- The European Union’s VAT in the Digital Age initiative (ViDA) reached a political agreement on November 5, 2024.
- ViDA is a set of tax reforms that will change how VAT works in the EU, and will be introduced from 2025 to 2035.
- The key change for the hotel, hospitality and leisure sector is the introduction of a new so-called deemed supplier rule under the Platform Economy pillar of ViDA.
- This rule will apply to online platforms operating a business model where they facilitate short-term accommodation rentals between hosts and guests.
- Under ViDA, platforms will, under specific conditions, be deemed to purchase and resell accommodation rental, thus becoming responsible for VAT.
- These rules must be implemented by each EU Member State by January 1, 2030, with an opt-in available from July 1, 2028.
- The change addresses unclear current rules, enforcement challenges and disparities between traditional and online sales.
- Online platforms facilitating short-term rentals in the EU
- uninterrupted to the same customer for up to 30 nights
- will be subject to these rules, with several conditions and exceptions.
- The rules do not apply if the host provides a valid VAT identification number and commits to charging VAT.
- EU Member States may require online platforms to validate VAT numbers of the hosts.
- Supplies under the small business scheme may be excluded, and those under the Tour Operators Margin Scheme (TOMS) must be excluded.
- EU Member States may classify certain rentals as hotel-like, excluding them from VAT exemptions for property leases (or not).
- Any separate B2C facilitation services will be subject to VAT in the EU Member State of the underlying supply (in principle the EU Member State of the accommodation).
Source: twobirds.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
