VAT in the Digital Age - Hihglights Pillar 2 on Platform Economy

Under Pillar 2 of the EU’s “VAT in the Digital Age” (ViDA) initiative, digital platforms facilitating short-term accommodation rentals and ride-sharing services will soon face major VAT changes. From 1 January 2030, these platforms will be treated as deemed suppliers for VAT purposes — meaning they must charge and remit VAT on behalf of their users. Member States may optionally apply this regime from 1 July 2028.

This new framework is designed to level the playing field between traditional service providers and digital platforms, which have often operated in VAT grey zones. To reduce compliance burdens and avoid double taxation, the EU has agreed on several key exceptions, including exemptions for users with a valid VAT ID or those covered by the new SME VAT exemption scheme.

Other important aspects include:

• A harmonized 30-day threshold for defining short-term rentals

• Carve-outs for travel agents operating under the TOMS scheme

• Ongoing obligations for digital platforms, even if not deemed suppliers — such as record-keeping and VAT ID validation

• New place of supply rules for facilitation services by platforms, also outside short-term accomodation and ride-hailing.

This reform brings new obligations, risks, and opportunities for platform operators across the EU. For tax teams and legal departments, understanding the impact of Pillar 2 is critical in preparing for implementation, tracking supplier statuses, and adapting system architecture.