VAT in the Digital Age: updated deemed reseller model for online platforms and marketplaces

The European Commission has drafted a directive called "VAT in the Digital Age." This initiative discussed how to handle VAT in a platform economy. The directive aims to combat VAT fraud and make sure platform sales are treated equally to traditional suppliers. They propose to extend the deemed reseller model to all EU goods via online marketplaces. The new VAT directive comes into effect in January 2025.

In the meantime, a deemed reseller model for online platforms was already introduced in 2021 stating that a transaction between an online trader, an online marketplace and a customer is fictitious when the online trader is established in a third country (such as the U.S.) or the import material value is less than EUR 150. This model is already implemented and widely practiced. The updated deemed reseller model is already applied to all supplies of goods within the EU and intra-Community transfers of own goods via online marketplaces.

Online marketplaces that already converted their systems in 2021 are one step ahead of the remaining suppliers of goods within the EU and intra-Community, who now are catching up on updating their systems. Transfers of own goods via online marketplaces will be subject to the deemed reseller model. Luckily this new model is streamlining the process and eliminating errors for online marketplaces so. Please contact us today at vat@eurovat.com to discuss your online sales of goods to the EU.

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