ViDA becomes EU law, ushering in major reforms to VAT rules
The new VAT in the Digital Age (ViDA) Directive comprises three legislative texts:
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the first one contains the bulk of the new rules as amending the EU’s VAT Directive
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the second one amends the Regulation on administrative cooperation for VAT purposes, whilst
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the third one sets out information requirements for certain VAT schemes.
Following an extensive legislative process, the Directive was finally published in the EU Official Journal on 25 March.
In the meantime, Accountancy Europe has released a new factsheet outlining the main elements of the ViDA package. Accountants are strongly encouraged to familiarise themselves with the new rules and prepare for them accordingly.
European Parliament
MEP Hadjipantela calls for tax simplification in European Parliament’s draft report
This non-legislative own-initiative report titled “The role of simple tax rules and tax fragmentation in European competitiveness” and prepared by MEP Michalis Hadjipantela (EPP/Cyprus), puts forward recommendations towards the EC on reducing administrative burdens in the EU tax system. The EC’s proposals for a so-called tax simplification omnibus are currently expected in early 2026.
Mr. Hadjipantelas’ draft report calls for coordinated tax policies whilst also reducing administrative burdens for companies, SMEs in particular.
His recommendations span several critical areas including:
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digitalisation of tax administrations
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reinforced cooperation and information sharing between EU Member States to tackle aggressive tax planning, and
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enhanced enforcement
Other MEPs may now submit their own amendments to the draft report, ahead of an ECON Committee vote, currently scheduled for 15 July. This will be followed by a final vote in the European Parliament’s (EP) Plenary most likely on 8 September.
FISC Committee discusses tax simplification draft report
The EP’s FISC Committee recently discussed Mr. Hadjipantela’s draft parliamentary report (see article above), which underscores the urgent need to address the complexity of tax systems across Europe, particularly in a context where competitiveness is under pressure and persistent barriers continue to hamper the functioning of the single market. Mr. Hadjipantela noted that the EC has acknowledged this challenge and is now considering concrete measures to streamline and simplify the existing tax framework.
All shadow rapporteurs expressed their support for the report, commending it as a strong and constructive basis for further work. They welcomed its nuanced and balanced approach to a complex policy area. Several MEPS called for greater emphasis on the OECD Pillar 2 rules, especially in light of recent developments in the US.
However, the debate also reflected a clear division among MEPs. Some advocated for strict adherence to national competences in taxation and defended the value of maintaining a diversity of tax systems across the EU. Others argued that greater harmonisation of tax rules at the EU level may be necessary to address fragmentation and improve the overall functioning of the single market.
International
ECA issues report on VAT fraud on imports
The European Court of Auditors (ECA) has published a new audit report assessing whether the EU’s financial interests and the single market are protected effectively against VAT fraud on imports when simplified import customs procedures are used.
Overall, the report concludes that the EU’s financial interests are insufficiently protected against VAT fraud on imports when the simplified import customs procedures are used. ECA found that loopholes and inconsistencies in the EU regulatory framework and the EC’s monitoring, for the customs procedure 42 and the import one stop shop procedure present a significant risk of abuse. Furthermore, there are serious weaknesses in member states’ controls and shortcomings in the cooperation between member states, at EU level and in the EC’s monitoring of Member States’ activities to combat abuse of these procedures.
