(Bloomberg) — Estonia is blocking a VAT reform that would impose new obligations on digital platforms, including short-term accommodation and passenger transport companies such as Bolt Technology OU and Airbnb Inc.
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“We are against taxing any service provider just because they offer their services through digital platforms,” Estonian Finance Minister Mart Vorklaev told Bloomberg ahead of EU finance ministers’ discussion on the issue in Luxembourg on Friday .
He added that instead of a tax on digital platforms, this new regime would be a tax on small and medium-sized enterprises, which would impose an additional burden on them that will distort competition.
Estonia has instead proposed a voluntary opt-in approach so that each country can do what suits them best, he said.
EU finance ministers had already failed to reach an agreement on the Digital Age Value Added Tax (or ViDA) at their meeting in May. Countries are discussing a proposal that includes eliminating tax avoidance and evasion, which costs member states billions of euros in lost revenue.
Platforms operating short-term accommodation and passenger transport services would become subject to VAT under certain circumstances.
Italy and Spain are among the countries pushing for the deal given their interest in collecting VAT revenue from Airbnb, Booking.com and other short-term accommodation companies, EU diplomats said. Meanwhile, Bolt is lobbying the Estonian government to oppose such a measure, the diplomats said.
“It was clear that 26 member states support it,” Belgian Finance Minister Vincent Van Peteghem told journalists in Luxembourg. “I will try to find a compromise with 27 member states.”
French Finance Minister Bruno Le Maire also said that “there is an absolute need for fair taxation of digital activities.”
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