Travel operator, passenger transport and accommodation platform associations question need for full VAT deemed supplier obligations
Several travel and related platform trade associations have raised doubts about proposed deemed supplier obligations in the Platform Economy pillar of the VAT in the Digital Age reforms.
The reforms would make facilitating marketplaces liable for the calculation and collections of VAT on ride and accommodation sharing services from January 2025. This would switch the obligations from the home or vehicle owner to the platform. This is being proposed by the EU as many providers are below the VAT registration thresholds (or evade VAT), and present unfair competition to the traditional taxi and hotels sectors.
Criticisms of Deemed Supplier Regime
The associations raise the following concerns of apply the deemed supplier regime:
- It violates the neutrality principle, including risking double taxation since it will not always be clear which party is the final supplier and so lead to VAT being assessed by multiple parties;
- Platforms having to charge VAT would put them at a price disadvantage to pure advertising site or offline sales channels
- Home owners entitled to VAT exemption for house sharing would be unfairly penalised by this VAT on all approach.
- The ride or accommodation shares will also not be able to recover any VAT they incur since the platform is the taxpayer – do disadvadvantaging them compared to their traditional competitors who are VAT registered.
- Traditional ride hailing services are generally operated by sole traders under the VAT registration threshold – again, disadvantaging the ride sharers on platforms who will now be subject to VAT via their platforms.
- Smaller platforms would not be able to support the new VAT calculations and reporting obligations and would have to pull out of the market. Aside from undermining consumer choice and potentially raising prices, it would solidify monopolies for the largest marketplaces
Deemed supplier and TOMS
There is also a call for further definition of on the scope of whether a ‘genuine’ travel agent providing ‘untaxed’ accommodation and / or transport services, included in a supply falling under the special scheme for tour operators should be taxed under the new deemed supplier or special scheme for tour operators – Tour Operators Margin Scheme (TOMS)
Call for delay and monitoring via DAC7
The associations have requested a delay in the proposals until more analysis has been undertaken of the potential impact. The also suggest waiting to see the benefits of DAC7, which harmonises the reporting to tax authorities by digital marketplaces on transactions by their users.
The signatories to the opinion statement are:
- Bolt
- Classified Marketplaces Europe
- Confedilizia
- EU Travel Tech
- European Holiday Home Association
- Rural Tour
- The European Travel Agents and Tour Operators’ Association
