ViDA: e-invoicing and digital reporting

After two years of negotiation the member states have adopted the ViDA package. Its first pillar makes e-invoicing and digital reporting mandatory for intra-EU B2B transactions.

ViDA stands for VAT in the Digital Age. With this package the EU aims to equip the VAT system for the digital world and to combat VAT fraud. Member states lose many billions of euros in VAT receipts every year. In 2020 the VAT gap, the difference between expected and actual VAT receipts, was estimated at € 93 billion across the EU, of which 40 to 60% was thought to be attributable to fraud.

Cross-border sales in particular have proved vulnerable. The existing filing, invoicing and reporting obligations, including the periodic recapitulative statement, give fraudsters too much room to disappear before the fraud comes to light. ViDA's first pillar is intended to put a stop to that.

E-invoicing

When we ask clients about their preparations for e-invoicing, they often say they already send and receive invoices as PDFs by email. That is not what e-invoicing means. An e-invoice is an electronic file in a structured format that is transmitted by computer and processed automatically.

For intra-EU B2B transactions it becomes mandatory from 1 July 2030 to issue an e-invoice to the customer within ten days (not working days) of the transaction or prepayment.

Digital reporting

The e-invoice for the cross-border transaction must be reported digitally to the supplier's own tax authority straight away. That reporting replaces the recapitulative statement. Customers must report the same transaction digitally within five days of receiving the e-invoice. Member states may decide that customers have no reporting obligation where they already have sufficient information from the supplier.

Within one day, tax authorities pass the data received to a central electronic exchange system (Central VIES). Member states therefore receive almost real-time information on these transactions, which should improve the fight against cross-border fraud.

E-invoice requirements

E-invoices must meet the invoicing requirements of the member state where the supply is taxed. New requirements are that a credit note must refer to the original invoice, and that the bank account or other account to which payment is to be made must be stated.

E-invoicing for domestic transactions

Driven by their own VAT gaps, several member states have already introduced e-invoicing or digital reporting for domestic transactions, for example Hungary, Italy, Spain and Romania. Dutch businesses already face those obligations, and penalties for breaching them. Germany and Belgium introduce e-invoicing in 2025 and 2026.

Member states are not obliged to introduce e-invoicing for domestic transactions, either before or after 1 July 2030. Where they do, the format must be in line with the requirements for cross-border transactions. To avoid a patchwork of systems, it has been agreed that member states with such a system in place in 2024, or with advanced plans for one, must have aligned it with the EU system by 1 January 2035 at the latest.

We advise businesses to start preparing now and, when buying or updating finance and invoicing software, to explore its e-invoicing capabilities.