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EY Indirect Tax Ireland - Alert on the ViDA changes
VAT in the digital age (ViDA) proposals approved
After almost two years of negotiations and numerous compromises and modifications to the original proposed text, the Economic and Financial Affairs Council (ECOFIN) of the European Union (EU) has reached agreement on all three pillars of the VAT in the Digital Age (ViDA) proposals.
Background
The ViDA package introduces fundamental changes to the common VAT rules across the EU with three pillars and gradual implementation dates. Now that the EU Member States' Finance Ministers have reached a political agreement, the next step in the process is that the proposals will return to the EU Parliament to be re-approved due to the substantial compromises made to the original text. This should be a formality given the extended timetable and it then moves to the Council to be accepted. The final step, before entering into force, will be the publication in the EU’s Official Journal.
The three Pillars are:
|
Pillar |
Description |
Effective date |
|
|---|---|---|---|
|
1 |
e-invoicing and Digital Reporting Requirements (DRR) |
Introduces standardised digital reporting requirements and e-invoicing for intra-EU transactions. |
July 2030 (with potential for earlier adoption by individual Member States) |
|
2 |
Platform Economy |
Introduces responsibilities for digital platform involved in short-term accommodation rentals, and passenger transport services in the collection of VAT. |
Jan 2030 (but voluntary from July 2028) |
|
3 |
Single VAT Registration |
Extension of existing ‘one stop shops’ and introducing a single pan-EU VAT registration. |
July 2028 |
The key compromises agreed between the EU Member States include:
- A 10-year opt-out derogation for certain SME businesses in respect of the deemed supplier obligations under Pillar 2 – Platform Economy, without EU Member States having to provide significant justification to the European Commission.
- Separate proposed ‘quick fixes’ to the existing e-commerce VAT rules and processes have been postponed.
- The EU Commission may adopt special measures to prevent VAT fraud around Import One Stop Shop (IOSS) identification numbers, including linking an IOSS ID to the import consignment number.
Focus on Ireland
Irish businesses should begin evaluating how to handle e-invoicing from EU vendors, especially considering the planned rollout of e-invoicing in Ireland. Irish Revenue’s ongoing consultation on VAT modernization emphasizes real-time digital VAT reporting and e-invoicing. With the EU’s ViDA proposals now approved, we anticipate swift action from Ireland to implement these changes – potentially ahead of the July 2030 deadline.
How can EY help
With the certainty of upcoming e-invoicing and digital reporting requirements, its crucial for businesses to take proactive steps including:
- e-Invoicing Roadmap: Identify jurisdictions where e-invoicing and real-time reporting will apply.
- Gap Analysis: Assess current data capture processes against future requirements.
- Process Re-engineering: Enhance processes and controls to ensure compliance and data integrity.
- Technology Framework: Explore e-invoicing solutions that integrate seamlessly with existing systems.
- Impact Assessment: Consider implications beyond tax, such as IT, data management, and procurement.
- Training & Awareness: Equip your teams with knowledge about these changes.
At EY, we provide comprehensive support in these areas, from e-invoicing solutions (noting that EY itself offers an e-invoicing solution) and vendor selection to implementation assistance, data and tax support, VAT health checks, and targeted training sessions on the ViDA changes.
For further discussion on how we can assist you, please contact any of the EY representatives listed below: