At this week’s ECOFIN council meeting, an agreement on the VAT in the Digital Age (ViDA) proposal was not achieved due to Estonia’s continued objection to the ‘deemed supplier’ rules for the platform economy in the taxi and accommodation sectors.
Despite compromises in this part of the ViDA package, the Estonian finance minister argued that the deemed supplier model would violate VAT neutrality principles for SMEs working with platforms in these sectors. The Estonian minister proposed a further compromise to make this rule optional for EU member states. However, it seems other EU member states are opposed to the optionality clause due to concerns about competitive distortion between traders in different EU member states.
All other aspects of the amended ViDA proposal (published on May 8) appear to have reached a consensus and will be included in the ViDA package upon its approval.
Discussions will continue to find a resolution on this final point, with the ECOFIN council hopeful that an agreement can be reached in the coming weeks, and before the end of the Belgian presidency. The Belgian Presidency aims to finalize the ViDA package before transferring responsibilities to Hungary on July 1, 2024. Uncertainty about the future of VAT regulations persists until the next ECOFIN Council meeting on June 21, 2024.
