VIDA – VAT in the Digital Age.

Who is Imposing ViDA Vat

The  EU Commission published a draft document on 8/05/2024 on “Value Added Tax (VAT in the Digital Age (ViDA)” The proposal was first introduced by the EU commission in 12/2022, with a single VAT registioatn system across the EU. There would be one EU Vat Registration system with all money collected centrally by the EU, rather than member states as presently exist


ECOFIN Meeting June 2024
Finance Ministers met at ECOFIN JUne 2024

What is ViDA

This is a tax which would affect the following

  • Vat on digital platforms which facilitate or book passenger transport and Short-Term Rental and passenger transport.
  • Expand the singe VAT registration to a one stop shop (OSS) across the EU.
  • Introduce real time digital reporting systems based on electronic invoicing (e-invoicingO for businesses that operate across the EU.

Why in News

SME Marketing Companies damaged by VIDA
VIDA impact on small STR provider

The EU Commission wants to bring in this regulation which has to approved by Finance Ministers for the EU states. At a meeting in Luxembourg on 21/06/2024 the ECOFIN the Ministers fir Finance did not adopt the ViDA proposals, and a decision on it was previously pospoed at a meeting on 14/05/2024. The Belgian presidency of rte Council of Europe is very much in favour of the ViDA proposal, but some other members states such as Ireland are not happy with the proposals. Estonia has to date clearly blocked the adoption of ViDA.

Historically the registration for VAT takes place the member state where taxable sales take place, and VAT is collected. In 2015 the EU introduced a One Stop Shop (OSS) for providers of digital platforms to sell B2C services – selling directly to the consumer. This has aided the development of the large OTA companies such as Booking, Expedia and Airbnb, who sell direct to the consumer.

The legislation if introduced would mean the mandatory e-invoicing for all good s sold across the EU and make the provision of travel services much more difficult. This would not affect domestic transactions, which would still be governed by the national regulations.

The ISCF View on ViDA

Effects of ViDA on SME Marketing Companies

Along with our colleagues in the EHHA ( European Holiday Homes Association) the ISCF favours an opt-in approach for member states for ViDA if it is to go ahead. At present the proposals affect platforms selling accommodation and transport of people, in B2B businesses. This would seriously affect SME tourism marketing businesses in Ireland and other countries, who already are over-burdened with gathering data from property owners. IT would give a disproportionate advantage to the large OTA companies, and lead to the closure of independent national marketing companies. It would have a similar affect on some small travel agencies across the EU, with less control at national level, and closure due to cost of compliance. The national opt in system would best serve the smaller countries.


What Happens Now with ViDA?

The Hungarian Government takes over the Presidency of the EU in July. There are many elections at national level which will affect the EU Commission and its functioning. The protection of SME tourism businesses in Ireland is the goal of the Irish Self-Catering Federation