Third pillar of the ViDA package:
a single VAT registration in the EU

With the ViDA package, the European Commission aims to simplify VAT rules across the EU. A key element is the introduction of a single VAT registration. This third pillar is designed to reduce the number of countries in which you need to register for VAT. In this article, we explain what will change and outline the main measures.

What is the ViDA package?

ViDA is an EU initiative to harmonise and modernise the VAT system. It consists of three pillars:

1. First pillar: e-invoicing and reporting
2. Second pillar: new VAT rules for the platform economy
3. Third pillar: a single VAT registration in the EU

This article focuses on pillar 3: a single VAT registration in the EU.

What will change? Three measures under ViDA

The third pillar reduces the number of VAT registrations required within the EU. For certain cross-border activities, you will only need to register in one Member State. Through this registration, you can also declare VAT due in other Member States.

This pillar consists of three connected measures:

• Expansion of the One Stop Shop (OSS)
• Expansion of the mandatory reverse charge mechanism
• Introduction of a scheme for the transfer of own goods

The new rules are expected to take effect on 1 July 2028. The final details depend on formal approval and implementation by the EU and its Member States.

1. OSS scheme

Through the OSS, you submit one VAT return covering VAT due in multiple EU Member States. At present, the scheme applies to B2C services and intra-EU distance sales. In some cases, domestic B2C supplies via platforms are also included.

The European Commission will expand the OSS to include:

• All domestic B2C supplies
• B2C installation and assembly supplies
• Supplies of electricity, gas, heating and cooling (this expansion will apply from 1 January 2027)
• Supplies made on board EU passenger transport

If you use a fixed establishment in the Member State of consumption, you must still file a local VAT return there. These supplies do not fall under the OSS.

For transactions reported via the OSS, you apply the invoicing rules of your Member State of identification. This creates more consistency in your administration.

If you repeatedly file late returns or make late payments, you risk exclusion from the OSS. Make sure your processes and deadlines are in order.

Please note! If you opt for the OSS, you must include all eligible supplies. You cannot apply the scheme selectively.

2. Mandatory reverse charge mechanism

The mandatory reverse charge will be extended to B2B supplies of goods and services within the EU. If you supply to a business in another Member State where you are neither established nor VAT-registered, you must shift the VAT liability to your customer in that Member State.

If you have a fixed establishment in the Member State where VAT is due, or if you are VAT-registered there, you usually cannot apply the reverse charge and must report VAT locally.

Please note! The reverse charge does not apply if the customer does not have a VAT identification number. It may also not apply to specific schemes, such as margin schemes or exemptions. Always assess per transaction whether the reverse charge can be applied.

3. Special scheme for the transfer of own goods

A new optional scheme will be introduced for transfers of your own goods within the EU. If you use this scheme, you report these transfers monthly via the OSS. The receipt of goods in the Member State of arrival will then be VAT-exempt. This means you no longer need to register for VAT in that Member State.

From 1 July 2028, the current call-off stock scheme will be abolished. Any transfer of goods to another Member State will then fall under the new scheme.

This scheme requires accurate stock and goods tracking. You should record:

• Where the goods originate
• Where they are sent
• When the transfer takes place
• What happens to the goods (for example sale, loss or destruction)

For goods transferred before 1 July 2028 under the current scheme, the old rules will continue to apply until 30 June 2029, provided the supply takes place within that period.

Tip! Prepare your transition in time. This helps you avoid duplicate registrations or unexpected VAT consequences.

The third pillar explained

A single VAT registration within the EU reduces the number of VAT registrations, but does not eliminate them entirely. In some cases, local registration remains necessary. This may apply to specific intra-Community supplies or situations involving limited input VAT recovery.

VAT paid locally cannot be reclaimed through the OSS. You must use the standard VAT refund procedure.

Please note! If you have a fixed establishment in a Member State, you must continue to meet local VAT obligations there.

Three measures that reduce VAT registrations

Although the single VAT registration is expected from 1 July 2028, it is wise to prepare now. This helps you stay in control of your VAT processes and avoid surprises.

Map out the following:

• In which EU Member States you are VAT-registered
• Which transactions are linked to those registrations
• Which flows will fall under the OSS or the new own goods scheme

Also assess the impact on your input VAT recovery and cash flow. VAT paid locally may no longer be offset in your return and may need to be reclaimed via the refund procedure.

Review whether your administration and IT systems are ready for the new requirements, including:

• Reporting through the OSS
• Applying the correct VAT rate per Member State
• The ten-year record-keeping requirement for OSS records

Finally, include clauses in contracts and pricing agreements that allow for price adjustments where VAT rates or countries change. This helps protect your margins.

Tip! Start preparing now. Carry out an impact analysis in time so you can make informed decisions about your VAT registrations, processes and systems.