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Financial Services Ireland

VAT in the Digital Age

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EY Indirect Tax Ireland

The EU has taken a significant step forward in modernising VAT regulations with the adoption of all three pillars of the VAT in the Digital Age (ViDA) initiative by the Economic and Financial Affairs Council (ECOFIN). This agreement sets the stage for essential legislative changes that will reshape VAT compliance across Europe.

What You Need to Know About ViDA

The ViDA initiative introduces fundamental changes to VAT rules, focusing on compliance, fraud prevention, and adapting regulations for the digital age. Here’s a quick overview of the three key pillars:

Pillar Description Effective Date
1. eInvoicing & Digital Reporting Mandatory e-invoicing and standardized digital reporting for intra-EU transactions July 2030 (with potential for earlier adoption by individual Member States)
2. Single VAT Registration Introduction of a single pan-EU VAT registration system July 2028
3. Platform Economy New VAT responsibilities for digital platforms in short-term rentals and transport services January 2030 (voluntary from July 2028)

Implications for Financial Services

The eInvoicing and Digital Reporting changes are particularly relevant for Financial Services firms. Many EU Member States are already implementing domestic e-invoicing and digital reporting regulations. Therefore, businesses must assess the potential impacts on their transaction processes and prepare their systems for compliance with the upcoming VAT reporting requirements.

Focus on Ireland

Irish businesses should begin evaluating how to handle e-invoices from EU vendors, especially in light of the planned rollout of e-invoicing in Ireland. The Revenue Commissioner’s ongoing consultation on VAT modernization emphasises real-time digital reporting and e-invoicing.  With the EU’s ViDA proposals now approved, we anticipate swift action from Ireland to implement these changes—potentially ahead of the July 2030 deadline.

How EY Can Help

With the certainty of upcoming e-invoicing and digital reporting requirements, it’s crucial for businesses to take proactive steps, including:

  1. eInvoicing Roadmap: Identify jurisdictions where new e-invoicing and reporting requirements will apply.
  2. Gap Analysis: Assess current data capture processes against future requirements.
  3. Process Re-engineering: Enhance processes and controls to ensure compliance and data integrity.
  4. Technology Framework: Explore e-invoicing solutions that integrate seamlessly with existing systems.
  5. Impact Assessment: Consider implications beyond tax, such as IT, data management, and procurement.
  6. Training & Awareness: Equip your teams with knowledge about these changes.

At EY, we provide comprehensive support in these areas, from e-invoicing solutions to implementation assistance, data and tax support, VAT health checks, and targeted training sessions on ViDA changes.

For further discussion on how we can assist you, please contact any of the EY representatives listed below: