It’s no secret that platforms like Airbnb, Booking.com, and Uber are giving the private sector a significant run for their money. However, what’s happening behind the scenes with regard to collecting and reporting VAT? The European Commission has raised cause for concern, but not without a plan of action.
- The European Commission has proposed legal reforms as part of the ViDA plan to address the VAT treatment of short-term accommodation rentals and passenger transport sold via digital platforms.
- The proposals aim to adapt the current VAT system to the fast-changing digital business environment.
- The reforms were prompted by a study that found up to 70% of underlying suppliers using a platform are not registered for VAT, creating an unequal playing field for hotels and taxi firms and a loss of VAT for member states.
- Large travel platforms such as Airbnb and Booking.com, as well as intermediaries and agents, will be affected by the proposed rules, which will make the platform operator liable for VAT on the supply if the supplier is not registered.
- The intermediary will be responsible for paying the VAT collected on the transaction to the relevant tax authorities.
- The changes are expected to be introduced from 1 January 2025.
Source VATit
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