EU: European Parliament approves VAT and reporting reforms
The European Parliament has approved reforms to the EU’s value-added tax (VAT) system, marking a key procedural step toward the formal adoption of the VAT in the Digital Age (ViDA) package. Lawmakers voted 589 to 42 in favor of endorsing the reforms, with 10 abstentions.
Key elements of the VAT reform
The ViDA package introduces several changes to VAT rules across the European Union:
- Digital VAT reporting and e-invoicing: Member states will be required to implement digital VAT reporting and electronic invoicing.
- Single VAT registration: Businesses operating in multiple EU countries will no longer need to register separately in each jurisdiction. Instead, a single VAT registration will apply across the bloc.
- Deemed-supplier rule for online platforms: Platforms facilitating accommodation and transport services will be responsible for collecting and remitting VAT.
EU finance ministers reached an agreement on the package in November. However, procedural rules required the European Parliament’s adoption of an opinion before the reform could be finalized. Estonia had initially blocked the agreement due to concerns over the deemed-supplier rule. A compromise was later brokered under Hungary’s presidency of the Council of the EU.
The provisions of the ViDA package will be introduced in stages, with full implementation expected by 2035. The deemed-supplier rule is set to take effect by 2030.
Reporting simplification for global minimum tax
In a separate vote, lawmakers approved an opinion supporting new rules to streamline reporting requirements under the EU’s 15% global minimum tax. The proposed amendment, known as DAC9, would facilitate the exchange of tax-related filings between authorities, reducing the need for multinational companies to submit duplicate reports.
- The vote passed with 608 in favor, 33 against, and 8 abstentions.
- The first reporting under these rules is scheduled for June 30, 2026.
- Poland, which currently holds the presidency of the Council of the EU, has indicated that it seeks to secure agreement on the rule by March.
While the European Parliament’s opinion on DAC9 is non-binding, its approval helps prevent delays in the formal adoption process by EU member states.
