VAT: EU launches e-commerce crackdown: new anti-fraud rules from 2030

Brussels – Internet and online shopping, the EU launched an anti-tax fraud clampdown. The economic ministers of the 27 member states, meeting in the Ecofin Council, approved a VAT package in the digital age to regulate a market that is still too full of grey areas. It introduced three main changes: by 2030, reporting on additional value-added tax data will have to be mandatory and digital for transactions between member states; online transportation platforms such as Uber or short-stay accommodation such as Airbnb will have to charge consumers VAT and turn it over to the Treasury; make all national tax systems inter-operational by 2035, to make up for structural ‘gaps’ that are all-Europeans.

“After almost two years of negotiations, the Council has reached an agreement on the VAT package,” Mihaly Varga, Hungary’s finance minister and president-in-office of Ecofin, exults.” It is a significant achievement representing “a milestone for the digital transition and a significant step in improving the EU’s competitiveness,” he stressed.

Commission estimates identify total losses of 61 billion euros due to failure to collect VAT. The funds could help finance the economic recovery or put state budgets in order. Ecofin ministers believe that with new rules on electronic invoicing, real-time data reporting, and tighter absolute freedom of platforms, the VAT package will counter tax fraud by reducing it.

The vote concludes a nearly two-year process. The Commission presented the legislative proposals on Dec. 8, 2022. At the end of a complicated negotiation phase that closed through a compromise on the digital economy, the EU now has new tools. The Council provided member states with greater flexibility by expanding the definition of ‘short-term rental of accommodation for tax purposes’ and allowing member states to exempt small and medium-sized enterprises (SMEs) from the rules for considered suppliers. The Council also agreed on a short transition period for suppliers to apply the rules.

“Today’s agreement makes life easier for taxpayers, tackles fraud and promotes fair competition”, stressed Paolo Gentiloni, EU commissioner for Economy. “These new VAT rules strengthen our ability to harness the opportunities of digitalisation, while addressing some of its challenges, moving us toward a fairer and more competitive Europe”.