The European ViDA project, which stands for “VAT in the Digital Age”, aims at fighting VAT fraud in EU member states. One of the main pillars of ViDA is Digital Reporting Requirements (DRR), modernizing invoicing and making e-invoicing for intra EU business-to-business (B2B) transactions mandatory from 1 July 2030. What should you expect and why is Europe implementing this legislation?
While e-invoicing is already compulsory in public procurement, transactions between VAT-liable parties (B2B) are soon to be subjected to similar regulations. Initially, the requirement will be limited to domestic invoices. For instance, companies in Belgium must comply by January 1, 2026 – read this blog to learn more about Belgian regulations. In the next step, e-invoicing will become mandatory for all B2B transactions in Europe, including domestic and cross-border invoices.
E-invoicing and e-reporting
What does this mean? The understanding of “e-invoicing” has evolved over time. Initially, sending an electronic invoice in pdf format via e-mail was considered a form of e-invoicing. However, the new EU directive aims to phase out all paper and PDF invoices, permitting only structured formats transmitted between systems over a secure, regulated network.
E-reporting will also become mandatory in Europe. This involves the electronic submission of VAT returns and related documents to tax authorities. It will enhance transparency in tax reporting and help authorities identify discrepancies, while reducing the administrative burden associated with manual reporting. Several countries in the EU and beyond have already introduced e-reporting systems.
Reducing the VAT gap
What is the aim of ViDA and the shift to e-invoicing/e-reporting? The driving force behind these new regulations is reducing the VAT gap. In Europe, we see a 10% discrepancy between the total VAT owed and the amount actually collected. This results in significant revenue loss for both the EU and its member states. According to the VAT Gap Report, this loss amounted to €93 billion in 2020. Fortunately, this figure decreased to €60 billion in the following year. Belgium accounts for €2.5 billion of this lost VAT revenue.
While several factors may contribute to the decrease in 2021, the gradual adoption of e-invoicing is likely a key driver. Proof of this is a positive trend in Italy, the first EU country to enforce e-invoicing due to severe tax fraud issues. Between 2020 and 2021, Italy recorded a 10 percentage-point reduction in lost VAT revenue, as noted by the VAT Gap Report.
With e-invoicing, each invoice sent and received is assigned a unique key, enabling tax authorities to monitor the VAT that has been paid and reclaimed. Europe anticipates that the transparency facilitated by e-invoicing will contribute to an €11 billion annual reduction in VAT fraud over the next decade. Addressing the VAT gap is critical as lost revenues impede governments’ capacity to invest in essential public goods and services, such as education, healthcare, and transportation.
Preparing for 2026/2030
In November 2024, the European Council officially approved the ViDA package. This marks the beginning of some major changes to the EU VAT system. In 2027, new rules will be introduced, while e-invoicing will be mandatory for transactions between parties subject to VAT as of 2030.
As previously noted, Italy was the first EU member state to enforce a compliance framework for e-invoicing. In Belgium, the deadline for digitalizing B2B invoices is set for 2026. This legislation will be applicable to all companies, with no transition period. It means that businesses need to use the time leading up to 2026 to prepare for the new way of invoicing.
Below you find a map of the EU countries that are in the process of implementing changes related to e-invoicing and e-reporting this year or in the coming years.
At speos, we have the in-house expertise to make your company compliant with the forthcoming regulations and assist you in maximizing the benefits of e-invoicing. Consider advantages such as enhanced speed, efficiency, and faster payment collection. Moreover, we not only prepare your business to send e-invoices to Belgian recipients but also ensure that you are ready for cross-border transactions that need to comply with the ViDA proposal when it enters into force.
Get ready for e-invoicing with speos! We are already certified and connected to Peppol. Ask our experts for an assessment of your Peppol readiness and start your transition today!
Find out all about e-invoicing at speos here.
