European Union diplomats have reached an agreement on reforms to VAT rules that will raise taxes on sharing economy platforms such as Airbnb and Uber. The deal was reached when Estonia withdrew its veto.
In May, Estonia was the only EU country to oppose the proposal for up to 25% VAT on sharing economy platforms, where many companies such as the Bolt app back in 2013 were originially set up. The EU’s aim is to digitise VAT invoicing so that platforms can register and pay tax, streamlining the process and ensuring they pay their fair share of tax across all countries within the EU.
Under EU tax rules, any of the 27 member states can block new laws, but changes must be approved unanimously. Estonia’s Finance Minister Mart Võrklaev said in May that the tax would not target platforms but rather small businesses that provide services through them, raising concerns that the change would raise costs for consumers and create unfair competition with direct sales.
Under the new agreement, there will be a longer transition period, with the new rules becoming optional in July 2028 and mandatory from January 2030. This will mean that sharing economy platforms such as Airbnb and Uber will be responsible for registering for VAT, rather than relying on property owners or drivers.
A spokesperson for the European Holiday Home Association [EHHA] told Euronews that the new law will harm services provided through platforms, lead to double taxation, negatively affect those who use the platforms for extra income and drive up prices in the tourism sector.
EU officials are concerned that platforms pay less tax in states where they do not have a physical presence, while hotels, which already pay VAT, have denounced unfair competition from digital services.
Beyond VAT reforms, the proposals aim to modernise pricing and strengthen regulations to combat tax evasion.
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