EU ViDA Platform Economy Jul 2028 to Jan 2030 – update

Short-term accommodation rental and road ride sharing platforms will become the deemed supplier for VAT purposes of their underlying suppliers’ transactions.

This means they will have to charge and collect VAT on behalf of the supplier. This recognises the major market distortions for traditional hotel operators and taxi operators who must charge VAT today, and so ensure a level playing field between traditional and digital channels.

The timetable ahead of the launch includes:

• 2026: first and second draft explanatory notes issued by Commission
• Q1 2027: final explanatory notes
• 1 July 2028: member states may voluntarily impose DSR. Alert – EC will only confirm conditions of each state by 31 Dec 2028; or
• 1 January 2030: all 27 member states must comply

Deemed Supplier Regime outstanding questions (see list of compromises below):

• The EC believes that member states that wish to opt for the voluntary July 2028 launch will have to confirm so by July 2027 to meet the necessary IT change schedules;
• Guidance distinguishing the existing agency provisions in Article 28 of the VAT Directive from the new deemed supplier rules introduced under Article 28a.
• Clarification of number of technical points:
  • Supplier VAT number verification – greater legal certainty over whether underlying suppliers must always provide a valid VAT ID number and declaration, with concerns that the current wording extends beyond the Directive itself;
  • Cross-border VAT number validation – platforms have warned that verifying VAT numbers across all 27 Member States could create a significant compliance burden unless a more harmonised validation system is introduced. Many stakeholders are requesting at least 12 months’ implementation time.
  • Practical application and additional examples covering:
    • price reductions
    • SME scenarios
    • the new Article 46a place-of-supply rules for platform facilitation services
    • more consistent terminology throughout the guidance.
  • How to exempt house swaps;
  • How reforms interact with SME exemption agreed in adoption negotiations;
  • Interaction between deemed supplier rules and OSS;
  • Chain supplies with property management companies;
  • Ancillary services (Breakfast; cleaning) charged outside of the platform;
  • Interplay with other taxes like tourism taxes;
  • Treatment of no-shows and cancellations;
  • Where passenger transport is included;
  • B2B supplies; and
  • Cut off for 30-day threshold when changes
• Role of the platform:
  • Multiple platform chains – clarification is also being sought where more than one digital platform participates in a transaction, particularly which platform should be treated as the deemed supplier for VAT purposes.
  • Obligations where false information supplied to platform;
  • Level of validation platforms are expected to undertake when verifying suppliers’ VAT registration numbers, together with whether a “safe harbour” will apply where reasonable checks have been carried out.
  • Guidance where a platform incorrectly applies the deemed supplier rules because it relied on inaccurate information supplied by the underlying supplier.
  • Double payment of VAT correction;
  • Managing the SME threshold tracking;
  • Platform’s obligation to validate the supplier’s VAT number;
  • Supplier resident in another member state, and having separate VAT numbers;
  • Late provision of VAT number and subsequent refund;
  • Reducing bookkeeping obligations;
• DST and TOMS:
  • Travel agents operating under the Tour Operator Mechanism Scheme are exempted. But this creates a range of questions to be addressed.
  • Practical examples of when a platform is considered to be acting in its own name.
• SME exemption
  • How do platforms track suppliers registered under the SME exemption;
  • Cross-border SME’s proving their exemption; and
  • Treatment of mixed supplier.
• Facilitation Fee
  • The facilitation fee does not necessarily follow the VAT treatment of the underlying service, and this is a separate supply. This is because the facilitation fee should be taxed at the standard rate of VAT, and not at any reduced rate which may be applicable to the underlying supply. This leads to a number of complexities, for which clarification will be required.
• Chain Transactions
  • The Commission is also preparing guidance on more complex chain transactions involving multiple intermediaries, where it may not be immediately clear which platform becomes the deemed supplier for VAT purposes.

Compromises since original blanket liability proposals

The original proposals from December 2020 were to make all transactions liable. Over the past 18 months, this has been modified following concerns raised by EU member states and business

• Exceptions have now been negotiated following concerns and member states may opt to exclude the following two groups of underlying suppliers: 
  • Those who provide their platforms with an identification number for VAT purposes. This enables them to continue to recover input VAT costs against their output VAT; and
  • Those who are using of the new 2025 SME VAT registration special scheme for small enterprises
• To keep some consistency between member states, the definition of short-term has been changed from 45 days to 30 days. Member states may also add further conditions in their local laws to qualify the definition of short-term.
• The EC will report on the effectiveness of these measures exceptions by 1 July 2033.
• Travel agents are to be excluded from the deemed supplier. And, likewise, platform supplies are excluded from TOMS (Travel Operators Margin Scheme.
• Even where the platform is not determined to be the deemed supplier, as with the 2021 e-commerce requirements for goods, the marketplace record-keeping requirements apply.

Overlap with OECD gig and sharing economy

The OECD has performed extensive work on VAT issues for the gig and sharing economies. The EU’s focus should be broader, although the OECD has now extended to goods and ride sharing. HMRC’s UK gig & sharing economy VAT consultation started in 2021.

EU VAT in the Digital Age reforms