The EU has adopted a comprehensive modernization of the European VAT system, which fundamentally changes the requirements for cross-border trade. This reform is known as ViDA (VAT in the Digital Age). If you believe this is simply another administrative hurdle, you should read on.
With ViDA, we are facing the largest shift in the European VAT system since the birth of the Single Market in 1993. The objective is ambitious: to achieve effective digitalization and reduce the massive VAT gap. Every year, billions of euros are lost to fraud and administrative errors (in 2020, the figure reached €93 billion).
At efacto, we do not view ViDA merely as a regulatory necessity. It represents a golden opportunity to optimize your business processes and eliminate numerous manual workflows related to invoice management.
It’s going well. Most Danish companies are now capable of invoicing digitally. For the vast majority, it’s no longer a new or unfamiliar workflow. There are still some differences between industries in terms of their level of digital maturity. Companies invoicing the public sector have been subject to e-invoicing requirements since 2005.
Where automation really makes sense is for companies with a high invoice volume. Fortunately, I’m seeing a rapidly growing interest in solutions like our InvoiceFirewall. More and more organisations are realising how much time and how many resources can be freed up by having control over their invoicing processes.
For individual companies, ViDA signifies the final transition from manual PDF invoices to mandatory, structured e-invoicing and real-time reporting.
Digital Reporting Requirements (DRR) will become mandatory for cross-border B2B transactions within the EU. This means that invoices must be issued as structured e-invoices, and transaction data must be reported shortly after issuance. The aim is to reduce VAT fraud by providing tax authorities with faster and more detailed insight into cross-border trade.
Currently, VAT is reported periodically—monthly, quarterly, or bi-annually depending on turnover—meaning authorities only gain insight into transactions with a significant delay. This time gap can be exploited for fraud, particularly if control mechanisms are insufficient. In other words, authorities are gaining digital X-ray vision into your transactions. This places higher demands on data quality and internal processes if you wish to avoid errors, corrections, and increased audits.
Furthermore, a Single VAT Registration will be introduced in the EU. This means that companies selling to consumers in multiple EU countries can fulfill their VAT obligations by registering once, rather than having to register in every single member state.
As one of the absolute frontrunners in Europe, Poland has already accelerated the transformation that ViDA signals for the rest of the member states. They are rolling out the national e-invoicing system, KSeF (Krajowy System e-Faktur), which makes digital B2B invoicing mandatory for all companies. This marks the final farewell to PDFs and paper in favor of structured XML data, which is validated and registered by the authorities in real-time.
These requirements will be rolled out in 2026. Large enterprises must be ready for electronic invoicing by February 1st, while all other companies must follow by April 1st. The Polish authorities have made the first year sanction-free to ensure a smooth transition. Poland’s model is a direct precursor to the requirements we will soon see across the entire EU, emphasizing the importance of managing your digital data flows now.
ViDA was finally adopted on March 11, 2025. As it is an extensive legislative package, it is being rolled out gradually to allow the business community time to adapt. Here are some of the most important deadlines:
While it will be several years before electronic invoicing becomes mandatory everywhere, we at efacto believe it makes sense to begin the transition now if you haven’t already. We can help you send and receive invoices to and from every country in Europe, ensuring you stay ahead of the requirements.
It is equally important to ensure that the data entering your ERP system and the authorities’ platforms is accurate and validated. This is exactly what our solution, InvoiceFirewall, does. Therefore, it is a central part of the solution to invoicing challenges—both existing ones and those that will arise in the wake of ViDA.
Electronic invoicing should not be an administrative burden, but rather a shortcut to more efficient digital processes that free up resources for your core business.
By acting now, you not only ensure compliance with complex future legislation but also achieve a much more efficient and automated daily operation immediately.