Indirect Tax Article VAT in the Digital Age: the platform economy analysis – what to expect? | Deloitte Netherlands


VAT in the Digital Age: the platform economy analysis – what to expect?

7 December 2022


The European Commission will release the legislative proposals on VAT in the Digital Age initiative on 8 December 2022. This proposal will result in three distinct but interrelated areas of VAT policy, which aim to address the challenges of applying this tax in the digital economy.

The proposals will cover three areas:

(i) Digital Reporting Requirements (DRRs);
(ii) VAT treatment of the platform economy; and
(iii) Single EU VAT registration and Import One Stop Shop (IOSS).

In this alert we will discuss what we can expect from the expected changes in the field of the VAT treatment of the platform economy.

Although the proposal has not been released, we take the final report of the European Commission on the VAT treatment of the platform economy that was published on 21 July 2022 as a starting point, taking into account details that have become known more recently. The final report (hereinafter “the Study”) principally identifies the scope and the exclusions of the proposal, the problems when applying VAT in the platform economy, and proposes five policy options to solve them.

Scope of the Study

The term “platform economy” is defined as “a multi-sided model of transactions, where there are three or more parties involved”.

The companies that are in the scope of this study are those digital platforms that “facilitate the connection between two or more distinct but interdependent sets of users (whether entities or individuals, whether carrying out an economic activity or not) who interact via electronic means. In these interactions, one of the parties to the platform offers access to or transfers assets, resources, time, and/or skills, goods, and/or services to the other party, in return for monetary consideration or, in certain cases, by barter/non-monetary exchanges. In most cases, these users could be named ‘providers’ and ‘consumers’, respectively. A platform usually charges a fee for the facilitation of the transaction”.

On the contrary, the following business models and sectors are excluded from the scope of the Study:

  • Financial intermediation and stock exchanges (e.g., CO2 stock exchanges and brokerage houses). They were excluded since these are regulated markets, they can operate both over the Internet or not, and, in the interactions, in most of the cases, the ‘users’ remain anonymous;
  • Taxi companies using internet-based platforms in parallel to traditional phone hailing and providing services on behalf of the company rather than in their own name;
  • Advertisers other than search engines and social networks. This group of excluded ‘advertisers’ consists primarily of media and web companies that match viewers and companies via other traditional business models.

It is also important to note that for the purposes of this study, the term “platform economy” is defined as “a multi-sided model of transactions, where there are three or more parties involved”. Considering the above what the “platform economy” covers is in our view quite a large part of our current economy and already a large part of today’s common business models.

Problem areas addressed by the Study

Three problem areas were identified when applying VAT to the platform economy:

  1. Unclear and not harmonized VAT rules. Specifically, those related to (i) the taxable status of the provider, (ii) the nature of services and place of supply, and (iii) reporting and record-keeping obligations.
  2. Difficulties in enforcing VAT compliance in the platform economy. This is closely intertwined with the determination of the taxable status of suppliers (and transactions).
  3. Lack of VAT equality and neutrality. For example, the unequal VAT treatment of the supply of goods or services via traditional channels or digital platforms. This affects neutrality in terms of (i) the final price of similar services for final consumers, (ii) the choice of the supply channel by providers (platform-mediated or not), and (iii) VAT compliance costs.

Policy options assessed

Five policy options were analyzed in the Study to solve the mentioned problems:

  • Option A – Status quo

This option means no legislative intervention in the VAT Directive and Implementing Regulation (IR). However, Member States could introduce changes independently, likely related to (i) clarifications of the VAT treatment of certain transactions and (ii) the progressive introduction of reporting obligations at a national level, in addition to DAC7 provisions, which are being implemented.

These independent changes would likely increase the fragmentation of the legal landscape that the platforms and their users are facing, contrary to a harmonized application of VAT rules. Additionally, the Commission could adopt non-binding clarifications via Explanatory Notes or VAT Committee Guidelines.

  • Option B – Clarification of VAT rules, book-keeping and reporting obligations

This option proposes adjusting the VAT treatment of the platform economy. These adjustments could be introduced in the VAT Directive and IR. The adjustments focus on three aspects:

B.1. Determination of the nature of the services supplied by the platform to its providers, to then identify which are the applicable place of supply rules. This would be done through a legislative amendment to the VAT Directive. Two alternatives can be considered, (i) intermediary services, and (ii) electronically supplied services.

B.2. Next, the introduction of a rebuttable presumption of the status of platform providers. This means that the provider is considered not to be a taxable person unless he/she provides a VAT number to the platform. The providers who do not communicate the VAT number would be required to confirm that they are not taxable persons.

B.3. Finally, a clarification of the relative scope and modalities of compliance of the existing and forthcoming reporting obligations for platforms may be in order. However, no fully-fledged policy option was proposed in this area, considering the difficulties of streamlining recordkeeping obligations.

  • Options C to E – deemed supplier regime

Option C – Narrow deemed supplier: the deemed supplier role would be applied to platforms facilitating the supply of certain accommodation and transport services for monetary consideration.

Option D – Sectoral deemed supplier: the deemed supplier role would be applied to platforms facilitating the supply of all accommodation and transport services for monetary consideration.

Option E – All services deemed supplier: the deemed supplier role would be applied to platforms facilitating the supply of all services for monetary consideration.


The deemed supplier role will apply when the provider is:

  • a non-established person not identified for VAT purposes in the EU; or
  • when established in the EU is,
    o a non-taxable person (private individual) or
    o a member of the ‘Group of Four’: (i) taxable persons carrying out only supplies of goods or services in respect of which VAT is not deductible; (ii) taxable persons subject to the common flat-rate scheme for farmers; (iii) taxable persons subject to the SME scheme; and (iv) non-taxable legal persons.

The practical impact of the policy options

The study summarizes the impacts of the policy options regarding (i) VAT revenue, (ii) legal certainty and administrative burdens, and (iii) competition/internal market.

The impacts of Option B.2. (rebuttable presumption on the status of platform providers) stand out in this section, since it would provide revenue increase, legal certainty improvement, administrative burdens reduction, and there would be a negligible impact on competition/internal market.

However, is not yet clear which of the five policy options will be presented in the proposal to be released on 8 December. Therefore, is relevant to keep in mind these possible changes already established in the Study.


If you have any questions on the practical implications for your business, please reach out to your Deloitte contact.

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