ViDA – The New Tax Era in the EU

The VAT in the Digital Age (ViDA) initiative aims to combat tax fraud and fundamentally modernize VAT processes in the EU. But what does this mean in concrete terms for companies, industries and the long-term development of financial flows? This article provides in-depth insights into the transition to ViDA.

What is VAT in the Digital Age (ViDA)?

“Trust is good, control is better.” This well-known saying takes on a very topical relevance in the context of the new EU initiative ViDA. ViDA is a complex undertaking by the EU to digitize and reform VAT processes. What on the one hand represents a step towards a progressive future, on the other hand entails far-reaching changes for companies: more transparency, stricter requirements and considerable penalties for non-compliance. It is the birth of a new era in which the tax authorities are omnipresent.

What does ViDA want to achieve? Tackling tax evasion

ViDA is the answer to a serious problem: tax fraud. Every year, the EU loses billions through illegal practices such as the infamous “tax carousel”. In this criminal mechanism, goods are moved back and forth between member states without an actual delivery taking place – the sole aim: to collect unjustified tax refunds. ViDA has set itself the task of putting an end to this problem.

Transparency through ViDA brings a new level of clarity

ViDA represents a paradigm shift: Companies are literally becoming transparent. Every transaction, every invoice, every error — everything is visible. Tax authorities can check in real time whether everything is running correctly. And that means a new reality for companies:

• Complete transparency: Errors that would previously have gone unnoticed can now be detected immediately.
• Strict controls: Trust is a thing of the past. Companies must now prove at all times that they are acting in compliance with the law.
• Higher standards: From the IT infrastructure to the internal processes, everything must comply with the new strict standards.

For many companies, especially smaller ones, this could be challenging at first. Data protection concerns, increased administrative effort and the risk of penalties for incorrect reporting are just some of the hurdles to overcome. For an introduction to the basic goals and challenges of ViDA, read our blog post ViDA: VAT in the Digital Age – Modernizing the VAT system in the EU.

E-invoicing is the core of ViDA

At the heart of ViDA is the real-time transmission of invoice data, also known as e-invoicing. Every invoice issued must be transmitted immediately to the tax authorities, giving them a complete overview of all transactions. Every single business transaction is checked immediately and helps to prevent tax fraud.

What happens if an EU country doesn’t comply with ViDA?

ViDA is a European project that can only be successful if all member states join in. If one country fails to implement the requirements, the entire system could falter. The EU is therefore focusing on strict requirements and is threatening to impose sanctions on countries that do not comply with the e-invoicing rules.

Digitalization and the role of cash: a farewell?

ViDA is not just a technological innovation in the tax system, but part of a much larger trend towards more digitalization. Financial flows are becoming easier to monitor with less cash in circulation. The potential elimination of cash could make tax evasion almost impossible, as digital traces can be easily followed.

However, the question for companies and consumers is whether this development is really beneficial.

ViDA – opportunity or risk?

ViDA undoubtedly marks a decisive step towards the digitalization of tax administration. It brings with it numerous advantages:

• Combating fraud: Tax carousels and other illegal practices no longer stand a chance.
• Efficiency: Real-time data enables faster and more precise control processing.
• Fairness: Companies benefit from a fairer system.

But the challenges are also considerable:

• Increased expenditure: New technologies and training require significant investment.
• Strict rules: Companies must ensure that they act in accordance with the rules at all times.
• Data privacy: Handling huge amounts of sensitive data harbors risks.

ViDA will usher in a new era in which control triumphs over trust. Companies that prepare for these changes will be able to take advantage of the opportunities and face the risks. But one thing is certain: the days of blind trust are over. In the new EU tax era, control is the new buzzword.

How SEEBURGER helps implement ViDA requirements in your company

Whether e-invoicing networks such as Peppol and EESPA, national e-invoicing clearing systems such as KSeF in Poland, ChorusPro in France or Sdl in Italy: we have decades of experience in connecting to B2G and B2B portals for the exchange of electronic invoices in any desired format and in over 35 countries, as well as in the automation and management of all processes for incoming and outgoing invoices to and from ERP systems.

With our global e-invoicing solutions, we also enable companies with less technical know-how and lower document volumes to participate in mandatory electronic invoice exchange. With the SEEBURGER Peppol Access Point Cloud Service, we also offer a quick and easy way to exchange documents with the Peppol network. We also actively support the development of a national reporting system in accordance with the requirements of the ViDA initiative.

Source: https://blog.seeburger.com/vida-the-new-tax-era-in-the-eu/