Hungary Pushes ViDA VAT Compromise Ahead of ECOFIN Meeting

Hungary is putting maximum effort into securing an agreement regarding VAT in the Digital Age (ViDA) by the end of its presidency of the Council of the European Union. Hungary has proposed changes to the ViDA package to gain Estonia's vote as part of its efforts.

Estonia has positioned itself as an obstacle to adopting the ViDA package, vetoing its adoption twice. A possible compromise solution will be discussed at the next ECOFIN meeting on November 5, 2024.

Proposed Solutions

Estonia's unwillingness to impose deemed supplier rules for the platform economy in the transport and accommodation sectors was a stepping stone to adopting the ViDA package. Now, Hungary has proposed two possible solutions to this problem.

The first proposed solution is implementing a ten-year opt-out option from the deemed supplier rules for all platforms. The second one is the one already proposed by Belgium during its presidency, which allows an opt-out option only for SMEs.

The second option is more appealing to most EU Member States, whereas Estonia previously stated it is for a voluntary opt-out option with no time limit. Both proposed solutions are not ideal for Estonia, but according to some sources, the Estonian Ministry of Finance is sending positive signals.

The first step towards achieving a compromise agreement is for all parties to agree on an acceptable solution on the Working Party on Tax Questions scheduled for October 24. 

Conclusion

It seems like the adoption of the ViDA package is closer now than ever before. However, considering previous voting outcomes on adopting the ViDA, everything must be taken cautiously.

Nevertheless, if an agreement is reached at the next Working Party on Tax Questions meeting, the voting outcome at the next ECOFIN meeting is likely positive. Perhaps the most important thing now is a willingness to reach an agreement. If the deal is not made during the following two months, ViDA adoption may be postponed for the spring of 2025.

Source: European Tax Adviser Federation, EuroCommerce Letter, Dutch Government - Annotated agenda Eurogroup and Ecofin Council 4 and 5 November 2024, ECOFIN -Notice of Meeting and Provisional Agenda, Bloomberg