Second pillar of the ViDA package: new
VAT rules for the platform economy

The European Union introduces new VAT rules for the platform economy as part of the ViDA package. Pillar two focuses on the role of digital platforms and changes who must pay VAT and where it is due. This article explains the platform fiction and the new place-of-supply rule, and what this means for your business.

What is the ViDA package?

ViDA is an EU package that harmonises and modernises the VAT system. It consists of three pillars:

1. First pillar: e-invoicing and reporting
2. Second pillar: new VAT rules for the platform economy
3. Third pillar: a single VAT registration in the EU

This article covers pillar 2: new VAT rules for the platform economy.

ViDA pillar 2: explained

Pillar 2 introduces two key measures:

• The platform fiction
• A new place-of-supply rule for facilitation services

These measures align VAT rules more closely with the realities of the fast-growing platform economy. They also create a more level playing field between traditional businesses and digital platforms.

The impact is visible for major platforms such as Uber and Airbnb, but also affects smaller platforms.

1. The platform fiction

Under the platform fiction, the platform pays VAT to the tax authorities. Instead of the service provider, the platform becomes responsible for the VAT. The law assumes that the platform first purchases the service from the provider and then supplies it to the consumer.

The platform fiction only applies to:

• Short-term accommodation rental (maximum 30 nights)
• Passenger transport by road (for example taxi or ride-hailing services)

The service between the provider and the platform is exempt from VAT, without the right to deduct input VAT.

There is an important exception. If the provider shares a valid VAT identification number or OSS number with the platform and confirms that they will account for VAT themselves, the platform fiction does not apply. In that case, the provider invoices the customer and pays the VAT directly. They can also deduct VAT on costs, as far as their activities are taxable.

A platform may apply different VAT treatments per transaction. For one transaction, the platform pays VAT; for another, it does not. This requires clear processes and robust record-keeping.

Please note! you must store the provider’s declaration and details and be able to demonstrate them. If a valid declaration is missing, the tax authorities may still treat the platform as liable for VAT.

2. The new place-of-supply rule

For B2C facilitation services provided by platforms, a new VAT rule determines where VAT is due. VAT is payable in the country where the underlying service takes place. For example, a hotel stay or a taxi ride.

This rule applies to the platform’s own service, not to the underlying service provided by the supplier.

If you operate across multiple EU Member States, you may be able to use the One Stop Shop (OSS). This allows you to report VAT for multiple countries through a single return.

New administrative obligations for platforms

Even if the platform fiction does not apply, you still face new obligations as a platform. You must record the services you facilitate and make this data electronically available to Member States on request. This increases transparency and makes tax audits more effective.

According to current plans, these obligations will take effect on 1 July 2028. This is one year later than previously announced. Member States may postpone the introduction of the platform fiction until 1 January 2030.

Please note! the exact rules and implementation dates may still change. Final details will follow once the rules are incorporated into national legislation. You should therefore monitor developments closely.

Please note! these VAT obligations are in addition to existing DAC7 reporting requirements and align with them in substance.