New VAT rules for the platform economy
New VAT rules for the platform economy
Under VAT in the digital age (or ViDA) new rules will apply for the platform economy, in particular for the accommodation and passenger transport sector. The rules were formally adopted on 11 March 2025 and published in the Official Journal of the European Union on 25 March 2025. The new rules consist of two parts: the introduction of a deeming provision and a new place of supply rule for facilitation services.
The deeming provision covers short term rental of accommodation and passenger transport services by road. Only uninterupted stays of a maximum or 30 nights of the same person are considered short term rental of accommodation. This short term accommodation rental will be taxed under criteria, conditions and limitations set by Member States. These criteria, conditions and limitations must be communicated to the VAT committee before 1 July 2028.
Platforms are only in scope of the provision if they facilitate the underlying supply. This means that they should allow a customer and supplier to enter into contact, which contact results in a supply of services through the platform. Platforms that meet certain conditions are not considered to facilitate a certain supply. Payment service providers, businesses that only provide listings or advertsing or redirect or transfer customers to other electronic interfaces are also out of scope of the deeming provision.
Under the deeming provision the supply of the supplier to the platform is subject to an exemption without a right to deduct VAT. The subsequent supply to the customer is taxed with VAT, unless an exemption applies in the Member State where VAT is due. If the supply is exempt this will not affect the platform’s right to deduct VAT.
The deeming provision does not apply if the underlying supplier provides the platform with a VAT identification number of the Member State where VAT is due or with a OSS identification number if it uses the OSS to report the VAT on those supplies. The underlying supplier must also declare to the platform that he will charge any VAT due on the supply. EU Member States can exclude supplies made within their territory which are made under the special scheme for SMEs (small and medium businesses) from the scope of the deeming provision. The result of this is that those supplies will take place between SME and customer directly. Those supplies will be exempted because of the special SME scheme.
More information
If you have questions regarding ViDA we are of course happy to help. Please contact one of our VAT advisors for more information.
Contact
Deeming provision
Under a deeming provision a platform is deemed to have purchased and subsequentlly supplied the underlying good or service, making the platform the one responsible for the payment of VAT on the supply to the customer.The deeming provision covers short term rental of accommodation and passenger transport services by road. Only uninterupted stays of a maximum or 30 nights of the same person are considered short term rental of accommodation. This short term accommodation rental will be taxed under criteria, conditions and limitations set by Member States. These criteria, conditions and limitations must be communicated to the VAT committee before 1 July 2028.
Platforms are only in scope of the provision if they facilitate the underlying supply. This means that they should allow a customer and supplier to enter into contact, which contact results in a supply of services through the platform. Platforms that meet certain conditions are not considered to facilitate a certain supply. Payment service providers, businesses that only provide listings or advertsing or redirect or transfer customers to other electronic interfaces are also out of scope of the deeming provision.
Under the deeming provision the supply of the supplier to the platform is subject to an exemption without a right to deduct VAT. The subsequent supply to the customer is taxed with VAT, unless an exemption applies in the Member State where VAT is due. If the supply is exempt this will not affect the platform’s right to deduct VAT.
The deeming provision does not apply if the underlying supplier provides the platform with a VAT identification number of the Member State where VAT is due or with a OSS identification number if it uses the OSS to report the VAT on those supplies. The underlying supplier must also declare to the platform that he will charge any VAT due on the supply. EU Member States can exclude supplies made within their territory which are made under the special scheme for SMEs (small and medium businesses) from the scope of the deeming provision. The result of this is that those supplies will take place between SME and customer directly. Those supplies will be exempted because of the special SME scheme.
Place of supply of facilitation services
Regardless of whether the deeming provision applies a platform provides facilitation services for VAT if either the supplier or customer on the platform needs to pay the platform for its services. In case of B2B-services the place of supply will be the place where the recipient of the service is established. VAT is reverse charged to the recipient if the service provider is not established in the Member State where VAT is due. For B2C-facilitation services a special place of supply rule applies. These B2C-facilitation services will be subject to VAT at the place where the underlying transaction is supplied.Record keeping
For transactions for which the platform is not a deemed supplier, it is required to keep records of the underlying supplies that it has facilitated. These records must be made available on request to the Member States electronically and must be kept for 10 years from the end of the year during which the transaction was carried out. It must be noted that record-keeping provisions for platforms already apply since 1 July 2021 for B2C supplies of goods and services which are subject to VAT in the EU. The proposed provision therefore only extends this obligation to B2B-supplies.BDO’s observations
The many options given to Member State to set conditions or limitations, for example the option for Member States to determine that SMEs using the special scheme for SMEs are out of the deeming provision, makes the new rules complex.More information
If you have questions regarding ViDA we are of course happy to help. Please contact one of our VAT advisors for more information.
Contact