input VAT incurred by taxable persons using the OSS schemes.

The new provisions clarify the application of VAT refund procedures for non-established taxable persons, particularly where a taxable person has carried out transactions declared through the OSS in the same member state in which the VAT refund is requested.

The aim is to remove certain restrictions that could hinder the recovery of input VAT and provide greater legal certainty.

Although the amendments scheduled for 2027 may appear relatively minor compared with the major transformations expected in 2028 and 2030, they have important practical implications.

Moreover, some of these amendments address interpretative issues that have created uncertainty since the introduction of the electronic commerce VAT rules in 2021.

ViDA already began producing legal effects in 2025. The 2027 amendments represent the first significant set of changes that economic operators will need to implement before the more structural reforms scheduled for the coming years.