Ecofin Council reached an agreement on the EU's new VAT package for the digital age
The comprehensive VAT package addresses the EU's need to modernise the VAT system to meet the demands of the digital age. It aims to combat tax fraud, support businesses, enhance system efficiency, and promote digitalization.
The Economic and Financial Affairs Council (Ecofin) was gathered in Brussels on Tuesday, 5 November. Finland was represented by Minister of Finance Riikka Purra. The meeting covered a wide range of topics, with one of the key issues being the achieved political agreement on the “VAT in the Digital Age” reform. The package includes three main action areas: digital VAT reporting for business-to-business transactions within the EU, reforming VAT rules for the platform economy, and introducing a unified EU VAT registration system.
A significant reform for the platform economy increases the responsibility of online platforms for VAT collection. The reform requires platforms to pay VAT on short-term accommodation and passenger transport services, such as ride-sharing, in cases where individual service providers do not collect VAT. Until now, private individuals and small-scale operators have been able to offer services tax-free via various platforms.
“In the future, platform operators will be responsible for collecting VAT if the seller has not done so themselves,” said Finland's Minister of Finance Purra. She also emphasized the reform's role in reducing market distortions.
Additionally, the package modernises VAT registration systems to eliminate the need for businesses to register in every member state where they operate. Cross-border business VAT reporting obligations will also be updated to become fully digital by 2030.
The next step is for the European Parliament to be consulted on the agreed text, after which the Council must formally adopt the text before it can be published in the EU’s Official Journal.
Source: EU Council press release(Link to another website.)
More about Ecofin(Link to another website.)