Ireland 
USA VAT in the digital age: the platform or sharing economy
Significant increases announced in EU VAT liability and compliance for accommodation and transport suppliers.
On 8th December 2022, the European Commission proposed major changes to the application of VAT for some suppliers of short-term accommodation rental and passenger transport in EU destinations. Think AirBnB, Booking.com, Uber type businesses but, potentially, many more.
The changes will be phased in from 2023, once adopted by the member states at the Council of the EU and are targeted at businesses operating an electronic interface such as a platform, portal, or similar means to facilitate the supply of short-term accommodation rental or passenger transport. The changes apply where those electronic interfaces allow consumers to book these services and the intermediary is not itself the principal in the actual supply of the accommodation or transport.
The Commission believes these changes could capture up to €6bn additional VAT per year, either from the underlying suppliers, intermediaries, or others in the supply chain.
To capture this VAT, the proposal is to make the intermediaries the ‘deemed’ supplier responsible for the collection and remittance of VAT on the payments received, particularly where the actual supplier will not be accounting for VAT on the full amount.
In addition, along with the same rules for similar ‘platform’ based businesses involved in the supply of goods, the intermediaries will be responsible for collating and submitting to EU tax authorities' details of the underlying suppliers and the sales made.
The combined impact will mean more VAT in the supply chain and more complex VAT compliance requirements for both owners and suppliers as well as the intermediaries and platforms.
What does this mean for suppliers and intermediaries?
For those businesses involved in the sale or booking of these services either in or to EU destinations, it could mean:
- Digital reporting requirements in relation to relevant sales across EU state borders
- VAT registration requirements for relevant intermediaries in the platform economy ultimately having a knock-on effect of supplies made within the supply chain involved in the platform economy
- An extension of the sales captured by the One-Stop-Shop for VAT
- A potential review of the pricing model due to the end suppliers’ obligation to account for VAT on their supplies
How we can help
Evelyn Partners has a highly experienced VAT team with significant experience in advising UK and international businesses on the application of EU VAT law, particularly in the travel, leisure and international supplies sectors. We would be happy to have conversation with any businesses that are concerned that they may be impacted by these changes.
Please feel free to contact either Damon Wright damon.wright@evelyn.com, Jade Els jade.els@evelyn.com or Bami Coker bami.coker@evelyn.com
Approval code: NTAJ14122272
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication.
Tax legislation
Tax legislation is that prevailing at the time, is subject to change without notice and depends on individual circumstances. You should always seek appropriate tax advice before making decisions. HMRC Tax Year 2023/24.
