The EU has unlocked the reform that will force digital platforms, such as Uber, Booking or Airbnb, to pay VAT in cases where service providers do not do so. The Council of the EU has introduced changes that have weakened the initial text to circumvent the veto of Estonia, which, under pressure from Bolt, opposed this legislation. Among the changes introduced, member states are given the possibility of exempting small and medium-sized enterprises (SMEs) from these regulations and the entry into force of the regulations is delayed, which will begin to be applied voluntarily in 2028 and will not be mandatory until 2030. Spain has requested that activation be allowed to be brought forward, for which the current regulations must be repealed, as explained by government sources.
The Ministers of Economy have given the green light to the VAT package in the digital era, which also aims to promote the use of digital invoices in cross-border operations and create a single registry that allows operations throughout the community bloc. But the obstacle was in the reform that aims to force digital platforms for tourist accommodation or transport to collect the VAT tax to transfer it to the tax authorities when the ultimate providers of the services (for example, the drivers or the owners of the apartments) tourists) don’t do it. The reform will mean that these platforms will automatically have to add the amount of the tax to the price shown in the offer.
Estonia blocked this reform with the increase in prices that this obligation would entail, causing “unfair competition” and a “distortion of competition.” “It is not a tax on the platforms but on the SMEs that provide services to a platform,” said the Minister of Economy of that country, Mart Vorklaev, who proposed that the legislation be voluntary, but the rest of the partners opposed it. The changes introduced with respect to SMEs and the reduction of bureaucracy have now allowed him to say ‘yes’, according to sources from the Estonian Government.
“Under the new rules, economic platform operators will be responsible for collecting and remitting VAT, in cases where their service providers do not pay VAT themselves. The platform will collect VAT directly from the client and send it to the tax authorities,” explains the EU Council in a statement in which it recognizes that “greater flexibility” has been provided to countries “by expanding the definition of short-term rental of accommodation for tax purposes and give Member States the possibility to exempt small and medium-sized businesses from the rules.” The European Parliament will now have to review the text given that substantial changes have been implemented, including its entry into force, which was scheduled for 2025 and is delayed by five years.
“The European Commission will have to closely monitor how the exception for SMEs is applied in practice so that it does not jeopardize the principle of responsibility of the platforms to collect VAT,” warned the Commissioner for the Economy, Paolo Gentiloni.
#unlocks #reform #Airbnb #Booking #Uber #pay #VAT
