European Council Agrees on Updates on VAT in the Digital Era

On November 5, European Council reached an agreement on new measures that will bring the EU’s value added tax (VAT) rules into the digital age, aimed at combating tax fraud and supporting businesses in the digitalized environment.

The agreement covers three acts – a directive, a regulation and an implementing regulation – which focus on three aspects of the VAT system:

• fully digital VAT reporting obligations for cross-border transactions by 2030;

• online platforms will pay VAT on short-term accommodation and passenger transport services in most cases where individual service providers do not charge VAT;

• improvement of online VAT one-stop-shops. Currently, businesses have to register for VAT twice (in their own state and in every member state in which they do business); after the revision, they will be able to report on VAT through a single platform in a single language.

The Council also agreed to shift the liability for the payment of VAT in business-to-business transactions from the supplier of a good or service to the buyer if that supplier is not established in the member state where the VAT is due.

Press release