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Airbnb, Booking.com, Trivago and others could be forced to collect more Vat
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EU economy chief Paolo Gentiloni. Photograph: Max Rossi/Reuters
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Sarah Collins
Airbnb’s Dublin-based headquarters could be forced to collect millions more in Vat in a move to make all travel platforms – including the likes of Booking.com, Trivago and Expedia – pay in cases where their users fail to do so.
The travel booking sites as well as potential crypto trading gains are being drawn into the EU’s tax net in the bloc’s latest clampdown on the online economy
The European Commission estimates the clampdown on travel apps could bring in an estimated €6.6bn a year across the bloc.
“Ultimately, this will lead to higher prices for consumers who are already facing a cost-of-living crisis as costs across the supply chain are set to increase,” said Damon Wright, tax director at UK-based advisory firm Evelyn Partners.
Crypto holders are also being drawn into the tax net, with platforms having to report EU residents’ transactions to tax authorities. It will apply to domestic and cross-border transactions, whether the crypto providers are based in the EU or not.
“The digitalisation of our economies poses challenges for our tax systems, like how to treat new business models such as the platform economy and new digital transactions, notably in the crypto asset market,” said EU economy chief Paolo Gentiloni.
A third rule change will make firms use electronic Vat invoices when trading with other countries inside the bloc. Governments can choose to make it mandatory for domestic trade.
A survey by tax technology firm Avalara shows Irish firms are less prepared for the move to e-invoicing than their German and French counterparts, with 23pc of business leaders saying they are not ready.
While 88pc of Irish firms believe the move would benefit them, more than a third are delaying investment in new tools and technologies by up to six months.
“Business leaders are well informed of the changes, but with investment on hold due to the economic downturn, there is a risk firms will not capitalise on the early mover advantage and will instead opt for a ‘sticking plaster’ approach,” said Alex Baulf, senior director of global indirect tax at Avalara.
“The big question is whether supplies of goods from Northern Ireland to the Republic would be caught by the proposed regulations, This could lead to Belfast businesses digitally transforming their finance function ahead of those in London.”
Ireland could have collected an extra €2bn in Vat in 2020, or around 12pc of total Vat revenues, if all moneys due had been paid, the Commission said.
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