EU – Single VAT Registration and Modernization of Tax Reporting

On March 11, 2025, the Council of the European Union approved the VAT in the Digital Age (ViDA) reform. The journey that ended in the adoption of the new legislative framework was not an easy one.  After more than two years of numerous negotiations, which even took a long break due to the impossibility of moving forward, the project launched during 2022 reached a triumphantly successful conclusion. 

On April 14, 2025, the ViDA package(consisting of three legislative acts) came into effect. One of the three foundational pillars of the ViDA package addresses the reform of the EU VAT registration mechanism. Pillar Three, also known as the Single VAT Registration pillar, introduces tax provisions aimed at modernizing, simplifying, and reshaping the EU VAT registration mechanism currently in place.  

The adoption of the Single VAT Registration (SVR) Pillar is primarily based on reducing the administrative burden and associated costs that non-established persons in the Member State of interest or non-EU-based persons will incur for one or more VAT registrations to conduct business in the EU. 

The most significant tax provisions will take effect on July 1, 2028. These are the most notable changes about which the taxable persons that are part of the EU supply chain should be aware: 

• The current structure of the Union One-Stop-Shop Scheme regime for B2C distance sales of goods and certain services provided by EU-established persons, which allows these economic operators to submit a single simplified VAT return for their EU-connected transactions, will be expanded. This extension will include the possibility to report in the single return, for example, supplies of natural gas and electricity, as well as certain domestic supplies of goods and services. 

• Addition of a new OSS module for reporting the movement of own stock across Member States. With these measures, the call-off stock simplification scenario will be abolished. The introduction of the “movement of own stock” module for OSS will significantly reduce the number of cases in which the economic operator becomes obligated to be VAT registered in the country where VAT is due. 

• Extension of the B2B reverse charge module for different types of transactions that require the  non-established supplier to be VAT registered in the country where VAT is due.

The adoption of the Single VAT Registration pillar of the ViDA reform will undoubtedly reduce the number of mandatory registrations for businesses operating outside their country of establishment. However, the decrease in circumstances that trigger mandatory VAT registration for businesses involved in transactions outside their domestic VAT framework shouldn’t be taken lightly without due diligence. 

There are numerous cases where registering for VAT in the Member State where VAT is due can slow down the business’s cash flow. In many cases, not being VAT registered in the Member State where VAT is due will require the taxable person to follow the EU VAT reclaim procedure for making input tax deduction. As the practice unequivocally demonstrates, these reimbursements are received at a significantly later date than those obtained by requesting an input tax credit through a VAT return.