EU ViDA Deemed Supplier Rules Explained for Digital Travel Platforms

ViDA Deemed Supplier Rules Explained: How the 2025 EU VAT Reforms Affect Travel Platforms

The European Union’s VAT in the Digital Age (ViDA) reforms, adopted on 11 March 2025, mark the most significant VAT overhaul in two decades. A central feature is the expansion of the “deemed supplier” regime, which shifts VAT liability from small or exempt providers to the digital platforms that facilitate their services.

Under new Article 28a of the VAT Directive (2006/112/EC), platforms that enable short-term accommodation rentals (less than 30 consecutive days) or passenger transport services (primarily road-based, such as ride-sharing) become responsible for collecting and remitting VAT when the underlying supplier does not.

This rule primarily targets individuals, small enterprises exempt under Article 284, and non-EU service providers who operate via platforms like Airbnb, Booking.com, or Uber. The intent is to close VAT gaps in the gig and sharing economy, ensuring consistent taxation regardless of whether services are offered by professional or casual providers.

From July 2028, platforms may opt in voluntarily, with full enforcement beginning on 1 January 2030. By that date, every qualifying platform must comply with the new VAT and digital reporting requirements across the EU.

How the Deemed Supplier Model Works

When the deemed supplier rule applies, the platform is treated as if it buys and resells the service. The underlying host or driver is deemed to supply the service to the platform on a VAT-exempt basis, while the platform supplies it to the end customer and charges VAT according to the destination principle—that is, where the service is consumed.

Platforms must handle record-keeping, invoicing, and reporting, including real-time submissions under the upcoming Digital Reporting Requirements (DRR) from 2030. The regime applies only where the platform genuinely “facilitates” the transaction—meaning it controls booking terms, processes payments, or mediates between parties. Pure listing sites with no payment or contractual involvement fall outside the scope.

Importantly, TOMS (Tour Operators’ Margin Scheme) supplies remain excluded from ViDA’s deemed supplier model to prevent double taxation. This preserves margin-based taxation for traditional travel packages while applying the new rules to standalone accommodation or transport services.

Example 1: Short-Term Accommodation (Airbnb-Style Model)

A French-based platform facilitates a five-night apartment rental in Spain for a German guest. The Spanish host is an individual earning below the €10,000 small business threshold and is therefore exempt from VAT under Article 284.

The total booking value is €800 (€700 for accommodation and €100 in platform fees). The place of supply is Spain, as the property is located there, and the Spanish VAT rate of 21% applies.

Since the platform handles the booking, processes payment, and manages disputes, it meets the facilitation criteria. It therefore becomes the deemed supplier. The host makes a deemed VAT-exempt supply to the platform, while the platform makes a taxable supply to the guest for €800 at 21% VAT (€168).

The platform collects a total of €968 (€800 plus €168 VAT), remits €168 to the Spanish tax authorities, either directly or via the One Stop Shop (OSS) mechanism, and keeps the right to deduct input VAT on its own costs, such as marketing or IT expenses.

From 2030, the platform will also have to report this transaction through the DRR system, including host details, the consumption location, and payment reference data.

If the host were VAT-registered, the deemed supplier rule would not apply, the host would charge VAT directly, and the platform would act only as an intermediary.

This change effectively removes VAT exemptions for private short-term rentals and levels the playing field with hotels, which have always been subject to VAT. The European Commission estimates additional annual VAT revenue of between €500 million and €800 million from this measure.

Example 2: Passenger Transport (Ride-Sharing Model)

A Dutch ride-sharing platform facilitates a €55 journey in Italy for a Belgian business traveller. The Italian driver operates below the national VAT threshold and is not registered for VAT.

Because the platform sets pricing, processes payments, and provides insurance, it qualifies as a facilitating platform. The driver is deemed to make a VAT-exempt supply to the platform, while the platform makes a taxable supply to the passenger.

The platform must apply Italian VAT at 22%, resulting in €12.10 of VAT on the €55 fare. The total charge to the passenger is €67.10, and the platform remits the VAT through its Italian registration or, from 2028, through the new Single VAT Registration (SVR) that replaces the current OSS and IOSS systems for multi-country operators.

If the passenger were VAT-registered (for instance, a company employee booking business travel), the reverse charge would apply: the passenger’s business would account for the VAT instead.

Platforms must maintain detailed records, including driver IDs, trip routes, and location data for VAT allocation. Cross-border rides must apportion VAT according to the kilometres travelled in each Member State. Food delivery services remain outside the deemed supplier scope for now to avoid overextending the system.

The measure is expected to recover an additional €300–500 million in VAT annually from the gig transport sector, primarily by eliminating exemptions for small-scale drivers.

Example 3: Packaged Travel and the TOMS Exclusion

A German tour operator registered under TOMS sells a three-night holiday in Portugal that includes accommodation (€600) and an airport transfer (€100). The operator sells the package for €800 total, including its margin.

Even if the underlying accommodation provider or driver is VAT-exempt, the platform that facilitated the sale, say, a large OTA, does not become a deemed supplier. TOMS takes precedence. The operator calculates its margin (€800 sale minus €700 cost = €100) and pays German VAT at 19% only on that €100 margin (€19 total VAT).

The platform simply reports the facilitation under DAC7 but holds no VAT liability.

For mixed transactions that combine TOMS and non-TOMS elements, such as an optional extra ride booked outside the package, platforms must apportion the supply. Only the standalone non-TOMS component falls under ViDA’s deemed supplier rules.

This ensures that the €10 billion-plus European TOMS market continues to operate under its margin-based structure without disruption from platform taxation rules.

Compliance and Practical Outlook

From 2028, platforms can voluntarily opt into the deemed supplier regime to test systems ahead of full enforcement in 2030. Penalties for non-compliance are expected to reach up to 15% of turnover in certain Member States.

By 2030, all intra-EU transactions under these rules must also comply with ViDA’s Digital Reporting Requirements, involving real-time submission of transaction data through national or EU-level APIs.

Interpretative challenges remain, particularly around defining “facilitation” and distinguishing between TOMS and non-TOMS activities. The European Commission’s 2025 Fiscalis Workshop highlighted these ambiguities, and further explanatory notes are expected in early 2026 to clarify examples and edge cases.

Platforms and travel operators should begin preparing now by auditing their dependencies, validating supplier VAT IDs, and upgrading software to manage cross-border VAT rates automatically. Tools such as VATCalc and Avalara are already developing modules for margin segregation and ViDA DRR compliance.

Conclusion

The ViDA deemed supplier reforms represent a fundamental shift in European VAT administration. For the first time, digital platforms, not individual hosts or drivers, will bear the primary responsibility for collecting VAT on short-term rentals and passenger transport.

For travel businesses, this means closer scrutiny of platform relationships, more robust digital reporting, and a clear need to distinguish between TOMS and non-TOMS services.

Platforms that invest early in automation and compliance can not only avoid penalties but also build a more transparent, trusted relationship with both regulators and users.

For tailored ViDA audits and TOMS integration reviews, visit VAT.travel.

References

• European Commission (2025). VAT in the Digital Age (ViDA) Package, adopted 11 March 2025.

• Directive 2006/112/EC, as amended by Directive (EU) 2025/524.

• Fiscalis Workshop Summary, “ViDA Implementation and Platform Liability,” September 2025.

• European Commission, VAT Revenue Gap 2025 Report.

• HMRC Notice 709/5 (for UK reference on TOMS exclusion), April 2024.

Disclaimer:
Content published by Antravia is provided for informational purposes only and reflects research, industry analysis, and our professional perspective. It does not constitute legal, tax, or accounting advice. Regulations vary by jurisdiction, and individual circumstances differ. Readers should seek advice from a qualified professional before making decisions that could affect their business.
See also our Disclaimer page