In brief

The ViDA proposal in brief

In December 2022, the European Commission issued a proposal on VAT in the Digital Age (ViDA) to modernize the EU's VAT system. This package has three main objectives:

  1. Modernizing VAT reporting obligations: with the introduction of digital reporting requirements (DRR) and mandatory B2B electronic invoicing ("e-invoicing")
  2. Addressing the challenges of the platform economy: by updating the VAT rules applicable to services and goods made available via an electronic platform and a focus on the role of such platforms in regard to the collection of VAT
  3. Avoiding the need for multiple VAT registrations in the EU: by improving and expanding the existing systems of One Stop Shop (OSS) and Import One Stop Shop (IOSS) and the scope of the reverse charge mechanism


  1. Theobjective to reduce the VAT gap
  2. DRR based on e-invoices
  3. Italy
  4. Belgium
  5. Austria
  6. Next steps

For an overview and the context of this proposal, please refer to our previous client alert on ViDA (here).

We will highlight one of the most important changes in the ViDA proposal below, i.e., the introduction of real-time digital reporting based on e-invoicing. We will also outline the current status of e-invoicing and digital reporting in Italy, Belgium and Austria.

The objective to reduce the VAT gap

The DRR based on e-invoices primarily aim to reduce the so-called VAT gap (i.e., the difference between expected VAT revenues and the actual amount of VAT collected). This VAT gap is due not only to fraud or evasion but also to financial insolvencies and reporting errors. At EU level, the VAT gap in 2020 was an estimated EUR 93 billion (or 9.1% of the total expected VAT revenues across the EU).

The introduction of DRR based on mandatory e-invoices should be able to reduce this VAT gap. In this context, jurisdictions that have already introduced various types of DRR have seen an increase in VAT collection, due notably to the improvement of tax control and a decrease in VAT reporting errors.

DRR based on e-invoices

With an increasing number of member states implementing different models of digital reporting, there is a need for harmonization at EU level. This can be achieved by having a default system of DRR based on e-invoices issued, with a standardized format, harmonized across the EU.

An e-invoice is defined in the proposal as "an invoice that contains the required information and which has been issued, transmitted, and received in a structured electronic format that allows for its automatic and electronic processing." Hence, mere PDF invoices sent by email will be excluded from this definition.

The objective is to introduce mandatory real-time digital reporting for intra-community transactions by 2028. To achieve this, e-invoices will be mandatory for all B2B intra-community transactions. A similar system can be implemented for the reporting of domestic transactions (however, this will be optional).

The EU Commission consequently proposes introducing a single VAT registration across the EU, building on the already existing OSS model for e-commerce traders. This will eventually not only decrease the reporting burden on transactions but will also further reduce the amount of required VAT registrations OR instances in which businesses that sell to consumers in more than one member state have to register in other member states. With this reform, traders that operate cross-border can opt to register in only one member state for sales to consumers within the EU and for the transfer of goods for storage and consignment in other member states.

Furthermore, the current European Sales Listing will be abolished and replaced by real-time reporting of intra-community transactions within two days following the issuance of the e-invoice. Such e-invoice has to be issued within two days following the chargeable event.

The data on intra-community transactions (in electronic format) will be submitted through a central database for exchanging information between member states.

Last but not least, the possibility to issue "summary invoices" will be abolished since it goes against the aim of providing data on transactions in almost real-time. The abolishment of summary invoices may have a significant impact on businesses that are used to issuing summary invoices on a monthly basis (e.g., to report intragroup transactions).


As of 1 January 2019, the supply of goods and provision of services carried out between taxable persons resident or established in Italy, subject to the invoicing obligation, must be documented by means of an e-invoice. The e-invoice must be drafted in compliance with the technical rules set forth in specific provisions of the Italian Revenue Agency, which specifically states that the invoice must be issued in XML format and transmitted to the Interchange System (SDI).

No other transmission systems can be used for "official" e-invoices (operators can still use their own systems — different than XML — but these are not recognized as tax-relevant in Italy).

The obligation applies to transactions with VAT-taxable persons (i.e., B2B transactions) and with private individuals (i.e., B2C transactions). There are, however, some exceptions: e.g., taxpayers not established in Italy but only registered for VAT purposes and doctors are not obliged to issue e-invoices.

The e-invoice transmitted via SDI, generally within 12 days from the tax point, is considered issued on the condition that it has not been discarded by the system (i.e., clearance), which unequivocally certifies the date and time of transmission and thus the time of issuance.

Generally, the SDI of the Italian tax authorities acts as a "postman" between the sender and the receiver of the e-invoice, performing predetermined checks on the correctness of the details of the invoice XML file.

The e-invoicing obligation does not extend to supplies of goods and services made to and received from taxpayers not established in the territory of the state. Such transactions may continue to be documented by means of analogue OR paper-based invoices. In this case, however, the relevant data must be reported to the tax authorities.

Effective 1 July 2022, reporting methods have changed, and data of cross-border transactions must now be transmitted to the SDI as XML files.

Any rejection of the file, which is communicated to the supplier within five days of the SDI's receipt of the document, implies that the e-invoice is not considered issued for VAT purposes and must be sent to the Italian Revenue Agency system again after the necessary corrections have been made.

The Italian Ministry of Finance recently launched a public consultation on the package of the ViDA proposal. The consultation, in which our Baker McKenzie Italy offices participated, closed on 18 April 2023.

Currently (differently from the ViDA proposal), Italy is the only member state that has adopted a system of e-invoicing subject to validation (i.e., clearance) by the SDI, which acts both as a filter and as a mail carrier for the delivery of the invoice from the sender to the addressee.

The proposal for harmonizing the e-invoicing process within the EU is well-accepted by Italian operators. However, should the DRR proposal remain as it is currently drafted, important investments for IT adaptation will be required of Italian businesses.


It is estimated that the administrative burden for companies in Belgium could be reduced by EUR 3.37 billion if the e-invoicing/automatic processing system is fully adopted. The introduction of e-invoicing and automatic processing is therefore high on the agenda of the Belgian authorities.

The acceptance and processing of e-invoices already exists for public procurement transactions (B2G), with the exception of B2G contracts below the threshold of EUR 3,000. In this context, a specific platform (the so-called Mercurius platform) has been set up, which facilitates the processing of B2G e-invoices.

As to B2B transactions, a draft law was published on 11 May 2022, aiming to introduce mandatory e-invoices by 1 January 2025. The minister of finance has now proposed its implementation in three phases, with the following timeline:

  • By [1] July 2024, mandatory B2B e-invoicing for businesses with a turnover above EUR 9 million
  • By [1] January 2025, mandatory B2B e-invoicing for medium-sized taxpayers (with a turnover between EUR 700,000 and EUR 9 million)
  • By 1 July 2025, mandatory B2B e-invoicing for all businesses

Still, a number of technical issues are to be solved, notably those relating to transactions between members of the same VAT group, the different special VAT schemes, and the issuance of invoices by nonestablished entities for transactions taking place in Belgium.

The above timing is therefore not yet "final" and might still be amended.


An obligation to use e-invoices for public procurement has already been in place in Austria since 2014. Contractual partners of the federal government in the trade of goods and services have been obliged to submit invoices exclusively in an electronically structured format. This requires registration in the "Unternehmensserviceportal" (USP).

The Austrian VAT Act (UStG) also permits enterprises supplying goods or services to send an invoice to another enterprise by email as an email attachment, web download, PDF or text file, scanned paper invoice, or fax invoice. The service recipient must agree to this type of invoicing. When issuing an invoice in several formats (e.g., as a PDF and XML file) or as a paper invoice and e-invoice, a reference thereto must always be included in the invoice to avoid tax liability by accounting.

  • For the e-invoice to serve as proof that an entitlement to input VAT deduction exists, the authenticity of the origin of the e-invoice, the integrity of its content and its legibility must be guaranteed. This must be ensured by the service provider and the service recipient independently of one another in their area of authority.
  • "Authenticity of origin" means proof of the identity of the service provider or the issuer of the invoice.
  • "Integrity of content" means that the information required under Section 11 of the UStG has not been changed. However, this does not mean that the content of the invoice (e.g., address of the service provider) is actually correct or was correct when the invoice was issued.
  • "Legibility" means that the content is comprehensible and understandable for a reasonable person.
  • Every enterprise can freely choose the appropriate procedure to ensure that these three requirements are met.

Austria has not yet issued a proposal for mandatory B2B e-invoicing based on the EU Commission's ViDA proposal.

Next steps

If you want to know more about the ViDA proposal, your local Baker McKenzie contact can provide you with tailor-made advice regarding the impact of this proposal on your particular business model, as well as the opportunities it provides for companies doing business in the EU.