Pillar 2 of ViDA, ride & accommodation platforms becoming deemed supplier
Voluntary from 1 July 2028; mandatory 1 January 2030
As part of the EU VAT in the Digital Age reforms, ride and accommodation marketplaces / digital platforms will take on the deemed supplier for VAT role of their underlying suppliers. This is known as Pillar 2.
ViDA Pillar 2 revised 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
- 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.
- However, 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
- In a change from the original proposals, and 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.
- In a further change, 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.
€6bn extra taxes – Travel & accommodation platforms to be made deemed supplier for their users VAT
- Extension of the deemed supplier VAT obligations to short-term accommodation and transport economies platforms which represent over 70% of the platform economy when excluding goods (so gig & sharing economies).
- The supply by the underlying house or car sharing service to the platform will be regarded as ‘exempt’ without the right to deduct. Whilst this could be regarded as undermining the rules of VAT neutrality; however, affected suppliers could voluntarily VAT register.
- ‘Short-term’ for accommodation purposes is regarded as 45 days or less.
- 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.
- This will exclude transactions under the special scheme for travel engines (TOMS) which is under a separate modernisation review.
- This measure is highly complex, and there was heavy reluctance from the digital platforms. They believed their business models, with multiple parties in the supply chain, are too complex for simplistic division of VAT liabilities. However, some tourist-popular states pushed for the full liability model for platforms. This makes any ratification and implementation timing difficult to predict.
- Alongside the DAC7 marketplace reporting reforms, there will be improved definition and clarifications of the players and roles in the digital marketplace sphere, and standardisation of information requirements.
- In particular, definitions around the taxation of fees charged as there are many inconsistencies between member states leading to double or no taxation. Also clarification that the VAT exemption does not apply to short-term rental as some countries have not correctly applied this.
- These measures will save an estimated €480m per annum.
Other pillars of ViDA are: Single VAT registration in the EU; and Digital Reporting requirements.
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
| EU VAT in the Digital Age | |
| 3 pillars to improve efficiency of VAT for all and reduce fraud | |
| 1. Digital Reporting Requirements; e-invoicing | Jul 2030-35: Mandatory digital reporting of intra-community transactions; obligation to be able to issue and receive intra-community e-invoices; member states free to impose own e-invoicing or real-time reporting but most conform to EU e-invoice standard EN 16931 |
| Read more about EU Digital Reporting Requirements (DRR) | |
| Structured e-invoices mandated for intra-community supplies | |
| EC Sales lists replaced by Digital Reporting Requirements | |
| Withdrawal of EU permission requirements for e-invoicing | |
| 2 Platform economy | Jan 2030: Travel & accommodation sharing platforms to become deemed supplier / liable to users' VAT. New definitions of the roles of providers, users and platforms to avoid double and no-taxation (voluntary Jul 2028) |
| Read more - Travel & accommodation platforms deemed suppliers for EU VAT | |
| 3 Single VAT Registration; extension of OSS | July 2028: Following the 1 July 2021 introduction of the One Stop-Shop (OSS), extended to cover movement of own stocks prior to cross-border B2C to reduce the foreign, non-resident VAT registrations & returns. Plus to movements of own stock with ending of 'call-off' stock burden |
| More details on Single VAT Registration in the EU | |
| Call-off stock VAT simplification ends | |
| Harmonisation of B2B Reverse Charge rules | |
