Platforms and other intermediaries as VAT collectors

Many assume VAT collection is simple—sellers charge tax, buyers pay it. But in today’s digital economy, the reality is far more nuanced, with platforms like Amazon and Airbnb becoming key players in the tax collection process.

In this episode, Paweł Mikuła speaks with Nevia Čičin-Šain, Assistant Professor at Vienna University of Economics and Business and author of the award-winning book „The Involvement of Intermediaries in the Collection of European VAT.” Together, they explore who collects VAT, how it evolved over the time, why basically every electronic store or platform may be VAT liable and how digital platforms have evolved from mere facilitators to actual VAT collectors. They talk about the challenges of taxing cross-border transactions in a globalized economy, and the complex legal frameworks governing these new collection models.

This episode is essential for tax professionals dealing with e-commerce and platform economy transactions, VAT managers working with digital marketplaces, and anyone seeking to understand how technology is reshaping fundamental tax collection mechanisms in the EU and beyond.

This article is a short summary note from a discussion with tax law expert Nevia Čičin-Šain and does not constitute a sourced academic paper. The analysis presented reflects the conversation’s key insights and points rather than comprehensive research.

VAT Collection by Platforms and Other Intermediaries

Introduction

This podcast episode features Paweł Mikuła, partner and co-founder of Halcyon Tax Customs Legal, interviewing Nevia Čičin-Šain, Assistant Professor at Vienna University of Economics and Business. They discuss her book „The Involvement of Intermediaries in the Collection of European VAT” and why this topic is important in today’s economy.

Why Intermediary Collection Is Important

Digitalization of the economy has increased instances where sellers and customers are not in the same jurisdiction. This makes it harder to impose obligations on non-established suppliers to collect and remit VAT.

The general rule is that the taxable person performing the supply of goods or services collects VAT. When suppliers are not established in a given jurisdiction, the obligation can shift to the customer – but only if the customer is a taxable person or sometimes a VAT-registered non-taxable legal person. The obligation never transfers to private individuals because they do not report VAT.

With distance sales of imported goods or electronic services provided to consumers, the customer collection model cannot be used. A third person needs to be tasked with the administrative burden.

This phenomenon is present not only in the EU VAT system but in other countries as well, as everyone struggles with the same issue.

Types of Intermediaries

According to Nevia, the OECD created a classification of intermediaries based on operations they perform in the supply chain:

Vending Intermediaries

These are online platforms, including those providing or participating in provision of electronically supplied services.

Transport Intermediaries

These include express couriers and postal operators. They are relevant only for e-commerce and supply of goods being transported. They do not apply to services or sharing economy because there is nothing to transport.

Payment Intermediaries

Payment intermediaries have access to money but have limited insight into supply characteristics. They might not know what is being sold, where it ships from and to, or the customer’s exact nature.

Functions of Intermediaries

Education Function

The least burdensome function is educating vendors on how to collect VAT. Research found people are more likely to follow notifications from platforms they use than go to tax administration portals and read legislation.

Information Collection

Article 242a of the VAT Directive imposes information collection obligations on intermediaries. DAC7 information can be used for VAT purposes. CESOP requires payment service providers with more than 25 cross-border payments in a calendar quarter to collect and report information.

Joint and Several Liability

These rules exist e.g. in the UK, Germany, France, Austria.

Deemed Supplier Rules

The highest degree of responsibility is when intermediaries are deemed to become the actual supplier, stepping into the underlying supplier’s shoes.

EU VAT System Evolution of Intermediaries in VAT collection

Article 28 and Undisclosed Agent

Article 28 of the VAT Directive addresses when someone acts in their own name but on behalf of someone else. This creates two fictitious supplies for VAT purposes – one from the actual supplier to the agent, and from the agent to the recipient.

The Fenix International case is an important example of the court case law involving OnlyFans. Clients knew content creators, not the platform, were providing services. The question was whether Article 9a of the VAT Implementing Regulation goes beyond Article 28’s scope.

2015 Reform

In 2015, there was a shift to destination principle for all suppliers of electronically supplied services. Before this, EU suppliers used origin principle, leading to tax competition as suppliers registered in member states with lower VAT rates.

Article 9a was introduced in the implementing regulation for app stores and similar platforms.

2021 E-Commerce Package

The e-commerce package eliminated VAT exemption for low-value consignments. It introduced deemed supplier rules for:

1. Distance sales of imported goods in consignments up to €150 to non-taxable persons
2. When goods are in EU territory but the vendor is non-EU established 

Nevia mentions around €20 billion is collected just from IOSS alone.

ViDA Package (2028)

The platform collection model will expand.

For Uber drivers or Airbnb landlords, there will be a fictitious supply split: one from driver/landlord to platform (exempt from VAT but with input VAT deduction rights), and another from platform to customer (taxed with VAT).

This enters force July 1, 2028.

Evaluation of the Model

Nevia evaluates the intermediary collection model using policy and legal criteria:

Policy Criteria

Efficiency: Criterium met, because tax previously foregone is collected. Platforms have technology to do it more efficiently than underlying suppliers.

Effectiveness: Criterium met, VAT gap in e-commerce has significantly decreased. Revenues are in billions – around €20 billion from IOSS alone.

Neutrality: Depends on definition. Legal neutrality yes – imports taxed like domestic supplies. Economic neutrality maybe not – platforms face compliance costs they might pass on. Smaller platforms might struggle more than giants.

Simplicity: Simpler for tax administrations dealing with fewer taxpayers. Simpler for underlying suppliers not registering in every member state. Not simple for platforms due to complex rules.

Certainty: Complex rules and open interpretations create lack of certainty. Platforms face liability risks if they get it wrong.

Fairness: Subjective. Platforms might argue it’s unfair to make them do tax administration work. But it restores level playing field between traditional and online businesses, and between EU and non-EU businesses.

Legal Criteria

Proportionality: Measure is appropriate and necessary for collecting VAT and fighting fraud. Traditional collection methods failed in digital economy. Compliance burden on platforms is high. 

Freedom to Conduct Business: Restricts this freedom by imposing obligations affecting platform operations. But can be restricted for objectives of general interest like tax collection.

Non-Discrimination: Rules try to be neutral regarding platform origin. Practical impact might differ depending on establishment location and size.

Nevia concludes there are tensions with these principles, but current rules likely don’t constitute manifest violation of primary EU law. There are friction points, especially regarding proportionality and certainty.

Future Outlook

Nevia believes intermediaries’ role will expand further. Payment service providers or other intermediaries might be drawn into collection process through real-time reporting or split payment mechanisms. Tax administrations cannot do it alone in the digital global economy.

She summarizes: „Outsourcing tax collection to the private sector.”

Conclusion

The conversation reveals how VAT collection has evolved beyond the simple vendor-customer model. Many different entities involved in or related to transactions now play significant roles in collecting VAT, reflecting the realities of the modern globalized and digitalized economy.

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