New VAT rules: ViDA Directive approved!

New VAT rules: ViDA Directive approved!

The Economic and Financial Affairs Council (ECOFIN) adopted the proposal ‘VAT in the Digital Age’ last year. These new rules aim to make VAT in the EU simpler and more resistant to fraud.

Today, the Council officially approved this new directive. The EU member states, including the Netherlands, must now implement these rules.

Our experts discuss the main rules and look ahead to the implementation by the Netherlands.

ViDA: preventing fraud and simplifying rules

VAT fraud and cross-border tax evasion structures (including ‘carousel fraud’) result in billions in losses for the treasuries of the EU and its member states every year. Also, the rules are complicated and lead to a relatively high administrative burden for businesses. A new European directive has been in the works for a while now: the ‘VAT in the Digital Age’ proposal (also known as ViDA).

The approval of this directive will thoroughly overhaul the VAT system.   

Main changes from 1 July 2028

Now that the directive has been approved, the EU member states must implement the rules in their national legislation. This means that the Dutch legislator must change a number of (national) laws too. The most important changes should in principle enter into force on 1 July 2028, although it is possible the Netherlands may change the rules sooner than that.

The ViDA Directive primarily concerns digital supplies of goods and services. Examples are e-invoicing, digital reporting and VAT for the platform economy. Several administrative matters are also addressed, such as the Single VAT Registration and adjustments to the One Stop Shop (OSS).

Aside from these main points, the adjusted proposal contains a number of other changes. Read more about the ViDA Directive and the expected timetable for the implementation of the various changes here.

Timely preparation is required

Although it may be a while before the changes actually take effect, we advise (internationally operating) businesses to start preparing as soon as possible. Business processes such as invoicing and ERP configuration will, for example, need to be adjusted to comply with the new e-invoicing rules. And implementing the new digital reporting requirements within the business may also take some time.  Implementing the changes properly will often be an expensive and time-consuming matter.

Do you have questions about the current state of affairs? Would you like to know more about ViDA? Or would you like to map what steps your business needs to take in preparation for ViDA? Please contact our VAT specialists Marisa Hut or Stevie Mols.

The legislation and regulations in this area may be subject to change. We recommend that you discuss the potential impact of this with your Baker Tilly advisor.