VAT on digital services in the EU

The EU experience

In March 2025, amendments to EU¹ Regulation No. 282/2011 were adopted. The EU VAT in the Digital Age (ViDA) initiative extends the concept of deemed supplier introduced in 2021. The concept means that, in certain cases, platforms are deemed to be responsible for paying VAT on behalf of their business customers, as if those platforms were selling goods or services themselves. Previously, this concept applied to platforms for facilitating a supply of goods, primarily imported ones. From July 2028, the same rules will apply to platforms through which short-term rentals (up to 30 days) and passenger transport services are provided. Such platforms will charge and pay VAT on behalf of landlords and cab drivers. However, if a platform provides only services for placing advertisements, redirecting users to third-party resources or processing payments, it² will not be considered a “deemed supplier”.

Platforms are also exempt from liability for incorrect VAT calculation if they acted on the basis of unreliable information from a supplier and could not have known of its unreliability. Platforms are required to collect and store additional information on suppliers and transactions, even if the deemed supplier regime does not apply, for comparison with payment data collected under the new tax control system for persons providing services through platforms.

The platform fulfills the requirements of a deemed supplier if the business user has a VAT³ number, and if there is no VAT number, the business user is responsible for paying VAT.

The US experience (at state

level)

In March 2025, Maryland published a bill that would impose a 3% sales tax on information services, including website development and cloud storage solutions, data processing, computer system design services for online publishing, online broadcasting, search engines,⁴ and related services.

That said, New York City proposed special indirect taxes on services as early as January 2025:

1) Digital advertising. Rates from 2.5% to 10% depending on the company's gross⁵ revenue from all sources for the year.

2) Excise tax on the collection of⁶ consumer data by commercial data collectors, processing information from more than 1 million⁷ consumers per month.

The experience of Niger

From 2025, Niger has introduced a 19% VAT on sales of goods and services made through both foreign and local e-commerce platforms, as well as on commissions received by the operators of these platforms. To fulfill their tax obligations, non-resident platforms are required to appoint a representative resident in⁸ Niger.

Russia’s experience

Article 174.2 of the Tax Code of the Russian Federation has been in force in Russia since 2017 regulating the taxation of services provided in electronic form, such as the provision of rights to use computer programs and databases via the internet, including updates and additional functions, and the provision of online advertising services. This norm was introduced to create uniform rules for the taxation of digital services in the EAEU.

As a general rule, foreign organizations providing electronic services to Russian individuals are obliged to calculate and pay VAT independently. Where such services are provided to Russian organizations or individual entrepreneurs, the obligation to pay VAT is imposed on Russian purchasers as tax agents.

From the monitoring issue No. 3 (15), March 2025. Download the full issue (PDF) · issue page at the Gaidar Institute