EU targets cryptocurrency gains and holiday bookings

Airbnb’s Dublin-based headquarters could be forced to collect millions more in VAT to get all travel platforms – including Booking.com, Trivago and Expedia – to pay if their users don’t.

The travel booking sites, as well as potential profits from crypto trading, are being drawn into the EU’s tax net as the bloc recently cracks down on the online economy

The European Commission estimates that the crackdown on travel apps could raise an estimated €6.6 billion a year across the country.

“Ultimately, this will result in higher prices for consumers who are already facing a cost of living crisis, as costs will rise across the supply chain,” said Damon Wright, tax director at UK consultancy Evelyn Partners.

Crypto holders are also being drawn into the tax net as platforms are required to report EU citizens’ transactions to tax authorities. It applies to domestic and cross-border transactions, regardless of 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, particularly in the crypto-asset market,” said EU economics chief Paolo Gentiloni.

A third rule change will prompt businesses to use electronic VAT invoices when trading with other countries within the bloc. Governments may choose to make it mandatory for domestic trade.

A survey by tax technology firm Avalara shows Irish firms are less prepared than their German and French counterparts to switch to e-invoicing, with 23 per cent of business leaders saying they are not ready.

While 88 per cent of Irish companies believe the move would benefit them, more than a third are delaying investment in new tools and technology by up to six months.

“CEOs are well informed about the changes, but with investment being held back by the economic downturn, there is a risk that companies will not take advantage of the early birds and instead opt for a ‘stick-a-band’ approach,” said Alex Baulf, Sr Director of Global Indirect Tax at Avalara.

“The big question is whether shipments of goods from Northern Ireland to the Republic would be covered by the proposed rules. This could lead to companies in Belfast digitally transforming their finance function ahead of those in London.”

Ireland could have collected an additional €2 billion in VAT in 2020, or about 12 per cent of total VAT receipts, if all monies due had been paid, the commission said.

https://www.independent.ie/business/budget/eu-to-target-cryptocurrency-gains-and-holiday-bookings-for-tax-42206491.html EU targets cryptocurrency gains and holiday bookings

Fry Electronics Team

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