Europe is preparing a crash plan against VAT fraud in the digital economy, which causes Member States to lose an average of 93,000 million euros a year.
The European Council develops a new Directive that directly affects the digital platforms that act as intermediaries between the service provider and the client, so that they are the taxpayers of VAT.
The regulations, for the moment, will only affect two activities, that of short-term accommodation and that of transport through private taxis.
The text provides that in these cases, where the provider of the accommodation or transport service is usually an individual or a small company, the intermediary platform is in charge of collecting and declaring the VAT.
New Directive from the European Council
Europe expects member countries to take advantage of this new Directive on December 31, 2023, although the measure that affects digital platforms will enter into force on January 1, 2025.
“Until recently, (VAT) exempt individuals and small businesses were considered to have no impact on market competition with VAT registered businesses. But the platform economy has introduced new business models that are changing this situation”, explains the text of the Directive in development.
Under this framework, he argues that the objective of this measure is to “guarantee a level playing field” between the platforms that offer services and the traditional providers considered taxpayers, without imposing a burden on the underlying providers that operate through the platform.
“The taxpayer model considered as a supplier is a simplification measure intended to facilitate the collection of VAT in specific situations,” says the new regulation.
When does it happen?
Thus, it points out that this will occur when the intermediary of a transaction (the platform) is better placed than the underlying provider to guarantee the collection of the VAT due for the transaction, since it would be too burdensome for that provider to collect the VAT if it is a person or a taxpayer who uses special regimes for SMEs.
The new Directive will modify the current Directive 2006/112/EC as regards the VAT rules in the digital age. Specifically, it inserts a new article, 128 bis, which indicates that when a platform facilitates the provision of short-term accommodation rental or passenger transport services, it will be considered that it is the platform that provides the services for tax purposes.
The VAT Directive that modifies that of 2006 also focuses its action on two other legs. On the one hand, it obliges companies to make the notification for VAT purposes digitally and, on the other, it creates a single register or window for VAT filing purposes throughout the EU, to avoid problems in cross-border operations.
Once these measures are implemented, the Commission expects Member States to collect between 172,000 million and 214,000 million euros more in the first decade of their application (2023-2032).
Europe charges them the tax if the supplier is an individual or an SME