News article

At the last minute of its European Council presidency, will Belgium still manage to get unanimous agreement among member states on the ViDA package?

At the ECOFIN Council (European Council of Finance Ministers) on 14 May 2024, the Belgian presidency failed to secure unanimous agreement among member states on the European Commission’s ViDA proposal.

On the mandatory digital reporting from 1 July 2030 of intra-Community transactions, member states apparently do agree. Also, on the various measures to ensure that there will be fewer situations where VAT taxable persons established in one member state will need a VAT number and submit returns in another member state (extension of the transactions that can be reported under the OSS scheme, more cases where VAT can or must be reverse-charged to the customer, and so on).

But no unanimity was reached on the third pillar, the ‘deemed supplier regime’ (DSR), under which digital platforms that facilitate services of short-term rental of accommodation and passenger transport by road, will be considered commission agents, and thus will have to be responsible for collecting and passing on the VAT due on these services.

Officially, it is Estonia that continues to oppose this measure. The fact that Bolt, a very well-known platform that facilitates, among other things, road passenger transport services, is based in the Estonian capital Tallinn may have a role in this. The Estonian finance minister fears, among other things, that this new rule will lead to an increase in the cost for consumers, which could lead to less consumption and thus less revenue, and to a possible disadvantage of an EU platform vis-à-vis one based outside the EU.

According to a source close to the negotiations, Estonia has not yet lifted its opposition to that measure. Therefore, Belgium, as Council president, is still holding bilateral talks with Estonia to try to convince them to still give their agreement on the whole ViDA package. For now, Estonia insists on a so-called ‘opt-in’ clause, meaning that each member state could choose whether or not to apply this measure. But neither Belgium nor the European Commission are in favour of this.

Meanwhile, talks are also ongoing to allocate some top European positions. For instance, the Estonian prime minister is in the running to become the new “High Representative of the Union for Foreign Affairs”. Perhaps the allocation of this post could make Estonia give up its opposition to the DSR pillar of the ViDA package after all.

Wait and see what will happen on the ECOFIN Council this Friday 21 June 2024.