Blog: VAT in the Digital Age (ViDA) – Why Businesses Urge Harmonization, Early Clarity, and No Surprises

A Transformative Reform – If Done Right

1. Harmonization, Harmonization, Harmonization

“One EU, one system” should be the mantra for ViDA’s rollout.

Why harmonization matters: A fragmented approach would mean each multinational company needs to maintain multiple compliance IT systems in parallel – one for France, another for Germany, and so on – defeating the purpose of a “Single Market” solution. It would drive up costs and create confusion, with different interpretations of what needs reporting. By contrast, a uniform EU system (with common standards for e-invoice content, transmission, and data exchange) lets businesses build one solution and reuse it everywhere, greatly reducing complexity. It also means tax authorities trust each other’s data, so a sale reported in Country A can be seamlessly used by Country B – something that fails if everyone speaks a different technical language.

2. Minimize Compliance Costs – Don’t Make Business Pay Unnecessary Bills

SMEs are particularly vulnerable: A large multinational might manage to absorb multi-million euro compliance projects; an SME cannot. As the cited analysis notes, these high initial costs “disproportionately affect small and medium-sized enterprises” who lack the same resources. If ViDA implementation is too expensive or complex, SMEs risk being left behind or squeezed out of cross-border trade – an unintended consequence that must be avoided.

3. Sufficient Lead Time and Early Clarity Are Critical

Case in point: the need for explanatory guidance. The VAT Expert Group and industry groups have already identified areas where clarification is needed. For example: How exactly will invoice corrections or credit notes be handled under real-time reporting? What counts as the “date of issuance” for an e-invoice in various scenarios? How will certain complex transactions (like triangular trade or sales under VAT groupings) be reported? These might not all be answered in the black-letter law of the Implementing Regulation, so businesses are asking for comprehensive explanatory notes and FAQs from the Commission. Having those well before the go-live date will help everyone interpret the rules consistently and avoid last-minute surprises. In the VEG forum, tax practitioners have called for such guidance by 2026 or 2027 at the latest, to give a comfortable runway for adaptation. The Commission has committed to issuing explanatory notes for each part of the package and to maintain “regular dialogue with the business community throughout the rollout” – steps that the business community wholeheartedly supports.

• 2025: Draft implementing rules published, consultation begins (happening now).
• 2026: Final Implementing Regulation adopted, along with initial technical specifications (e.g. data schemas, API formats for reporting). Also publication of an updated EN 16931 e-invoice standard (which is currently under revision) to align with ViDA’s needs.
• 2027: Perhaps a pilot environment or sandbox where businesses and software providers can test sending data in the new format. At minimum, detailed guidelines and examples released. (The Commission’s plan to define the system architecture by 2026 and start development in 2027 fits here.)
• 2028–29: Phased roll-out or voluntary adoption period. Some Member States might encourage companies to start using the new system early. This period can iron out kinks.
• July 1, 2030: Mandatory go-live for cross-border transactions – all affected businesses must comply from this date.
• 2030–2034: Further refinement and integration of any remaining domestic systems.
• Jan 1, 2035: Full harmonization – any country that had its own local reporting pre-ViDA must be aligned to the EU system by this date.

4. No “Gold-Plating” – Worth Emphasizing Again

5. “Prefilled” VAT Returns – Proceed with Caution

• Data mismatches and incomplete coverage: Even with real-time invoice reporting, tax authorities might not have a complete picture of everything that goes into a VAT return. Certain adjustments, corrections, or non-transactional items might not be captured. If the prefilled return is missing data or has errors (e.g. double-counting something due to a reporting glitch), the business still has to manually fix it. A recent commentary noted that while prefilled returns offer potential benefits like time savings and fewer arithmetic errors, they still face issues like incomplete data and the need for ongoing manual intervention – plus the business retains final responsibility for accuracy. In other words, you can’t blindly rely on the prefilled numbers.
• Final liability remains with taxpayers: Importantly, even if a tax authority generates a draft return, it’s the company that will be on the hook if something is wrong. That means companies must review every prefilled return as carefully as if they prepared it from scratch, to avoid penalties. This limits the labor-saving aspect – you might not be typing in the numbers, but you’re certainly verifying each one. For many firms, this feels like an extra step rather than a substitution. If you have to reconcile the authority’s data with your own books every time, have you really saved effort?
• Fragmented approaches across countries: Not every tax authority will implement prefilled returns in the same way or on the same timeline. Some early adopters like Romania have started providing a form of prefilled VAT return to taxpayers based on its SAF-T and e-invoicing data. There have been reports of significant discrepancies in the Romanian pilot, requiring companies to investigate and explain differences before finalizing their returns. Other countries are exploring it, while some may not attempt prefilled returns at all. For a business operating in multiple EU states, this means potentially dealing with different processes in each place – ironically, adding complexity. One industry summary cautioned that these “fragmented approaches across jurisdictions complicate the process for businesses operating in multiple countries”.
• Resource trade-off: There’s an argument that tax authorities might better spend their resources ensuring the front-end data collection (the DRR system) works flawlessly, rather than trying to build downstream systems to prefill returns. If the DRR yields high-quality data, many businesses can easily generate their own VAT returns from that same data using their internal systems. The value-added of the tax authority doing it might be marginal, except perhaps for the smallest businesses.

Conclusion: Success Lies in Collaboration and Smart Execution

• Publish the draft Implementing Regulation without delay, and incorporate feedback from the broad business community.
• Enforce uniformity – one standard, one timeline – and openly discourage any deviations by individual states.
• Provide clarity through detailed guidance and ample lead time, so companies aren’t scrambling at the last minute.
• Avoid adding complexity – every requirement should have a clear value. If something like prefilled returns isn’t clearly beneficial yet, it should remain optional and exploratory.
• Keep engaging stakeholders through forums like the VAT Expert Group, because the best solutions often emerge from dialogue between policy designers and real-world users.