Q&A: EU - VAT in the digital age

Europe’s complex VAT system has been a significant barrier for digital businesses operating across the EU. By having to navigate cross-border transactions digital innovation and rapid market shifts both businesses and governments alike have faced difficult and often convoluted challenges. In doing so this has exposed many organisations to possible fraud and malicious threats.

For this very reason in 2024 the European parliament passed a landmark reform: the VAT in the digital age legislation marking a step towards the modernisation of the VAT framework. This overhaul was designed to smooth the processes and compliance requirements for organisations. Approval was a difficult process and met with opposition such as from Estonia which voiced concerns about the potential implications for supplier economies. However its eventual passage shows an overarching agreement that there was a significant need for change.

Part of ViDA’s scope...