Brussels: The European Commission pushed its digital VAT overhaul into an operational phase this year, asking every member state to begin exchanging transaction data, tightening platform rules and preparing for a single registration that will reshape how companies pay tax across the bloc.
The reform, known formally as VAT in the Digital Age, entered into force on 14 April 2025 after the Council adopted it on 11 March. It rolls out in stages through 2035, and 2026 marks the year governments move from preparation into delivery.
Three pillars carry the package. The first modernises digital reporting and mandates structured, electronic invoicing for cross-border trade. The second rewrites the rules for platforms such as short-term rental and passenger-transport apps, making them collect VAT when their underlying providers do not. The third builds a single VAT registration so a business can cover its obligations across all 27 countries with one filing.
The Commission published its 2026 work programme in May, setting out the technical groundwork national tax authorities must lay this year. Officials describe the aim plainly: close the fraud gap, cut paperwork for traders and drag a decades-old system into the era of instant data. Readers can find the framework on the Commission’s ViDA page.
The stakes are large. The bloc loses tens of billions of euros a year to VAT fraud, much of it through cross-border carousel schemes that thrive on slow, paper-based reporting. Brussels argues that once authorities swap invoice data systematically, those schemes become far harder to hide.
Businesses feel the change unevenly. Large exporters welcome the single registration, which promises to end the costly ritual of registering separately in each market where they hold stock or sell to consumers. The One-Stop Shop widens from 1 January 2027 to cover energy supplies, and the full single-registration regime follows on 1 July 2028.
Smaller firms worry about the transition. Upgrading accounting software to issue structured e-invoices costs money, and the compliance calendar stretches years into the future, leaving companies to plan around milestones that keep drawing closer. The Council set out the sequence when it adopted the package.
National governments hold the pen on much of the detail. Several capitals already run their own e-invoicing mandates, and the Commission must now knit those systems into a design that talks to one another rather than fragmenting the single market further.
For now, the digital VAT project sits between ambition and execution. The law exists, the timeline is fixed, and the real test arrives as tax authorities and companies build the plumbing that will decide whether the reform delivers the cleaner, cheaper system its architects promised.
