It’s been three years since the European Commission published the “VAT in the Digital Age”-initiative (“ViDA”), laying out the gameplan for the modernization of the EU’s VAT system. And a modernization is welcome, knowing that the current VAT regulations were introduced in 1993 as a ‘temporary system’ yet, after more than thirty years, they’re still in place. And meanwhile, the world has become increasingly ‘digital’. And now it is fair to say that the VAT system no longer properly reflects today’s digitized economy the way it should.
Therefore, ViDA contains a package of changes to the EU VAT regulations intended to harmonize a Uniform VAT System across the EU. Basically, ViDA can be divided into three main categories:
- Digital Reporting Requirements (“DRR”) based on e-invoicing;
- Single VAT registration: an extension of the One Stop Shop (“OSS”);
- New VAT rules for the platform-economy and e-commerce.
This article focuses on the first category: the digital reporting requirements and e-invoicing. Even though our neighbors (Germany and Belgium) are already familiar with DRR and e-invoicing, the Netherlands is not quite there yet. While there is mandatory e-invoicing for business-to-government-transactions, the national e-invoicing requirements for all business-related invoices are expected by July 2030.
Some will say the Netherlands is in the slow lane, while others would point out that playing the waiting game is also a way to better prepare, and let other EU Member States work out the kinks. An although we still have some time before July 2030, time flies when you’re having fun and selling goods – so let’s prepare for the new world of ViDA and dive into the upcoming new legislation.
ViDA, Digital Reporting Requirements (“DRR”) and E-Invoicing
VAT in the Digital Age
ViDA is a European Commission initiative to modernize and digitize the EU’s VAT system. It contains a package of changes that require digital reporting for cross border activities. The real-time digital reporting obligations for taxpayers give EU Member States insightful information to fight VAT (carousel) fraud. The goal is to reduce VAT fraud by up to €11 billion annually. In addition, the new regulations should reduce the compliance costs for businesses. Ultimately, ViDA makes the VAT system more efficient for all parties involved.
Digital Reporting Requirements & E-Invoicing
The Digital Reporting Requirements pillar is one of the three (main) pillars in the ViDA package. The DRR aims to reduce administrative burdens for businesses and fight VAT fraud. It includes a set of rules for (near) real-time digital reporting based on structured e-invoices.
The DRR will introduce (near) real-time reporting of B2B cross-border supplies of goods and services, and EU Member States may extend the DRR to include B2B cross-border acquisitions of goods and services and/or domestic supplies for both suppliers and recipients.
The key change is that the periodic EC Sales Listing will be replaced by transaction-based reporting, which requires real-time submission of transaction data.
Digital reporting and e-invoicing are closely connected; the information included on the e-invoice largely corresponds to the data required for the reporting. At the risk of stating the obvious: an e-invoice is not a PDF attached to an e-mail. An e-invoice must be created, transmitted and received in a structured format, such as UBL or XML formats. In addition to the structured format, the e-invoice includes additional required data such as bank account identifiers, payment details and references to corrected invoices.
The supplier is therefore required to report “near” real-time, meaning that the data must be transmitted to the tax authorities at the moment the invoice is or should have been issued. Currently, it remains unclear whether the Netherlands will implement the digital reporting obligations for B2B cross-border activities and reverse charge activities (the so-called “ViDA-A”) or the B2B cross-border activities, reverse charge activities and domestic activities (the so-called “ViDA-B”). We expect the Netherlands to start with the ViDA-A option, so only for cross-border B2B-activities and later expand to domestic transactions as well (ViDA-B). This approach would ensure that companies are not overwhelmed with all the new obligations, Rome wasn’t built in a day.
The favored operating model is a Peppol-based regime whereby the supplier reports the data in the database (access point), whereby an e-invoice is created and sent to the database (access point) of the client. The access point of the supplier not only sends over the e-invoice to the access point of the buyer but also sends over the data to the Dutch tax authority.
Benefits for businesses
When e-invoicing becomes the norm, paper invoices will be replaced by electronic ones, which at first glance appears to benefit only the tax authorities; namely accurate reporting and real-time insights. However, once implemented, it should also be beneficial for companies. Once incorporated, it reduces manual data entry and human errors. E-invoices will make invoice processing more efficient. “Homemade”-invoices require a lot of time-consuming work that will be replaced with automated invoice flows. E-invoices are therefore, on average, processed faster and even paid faster, leading to an improved cash flow. It reduces the number of disputed invoices and saves on collection and correction activities.
Timeline and Scope
The European Commission proposed measures to modernize the EU’s VAT-system on 8th December 2022, and in March 2025 the Council of the EU formally adopted the ViDA-package.
E-invoicing will be standard practice across the EU as of 1 July 2030 for cross-border supplies, and thus businesses will only be permitted to send and receive e-invoices for cross-border transactions. The timeline for implementation in the Netherlands depends on a variety of factors, such as political will and the sense of urgency. Furthermore, it’s important for businesses to have enough time to prepare and implement. Hence, our article about ViDA, DRR and e-invoices: to inform you and keep you updated.
Based on the timeline and taking into account that time flies by faster than we think, start recognizing the different challenges and exploring software solutions.
A quick rundown:
- Electronic invoices must be issued in a structured format compliant with the European Standard (EN16931).
- E-invoices are mandatory for all transactions falling under the DRR.
- Being able to accept e-invoices may become a necessary condition for reclaiming input-VAT.
- E-invoices must be issued within 10 days of DRR-transactions.
- Summary invoices can be issued up to ten days after the end of the month in which the sales are made.
- Invoices must include bank account numbers.
- DRR applies to 0% sales, intra-EU acquisitions and cross-border transactions under the reverse charge mechanism.
- EU-compliant DRR may be implemented by EU countries for domestic sales.
- EC Sales Listings will no longer be necessary.
Further harmonization of domestic reporting is scheduled to be applicable in 2035.
Be Ready!
Are you involved in cross-border transactions? Whether as a supplier or a recipient of the services and/or goods, make sure that you are ready for the new ViDA rules.
Want to discuss or have questions? Book a slot – it’s on the house.
