prices will rise for customers!

EU member states approved on Tuesday a reform of the European VAT system which will force digital accommodation platforms, which are a hit in Belgium, or transport to collect this tax to avoid unfair competition with traditional companies.

By requiring platforms like Airbnb and other transportation services to collect VAT, costs for users are likely to increase, as these taxes will likely be reflected in final rates. This would align the prices of digital platforms with those of traditional businesses, which already charge VAT.

The Council of the European Union announced that it had reached agreement on a package of measures. It also includes the implementation of a digital VAT declaration for cross-border transactions between businesses, as well as an improvement of the one-stop shop system in the EU for declaring and paying this tax.

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“The new rules will make it possible to adapt our VAT systems to the digitalization of our economies, help fight fraud while facilitating administrative obligations for small businesses,” welcomed Hungarian Finance Minister Mihaly Varga, whose country currently holds the rotating presidency of the Council.

The reform, approved on Tuesday by EU Finance Ministers meeting in Brussels, was proposed in December 2022 by the European Commission. The European Parliament must still be consulted before formal validation by the Twenty-Seven.

Individual providers

Currently, many providers of online accommodation rental and passenger transport services do not pay VAT because they are individual providers (drivers or people renting their apartment) or small businesses who are generally not required to pay VAT. save.

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This leads to significant losses in VAT revenue and sometimes unfair competition for traditional accommodation and transport companies vis-à-vis digital platforms.

“Under the new rules, operators in the platform economy will be responsible for collecting and remitting VAT in cases where their service providers do not pay it themselves,” the Council explained in a statement. “The platform will collect VAT directly from the customer and remit it to the tax authorities.”

Real-time digital reporting

Regarding cross-border business transactions, a real-time digital reporting system will be implemented for VAT via electronic invoices. This European system must be operational in 2030 and all existing national systems must become interoperable with it by 2035. “This will provide Member States with rapid and comprehensive information that they can use to fight fraud,” he says. specified.

Finally, the reform will “improve and extend online one-stop shops for VAT so that businesses do not have to carry out costly registrations in each Member State where they operate”.

“EU member states lose 61 billion euros in VAT each year” because of undeclared transactions, underlined the European Commissioner for the Economy, Paolo Gentiloni, welcoming the agreement reached on Tuesday.


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