EU to Target Cryptocurrency Earnings and Holiday Bookings for Tax
Airbnb’s Dublin-based headquarters could be forced to collect millions more in VAT in a bid to charge all travel platforms – including Booking.com, Trivago and Expedia – in case their users don’t. wouldn’t do.
Travel booking sites as well as potential gains from crypto trading are being lured into the EU tax net in the bloc’s latest crackdown on the online economy
The European Commission estimates that a crackdown on travel apps could bring in around 6.6 billion euros a year across the bloc.
“Ultimately, this will result in higher prices for consumers who are already facing a cost of living crisis, as supply chain costs are expected to rise,” said Damon Wright, tax director of the UK-based consultancy firm Evelyn Partners.
Crypto holders are also being drawn into the tax net, with platforms having to report EU resident 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 digitization of our economies poses challenges to our tax systems, such as how to deal with new business models such as the platform economy and new digital transactions, especially in the crypto asset market,” said the head of EU economy, Paolo Gentiloni.
A third rule change will require businesses to use electronic VAT invoices when trading with other countries inside the bloc. Governments can choose to make it mandatory for internal trade.
A survey by tax technology firm Avalara shows that Irish businesses are less prepared to switch to e-invoicing than their German and French counterparts, with 23% of business leaders saying they are not ready.
While 88% of Irish businesses believe the move would benefit them, more than a third are delaying investment in new tools and technology for up to six months.
“Business leaders are well aware of the changes, but with investments on hold due to the economic downturn, there is a risk that companies will not capitalize on the first mover advantage and instead opt for a ‘sticky 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 businesses in Belfast digitally transforming their finance function before those in London.”
Ireland could have collected an additional €2 billion in VAT in 2020, around 12% of total VAT revenue, if all amounts due had been paid, the Commission said.
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