In Short: Compliance under the deemed supplier regime truly matters!
For multinational enterprises (MNEs) operating digital platforms in sectors such as travel and accommodation, or providing other facilitation services, the new deemed supplier regime will require a proactive strategy to ensure local compliance. To stay ahead of the game, MNEs should map their facilitation flows without delay to identify where platform entities interact with non-taxable suppliers and assess who bears VAT liability under ViDA legislative package. This review covers contractual terms, billing logic and reporting systems to ensure that VAT collection and remittance responsibilities are clearly embedded across jurisdictions.
In Detail: Why ViDA’s ‘Implementation Strategy’ Matters
On 24 September 2025, the European Commission released the Implementation Strategy for VAT in the Digital Age (ViDA) (the Strategy Document), marking a pivotal moment in the European Union’s accelerated digital and fiscal integration. This Strategy Document outlines not only technical measures, but also how the EU’s most ambitious VAT reform in decades will be implemented across Member States and within the business landscape.
From a policy standpoint, ViDA is therefore as much about institutional coherence as it is about taxation. The Strategy Document emphasises the importance of political ownership and engagement across Member States, a goal supported by Fiscalis workshops, the VAT Expert Group (VEG) and technical working groups. However, the European Commission acknowledges significant risks, primarily relating to IT readiness, the fragmented implementation of the Strategy and ‘gold-plating’ by Member States, who impose additional obligations beyond EU standards.
For businesses operating in or trading with the EU, the Strategy Document provides a clear indication of regulatory expectations and a timeline for the digital transition, offering insight into the EU’s policy direction towards a data-driven tax ecosystem. Therefore, understanding its implications is essential for compliance planning, investment decisions and long-term competitiveness in the Single Market. The key points of the Strategy Document are outlined below.
1. A Policy Turning Point for Businesses
The Strategy Document represents a significant milestone in the development of EU tax policy, together with the ViDA legislative package, which was published in the Official Journal of the EU on 25 March 2025, and entered into force on 14 April 2025.
Comprising three pillars - Digital Reporting Requirements (DRR), the Platform Economy, and Single VAT Registration (SVR) - the ViDA legislative package comprehensively modernises the EU’s VAT framework. Beyond its technical reforms, the ViDA package signals a strategic policy shift: the EU is embedding tax compliance directly into the digital infrastructure of trade.
2. Digital Reporting and E-Invoicing: From Compliance to Competitiveness
The DRR component will introduce (near) real-time digital reporting based on e-invoicing for cross-border B2B transactions by 1 July 2030, replacing the current system of recapitulative statements. This policy aims to standardise reporting practices across the EU while equipping tax administrations with the data needed to combat VAT fraud, with estimated savings of EUR 11 billion per year.
From a business policy perspective, this shift presents both a compliance challenge and a strategic opportunity. Businesses that invest early in interoperable invoicing systems aligned with the EU e-invoicing standard will benefit from greater operational efficiency and improved data-driven insights into their supply chains. Conversely, those that delay adaptation risk being faced with fragmented obligations as Member States roll out domestic systems at differing speeds.
3. Platform Economy: Levelling the Fiscal Playing Field
The ViDA legislative package will introduce a ‘deemed supplier’ regime for digital platforms, especially those operating in the short-term accommodation and passenger transport sectors. This regime will take effect from 1 July 2028 (or 1 July 2030 for Member States that opt for a delay). Under this regime, platforms will be responsible for collecting VAT on behalf of underlying suppliers, such as small businesses or individuals, who are not currently required to do so.
This significant policy change aligns with the Digital Services Act and Digital Markets Act, reinforcing the EU’s commitment to a coherent framework of digital intermediaries. While the measure promotes fair competition between online platforms and traditional providers, it also introduces compliance and technological obligations that smaller platforms may find demanding.
4. Single VAT Registration: Simplifying Cross-Border Operations
The SVR initiative, which is an extension of the One Stop Shop (OSS) mechanism, aims to minimise the need for businesses to register for VAT in multiple Member States. By 1 July 2028, businesses will benefit from a harmonised ‘transfer of own goods’ scheme and a mandatory reverse charge mechanism (RCM) in certain business-to-business (B2B) scenarios.
This could dramatically simplify cross-border operations for EU and non-EU traders alike, thereby aligning with the EU’s single market policy objectives. However, realising these benefits requires synchronised IT development between national and EU systems, particularly for the Central VAT Information Exchange System (Central VIES).
5. Policy Implications Beyond the EU: A Global Shift Towards Digital Tax Compliance
The key message of the Strategic Document for businesses is clear: ViDA will transform VAT compliance from a back-office process into a core operational function, potentially integrated into the IT and control processes of multinational enterprises (MNE) groups. In order to remain compliant and competitive, businesses must engage early in consultation processes, invest in digital infrastructure and collaborate with tax authorities.
Not only. In this context, ViDA reforms are part of a wider global shift towards continuous transaction controls (CTCs) and real-time reporting. Outside the EU, countries such as the United Arab Emirates (UAE), Saudi Arabia and Egypt in the Gulf Cooperation Council (GCC), as well as India, Mexico and Chile, are introducing or expanding mandatory e-invoicing and digital reporting systems.
While each system has its own technical specifications, the overarching goal is to improve transparency, strengthen enforcement, and reduce fraud. For businesses operating globally, this convergence means that VAT and indirect tax compliance must be managed holistically. By aligning ViDA readiness with broader international e-invoicing and reporting initiatives, MNEs can harmonise processes, reduce duplication, and build a robust global tax governance framework.
6. The Road Ahead
The phased implementation of ViDA legislative package reflects the EU’s pragmatic approach to systemic reform. It ranges from the introduction of optional e-invoicing in 2025 to the deployment of full DRR by 1 July 2030. However, from 1 January 2035, all Member States must have aligned their domestic systems with the cross-border digital reporting model, thus establishing a fully digital VAT regime.
ViDA is not merely a tax reform; it is a policy blueprint for a digital Single Market where transparency, automation and interoperability define fiscal governance. For businesses operating in the EU, the message is clear: digital tax compliance is a competitive necessity, not just an administrative obligation.
Businesses should also prepare to integrate VAT data collection within existing Enterprise Resource Planning (ERP) or platform systems to enable real-time tracking of taxable transactions. Early preparation will minimize business disruption, reduce exposure to penalties, and provide greater visibility of indirect tax performance, thereby turning compliance into an operational advantage.
Call to Action: Preparing for VAT in the Digital Age
VAT has never been more complex or digitalized. Across Europe and beyond, authorities are shifting from periodic returns to continuous transaction controls (CTCs), in which structured e-invoices and near-real-time reporting are becoming the norm. For multinational businesses, these changes will reshape how indirect tax is managed, reported, and governed across jurisdictions.
The ViDA Implementation Strategy makes clear that every business operating in or trading with the EU will need to adapt its systems, contracts, and reporting processes over the next few years. Early movers will not only ensure compliance but also unlock efficiencies through automation, better data visibility, and reduced administrative costs. Those who delay may face fragmented implementation, inconsistent reporting, and exposure to compliance risks once the new rules take effect.
At NOEMA Global, we help organizations translate regulatory change into competitive advantage. Our team supports clients in assessing exposure, designing compliance roadmaps, and implementing global reporting solutions that integrate seamlessly with tax and IT functions.
The European Commission’s vision for VAT in the Digital Age is ambitious, and its timeline is already underway. Whether your operations are in the EU, the GCC, or elsewhere, the question is not if ViDA will affect your business, but how ready you are when it does.
Now is the time to act. Let’s prepare your strategy together.
