Online platforms for short-term rentals and transportation services, such as Airbnb and Uber, will have to charge VAT from 2030 at the latest, as the EU recently approved new rules for online services.
ADVERTISEMENTThe EU wants to level the playing field on VAT for tourist accommodation and chauffeur-driven car transport, so online platforms such as Airbnb, Uber and Bolt will need to collect VAT, just as other traditional businesses do. That could amount to as much as 25%, and the rule would apply from 2030.
“It’s always very difficult to reach agreement on EU tax laws, because they have to be approved unanimously by all 27 member states. And in this case, there was one in particular that was firmly opposed. It was Estonia, home to Bolt, one of the ride-sharing companies that would be greatly affected by this measure,” according to Jack Schickler, who followed the negotiations for Euronews, which ended with an agreement in the EU Council on 5 November.
Some member states have obtained exemptions that allow them to exclude certain categories of small businesses from the tax, and online platforms consider that this has created a new level of injustice, which was precisely the criticism from brick-and-mortar rivals that led to the original proposal.
“The deemed supplier regime actually defeats the level playing field between the online short term rental accommodation and the traditional hotels. Two categories – private people and exempt from VAT enterprises, which are offering short term rental accommodation on online platforms - will have no right to deduct input VAT,” said Viktorija Molnar, secretary general of the European Holiday Home Association.
“So in other words, these two categories working in online platforms will be treated as businesses, but actually devoid of any business rights and privileges,” she added.
Estimates suggest that six billion euros in VAT per year could be raised from platforms providing short-term rentals and ride-hailing services. Every year, around 1 trillion euros in VAT revenue is collected in the EU, making it a key source of budgets in the Member States. It is also an important resource for the EU’s collective budget, which received 22 billion euros in 2023 alone.
Prices will hike
It’s likely that those extra taxes will be passed on to the customers, as Viktorija Molnar admitted. ”It will of course increase the prices for the consumers. It will impose unfair obligations to online platforms, especially those which are doing business across the borders,” she said, adding: “Adapting to these rules requires a lot of time, energy or financial resources as platforms will eventually have to understand and adapt to 27 different deemed supply regimes in Member States.”
“Taxing Airbnbs would certainly benefit the Greek state. However, on the other hand, this would not please tourists. A middle solution is needed, a taxation that will be neither too high nor too low,” an Athenian told EU Decoded of the proposal.
Short-term rentals currently account for around a quarter of tourist accommodation available in the EU and ride-hailing is now commonplace across the bloc’s countries. But by imposing VAT on these online businesses, does Europe risk killing the digital goose which lays the golden eggs?
Find out more details in the video!
Journalist: Isabel Marques da Silva
Production: Pilar Montero López
Video production: Zacharia Vigneron
Graphism: Loredana Dumitru
Editorial coordination: Ana Lázaro Bosch and Jeremy Fleming-Jones
