Reshaping VAT reporting under ViDA: What businesses need to know

Businesses operating across the EU must prepare for significant changes in VAT reporting as digitalisation and real-time compliance requirements reshape the tax landscape under the ViDA initiative.

ViDA pillar 1: Digital reporting requirements and e-invoicing


The European Union's VAT in the Digital Age (ViDA) initiative represents one of the most significant changes to VAT compliance in recent decades. Pillar 1, which focuses on Digital Reporting Requirements (DRR) and e-invoicing, will fundamentally reshape how businesses document and report intra-EU transactions.


While the mandatory implementation date of 1 July 2030 may seem distant, businesses should already be considering the operational and technological changes required to comply with the new framework.

From periodic reporting to near real-time visibility


Historically, VAT compliance has relied on periodic reporting through VAT returns, recapitulative statements, and Intrastat declarations. Under ViDA, cross-border B2B transactions within the EU will be subject to near real-time reporting supported by structured electronic invoicing.


Suppliers will be required to issue e-invoices and report transaction data within 10 working days of the chargeable event. This significantly reduces the time available to identify and correct errors before information reaches tax authorities.


In practice, VAT compliance will become increasingly embedded within the transaction lifecycle itself rather than remaining a retrospective reporting exercise.


How the new model will operate


Under the new framework, reporting will occur on a transaction-by-transaction basis rather than through periodic summaries.


A supplier will issue a structured e-invoice containing the required VAT information, with the relevant data transmitted through the organisation's ERP system or an authorised service provider. Tax authorities will gain visibility of the transaction shortly after issuance, while the customer records the corresponding acquisition on their side.


This creates a near real-time audit trail, enabling tax authorities to cross-check supplier and customer records and identify discrepancies at an early stage.


E-Invoicing becomes a compliance tool


Under ViDA, e-invoicing becomes more than a billing format. It becomes a core compliance mechanism.


This means that:

  • VAT treatment must be determined correctly at the point of invoicing. 
  • Invoice data must be complete, accurate, and consistent across systems. 
  • Errors can no longer be deferred to month-end or quarter-end reporting processes. 


As a result, VAT compliance responsibilities will increasingly move closer to operational and billing functions rather than being addressed solely by finance teams during reporting periods.


What this means in practice


Consider a Maltese company supplying goods to a VAT-registered customer in Italy.


The invoice is issued as an intra-EU exempt-with-credit supply. Under ViDA, the transaction data must be reported within 10 working days. Once the Italian customer records the corresponding acquisition, tax authorities can effectively match both sides of the transaction.


Any inconsistencies in values, timing, customer details, or VAT treatment become visible much sooner than under the current system.


The same principle applies to returns and credit notes. Adjustments will need to be reported through structured electronic documents within the prescribed timeframe, creating a transparent audit trail of both the original transaction and subsequent corrections.


Increased audit visibility


With access to transaction-level information shortly after transactions occur, tax authorities are expected to rely more heavily on automated controls and data analytics.


This may increase scrutiny in areas such as:

  • Reporting deadlines and timing differences. 
  • Application of VAT exemptions. 
  • Customer VAT identification details. 
  • Data mismatches between suppliers and customers. 
  • Consistency between transactional and accounting records. 


Businesses should therefore expect greater emphasis on data quality, documentation, and system integrity.


Preparing for the future


Although implementation remains several years away, organisations should use this period to assess their readiness.


Key areas for consideration include:

  • Ensuring ERP and invoicing systems can support structured e-invoicing and digital reporting requirements.
  • Embedding VAT determination logic directly into operational processes. 
  • Strengthening controls around invoice issuance and data accuracy. 
  • Establishing clear processes for returns, credit notes, and adjustments. 
  • Improving coordination between finance, tax, and IT functions. 


Successful compliance will depend not only on understanding the legislation but also on ensuring that systems and processes can support the required level of reporting accuracy and timeliness.


Looking ahead


ViDA Pillar 1 is more than a reporting reform. It represents a fundamental shift in how VAT compliance will be managed across the European Union. By moving from periodic reporting to transaction-level visibility, the framework places greater emphasis on accuracy at source, robust systems, and real-time compliance controls.


Businesses that begin preparing early will be better positioned to manage the transition efficiently, minimise compliance risks, and adapt to an increasingly digital tax environment.


How RSM Malta can help


The transition to ViDA will require organisations to assess not only their VAT processes but also the readiness of their systems, controls, and reporting frameworks. RSM Malta's Tax and Audit teams can help businesses evaluate their current state, identify potential gaps, and develop a practical roadmap towards compliance.


To discuss how ViDA may affect your organisation, contact RSM Malta and speak to our specialists about preparing for the next generation of VAT reporting requirements.

Article by Michela Scicluna - Manager, Tax & Janella Mae Landicho - Senior Manager, Audit.