02 Aug 2022

VAT in the digital age

The rise of the platform economy, the associated network effects, and variations across the models create challenges for the functioning of tax systems. At the same time, digital means giving tax administrations enormous opportunities. See more discussion in the report co-authored by CASE “VAT in the digital age”.


This Report was prepared within the framework of the study on VAT in the Digital Age for the European Commission, Directorate General for Taxation and Customs Union. The Report covers three distinct but interrelated areas of VAT policy:

1) Digital Reporting Requirements (DRRs);

2) The VAT Treatment of the Platform Economy;

3) The Single VAT Registration and Import One Stop Shop (IOSS).


The purpose of the Report is two-fold:

(i) to assess the current situation with regard to the three domains listed above;

(ii) to assess the impacts of a number of possible policy initiatives in these areas.

The Report is intended to feed into the preparation of an Impact Assessment by the European Commission, to accompany possible legislative or non-legislative initiatives.


This first part of the Study covers ‘Digital Reporting Requirements’, that is any obligation for VAT taxable persons to periodically or continuously submit data in a digital way on all (most of) their transactions, including by means of mandatory e-invoicing, to the tax authority. As of September 2021, 12 EU Member States have introduced a Digital Reporting Requirement, with positive net impacts, as the additional VAT revenue exceeds the costs for setting up the system and complying with the requirements. However, the existing rules (or lack thereof) on Digital Reporting Requirements generate two main problems:

(i) a fragmented regulatory framework,

(ii) an insufficient degree of fight against VAT fraud, for intra-EU transactions, as well as at a domestic level.

The analysis of impacts of possible policy options shows that the best policy choice results from the introduction of an EU Digital Reporting Requirement. As for the type of requirement, the comparison suggests that an e-invoicing solution ranks first across the various scenarios.


This second part of the Study on VAT in the Digital Age, focuses on the VAT treatment of the platform economy. It aims to:

(i) provide an estimate of the size of the platform economy in the EU,

(ii) analyse the VAT aspects related thereto, including an evaluation of the impact of the differences between the national VAT measures and guidelines,

(iii) conduct the analysis of costs, benefits, opportunities and risks in respect of possible future changes, including the underlying problem definition and identification of policy options.

The Study finds that there were over 1,500 digital platforms with a significant presence in the EU27 in 2019, generating about EUR 67 billion of revenue. The scale of the platform economy has increased at a very fast pace for the last years. The growing scale, multi-sided nature, complexity and variation of business models within the platform economy create challenges for VAT rules, which are insufficiently clear and harmonized. Moreover, by bringing new economic operators into the tax systems, the growth of the platform economy hinders the enforcement of VAT compliance. The Study assesses a number of policy options encompassing:

(i) the clarification of VAT rules regarding the nature of the platform’s facilitation and the providers’ status;

(ii) the streamlining of record-keeping obligations;

(iii) a structural change to the VAT treatment, consisting in the introduction of a deemed supplier role for digital platforms.


This third part of the study focused on progress towards a Single Place of VAT registration in the EU (i.e. the minimisation of situations where businesses are obliged to VAT register in more than one Member State) and improvements to the Import One-Stop Shop (IOSS) regime. The study examined the continued existence of situations requiring multiple VAT registrations after the introduction of the e-commerce VAT package on 1 July 2021. This both defined new rules and introduced two new mechanisms – the One-Stop Shop (EU and non-EU) and the IOSS – that allow businesses to avoid additional registrations by declaring and paying VAT incurred on certain types of transactions in Member States where they are not established. The examination led to an impact assessment exercise, including a problem definition, scoping out of objectives and policy options and an assessment of the likely impacts of these. The study found that certain types of transactions – especially in the quickly growing e-commerce sector – still require multiple VAT registrations, increasing administrative and compliance costs, contributing to fraud/non-compliance and distorting trade in the Single Market. Several policy options offer the potential to address these issues, including measures to increase the scope and use of the OSS and IOSS as well as to enhance the implementation of the existing reverse-charge mechanism.







Report was prepared by prepared for the European Commission by: Economisti Associati, Oxford Research, CASE, Wavestone, Hedeos, Mazars, Desmeytere Services and Università di Urbino.