What are the proposed changes?
In December 2022, the European Commission published its long-awaited draft of the VAT in the Digital Age (ViDA) initiative – a comprehensive package of measures that brings significant changes to VAT regulations.
1. Extension of the deemed supplier rule
Current regulation: Marketplaces become the deemed supplier
- if they enable the sale of goods imported into the EU with a value of less than €150,
- if they enable deliveries of goods to customers in the EU, irrespective of value, and the seller is not established in the EU.
Proposed regulation from 2025: Marketplaces become deemed suppliers for all cross-border B2C and B2B deliveries they facilitate.
What does it mean to be a “deemed supplier”?
As a deemed supplier, the marketplace is treated as the actual supplier of the goods. Accordingly, the marketplace is obliged to report and pay VAT. The sale from the merchant (the so-called underlying supplier), who sells the goods via the marketplace to the customer, is a fictitious chain transaction divided into two supplies.
2. Extension of the One-Stop Shop (OSS) scheme
Current regulation: Merchants register only once (in one state) for VAT purposes for B2C sales to other EU Member States via the One-Stop Shop.
Proposed regulation from 2025: The single OSS registration now also covers
- cross-border movements (transfers) of own stock,
- local supplies and
- second-hand goods, art, collectors’ items, antiques and other types of transactions such as supplies of goods with installation or assembly.
3. VAT treatment of the platform economy
Proposed regulation from 2025: Platforms that provide transport services or short-term accommodation collect and remit VAT. This applies in cases where the provider has not submitted a valid VAT ID and is liable for VAT.
4. New requirements for digital reporting; e-invoicing
Proposed regulation from 2028
E-invoicing: Electronic invoicing will become mandatory for cross-border B2B transactions within the EU. Electronic invoices for goods or services must be provided within two working days. For domestic transactions, e-invoicing remains optional.
Digital reporting, cross-border: The most important transaction details from intra-community supplies are reported to an EU database within two working days (reporting totals are no longer sufficient). This (quasi) real-time reporting replaces the EC Sales List (ESL).
Digital reporting, domestic: A real-time digital reporting system may be introduced or maintained on a transaction-by-transaction basis for transactions between companies within the same Member State. It must comply with the harmonised EU requirements.
These regulations will be omitted in the future
- EC Sales List
With the new digital reporting requirements of the ViDA package, the EC Sales List reporting requirements will be dropped as of 1 January 2028 (see also 4. Digital reporting, cross-border).
- Consignment warehouse regulation
The simplification for consignment warehouses will be abolished; a transitional arrangement is planned until 2025. The OSS will be extended to intra-community transfers (transfers to another EU country); see also 2. Extension of the OSS …. For removals, a reverse-charge mechanism will be introduced.
How does ViDA affect marketplaces and platforms?
The reform planned by the EU is intended to close tax gaps, reduce competitive distortion and simplify registration and reporting requirements for merchants. However, marketplaces and platforms have to face numerous new tasks.
Additional efforts due to the extension of marketplace liability:
You are responsible for
- accounting and correct tax treatment of intra-European transactions,
- accounting of stock transfers in warehouses,
- processing the merchant invoice (incoming) and issuing receipts for the buyer (outgoing),
- calculation, collection, and payment of the VAT due to the respective tax authority,
- extensive, additional reporting obligations via OSS or local reports.
Tax liability also for intra-European transactions:
You take over from the merchant
- the responsibility to apply the country-specific applicable tax rates,
- the verification and documentation obligations (e.g. for VAT ID validation, proof of arrival, etc.).
Necessity of data reconciliation of order and payment:
You check
- the reconciliation of order and payment data to determine the correct tax base.
Reporting obligations:
You create
- electronic invoices for your merchants’ B2B transactions (intra-Community supplies),
- real-time reporting of all cross-border and possibly national B2B transactions.
How you can prepare
Our checkout integration ClearVAT provides a border-free sales experience for orders within the EU and takes over all tax obligations you must fulfil.
