Negotiations to reach a political agreement on ViDA (VAT In The Digital Age) are intense in the EU. The goal is to agree on a compromise in time for the ECOFIN meeting in May.
The strange thing is that Sweden - which wants to become the world's most digitized country - is passive and rather slows down than supports the proposal.
– Sweden is classified as negative to ViDA by the European Commission. It's actually embarrassing," says Niklas Andersson, Product Manager at InExchange.
The content of the ViDA proposal is extensive, but in essence it is about upgrading the VAT Directive and adapting it to today's digital environment. Among other things, it proposes a digital reporting requirement for cross-border trade within the EU. This requires both e-invoices and coordination - in terms of systems and standardized formats - so that transactions can be carried out between member states without technical obstacles.
If ViDA enters into force, more or less in line with the original proposal, the EU will be endowed with a solution that will significantly simplify invoicing when exchanging documents across borders within the Union and make it more difficult to evade VAT liability.
– The arguments for implementing ViDA are many. In a world that is becoming more digitalized by the day, a move to mandatory electronic invoicing is inevitable. The question is not if this step will be taken - but when. There is no point in resisting this development. There is no value in it, says Niklas Andersson.
The tricky thing is that Sweden is described as skeptical of ViDA and stands in stark contrast to many other countries. ViDA encourages the possibility of synchronizing the introduction of mandatory e-invoicing in cross-border trade with also legislating nationally on e-invoicing for B2B invoicing. According to a recent compilation (published on vatcalc.com), 27 countries around the world will introduce mandatory e-invoicing before 2030.
Including major economies such as France and Germany.
But Sweden is worryingly inactive. The petition from last year, when three government agencies asked the government to appoint an investigator to examine the conditions for introducing e-invoice requirements for B2B and G2B, is still unprocessed.
In Brussels, there are also Swedish lobbyists who obviously oppose ViDA and the digital progress the proposal would mean. The anti-campaign is so obvious that the European Commission has reacted strongly to the Swedish approach.
The objectors, who make Sweden appear recalcitrant, give two main reasons why ViDA in its intended form should be shelved:
– One of the objections is based entirely on principle. It is wrong, it is thought, to use legislation to regulate how contracts are written between two parties.
– Another argument, which opponents point to, is that a large proportion of Swedish companies lack system support and that a legal requirement would force expensive investments.
But Niklas Andersson easily pokes holes in that rhetoric.
– Principles are all well and good, but this is about working smart. If the EU cannot agree on ViDA, there is a risk that each member state will find its own solution. Then we will have 27 solutions. In that case, it will be even more complicated than today," he says, adding:
– "Even the reasoning about the systems is strange. Does anyone really think that the system suppliers will sit idle the day it becomes mandatory with e-invoices? They will of course anticipate a legal requirement and fight for customers with better and more attractive offers. That's how things evolve. It's a natural exposure to competition.
Another valid question is this: are there really that many companies that lack system support? In the report "80 percent e-invoice", NEA (Nätverket för Elektroniska Affärer) identifies a total of 600,000 micro-businesses in Sweden, of which it is estimated that 150,000 lack business systems today. At the same time, there are 1.2 million companies in the country.
So really it's only 10 percent, a little over, who are not equipped at present.
An overwhelming majority can therefore handle electronic invoicing and then, according to Niklas, it would be natural to prioritize the interests of the vast majority.
– We already have a legal requirement for e-invoicing when it comes to invoicing to public organizations. It's rather stupid that this system is not widely used instead. Companies now find themselves in two situations. They can have one type of invoicing to the public sector and one to the private sector that is governed by all sorts of things. It's just unnecessary, he says.
Sweden's lack of initiative towards ViDA in the first half of last year, when the EU presidency rested in blue-yellow hands, reinforced the impression that the long northern country had lost momentum in terms of digital transformation. In terms of digital business communication, the Swedish presidency was six months lost.
But now Belgium holds the presidency. Under their tenure, the ViDA process has unraveled in earnest. When EU finance ministers meet in mid-May at their monthly Ecofin meeting, they are expected to agree on a political deal on ViDA that could harmonize e-invoicing across the Union.
– Belgium is a strong proponent of digitization and will introduce mandatory e-invoicing provisions for B2B in 2026. As it evolved, it is today easier to find countries that have a plan to legislate on e-invoicing than countries that do not. Unfortunately, Sweden falls into the latter group. We barely have a plan at all," concludes Niklas Andersson with concern.
This is VAT in The Digital Age