On Wednesday, Parliament’s plenary approved the changes to the rules that member states indicated in November they wished to make to the VAT Directive. MEPs approved the rules with 589 votes in favour, 42 against and 10 abstentions.

These changes will require that by 2030 online platforms must pay VAT for services provided through them in most of the cases where the individual service providers do not charge VAT. This will put an end to a distortion of the market because similar services provided in the traditional economy are already subject to VAT. This distortion has been most significant in the short-term accommodation rental sector and the road passenger transport sector. Member states will have the possibility of exempting SMEs from this rule, an idea which Parliament had also pushed.

The update will also fully digitalise VAT reporting obligations for cross-border transactions by 2030 with businesses issuing e-invoices for cross-border business-to-business transactions…