EU ViDA Platform Economy ride & accommodation Jul 2028 to Jan 2030

Pillar 2 ViDA, ride & accommodation platforms adopt VAT Deemed Supplier Regime

Voluntary 1 July 2028; mandatory 1 January 2030

As part of the EU VAT in the Digital Age reforms, entering into force 14th April 2025, ride and accommodation marketplaces / digital platforms will take on the deemed supplier regime (DSR) for VAT role of their underlying suppliers.  This is known as Pillar 2.

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.

• 1 July 2028: member states may voluntarily impose DSR; 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;
• Clarification of number of technical points:
  • Tax status of underlying supplier;
  • How to exempt house swaps;
  • Chain supplies with property management companies;
  • Ancillary services charged outside of the platform;
  • Interplay with tourism taxes;
  • Treatment of no-shows and cancellations;
  • Price reductions and similar discounts;
  • Where passenger transport is included;
  • B2B supplies; and
  • Cut off for 30-day threshold when changes,
• Role of the platform:
  • Obligations where false information supplied to platform;
  • 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.
• 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.

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