Livin’ la ViDA loca – What is ViDA and how to comply with the upcoming changes?

VAT in the Digital Age will become effective in the near future as the EU introduced an initiative called ViDA in 2022. But what is ViDA and how does it affect businesses in the EU region? What are the benefits and how can you be prepared for what is to come? Read more in this blog and find out how you can implement the ViDA initiative and stay thriving.

The definition of ViDA

First and foremost, let’s dive into the basics of what ViDA even is. ViDA, short for VAT in the Digital Age, is the EU’s answer to challenges of taxing online sales. Its aim is to make sure that businesses selling online to EU customers pay VAT fairly, regardless of their location. This involves standardised digital reporting and more information on invoices. ViDA applies to both cross-border and domestic sales within the EU.

Key takeaways of ViDA – This you need to know

• Applies to all EU sales: Businesses selling online to EU customers, regardless of their location (within or outside the EU), must comply. This includes online marketplaces that facilitate such sales.
• Additional details on invoices: Invoices will require additional details like VAT identification numbers, place of supply, and applied VAT rate.
• Standardised digital reporting: A new Digital Reporting Requirements (DRR) schema will be mandatory for intra-EU transactions in the future (optional for domestic transactions).
  

What are the benefits of ViDA for businesses?

ViDA offers businesses three great advantages. Firstly, the shift to digital reporting promises to significantly reduce VAT fraud. Secondly, by adopting digital technologies to comply with ViDA, businesses can streamline their processes and potentially achieve cost savings. Last but not the least, the initiative proposes a single VAT registration platform for businesses, which ultimately means that there’s no need to fill in forms in different channels for different regions.

How can your business prepare for ViDA?

1. Update your system. Businesses will need to ensure their systems can handle the additional information required on invoices under ViDA. This includes VAT identification numbers, place of supply, and applied VAT rate.
2. Take e-invoicing into use. ViDA emphasises digital reporting. Businesses need to adopt e-invoicing capabilities to comply with the upcoming Digital Reporting Requirements (DRR) schema.
3. Learn about compliance in your business. Understanding the regulations and potential impact on your specific business is crucial. This doesn’t mean you need to become an expert in the field –  you can collaborate with a service provider experienced in navigating VAT compliance across different regions. Most compliant ERPs and e-invoice operators are also happy to share their knowledge.
4. Stay informed and curious: The ViDA initiative is still evolving. Businesses should stay updated on developments, such as the mandatory switch to digital reporting for EU transactions.

Ultimately, a great software and operator network provider make sure these changes are implemented and available for you when the time comes, providing you with a smooth transition to the digital age of VAT processes. 

If you stay ready, you won’t have to get ready

While the catchy phrase “Livin’ la ViDA loca” might not be entirely accurate, the VAT in the Digital Age initiative presents a clear path towards a more streamlined and secure VAT system for both businesses and the EU. 

By adopting the required digital processes and updates, your business can not only ensure compliance but also reap the concrete benefits such as reduced fraud, simplified registration and smoother sales through automation. 

With the right support and proactive preparations, ViDA becomes an opportunity for your business to thrive in the digital age. And it all starts with e-invoicing. Stay future-proof and take e-invoicing into use with Maventa, and you’ll surely be on the right path with welcoming ViDA without worries!