On 8 December 2022, the European Commission (EC) published the ambitious and comprehensive VAT in the Digital Age package (“ViDA”), which aims to modernize the EU’s VAT system to make it more compatible with an increasingly digitalized economy.
ViDA consists of three Pillars:
- Modernisation of VAT reporting through digital reporting
- Updated rules for the Platform Economy
- Single EU VAT Registration (including expansion OSS/IOSS)
ViDA has been subject to ongoing negotiations between the Member States since its release. In May 2024, in advance of the 14 May 2024 ECOFIN meeting, the Belgian presidency released a compromise text. This latest compromise text could have been agreed by all, but one Member State had reservations about the Platform Economy Pillar.
While further conversations took place prior to and during today's ECOFIN Meeting, no unanimity was reached.
What is next?
Hungary will take over the EU presidency from Belgium on 1 July 2024. In its published programme and priorities, Hungary indicated that its objective is to effectively advance the discussions on the taxation files currently on the agenda.
During today’s ECOFIN meeting, Hungary indicated that the Hungarian presidency will take the lead on ViDA and try to reach an agreement. Political challenges could nevertheless make it difficult. In the meantime, time is running out. Even if the compromise text were to be adopted during the Hungarian presidency, the European Parliament may need to be consulted again, given the number of changes made to the original proposal.
Therefore, member states are expecting the negotiations to continue during the Hungarian presidency and the compromise text to be sent once more to the European Parliament before the final text is ultimately voted on, which will probably take place at the end of 2024.