Estonia Blocks New EU Tax Rules That Would Have Hit Airbnb, Bolt

(Bloomberg) -- Estonia is blocking a reform of VAT which would impose new liabilities 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 only because they provide their services via digital platforms,” Estonian Finance Minister Mart Vorklaev told Bloomberg ahead of the EU finance ministers discussion on the matter in Luxembourg on Friday.

He added that rather than a tax on digital platforms, this new regime would be a tax on small and medium-sized enterprises, representing an additional burden for them that will distort competition.

Estonia has instead proposed a voluntary opt-in approach to allow each country to do what suits them best, he said.

EU finance ministers had already failed to reach and agreement on Value Added Tax in the digital age — or ViDA — at their May meeting. Countries are discussing a proposal that includes eliminating tax avoidance and evasion, which cost member states billions of euros in lost revenue.

Platforms operating short-term accommodation and passenger transport services would become liable for paying VAT under certain circumstances.

Italy and Spain are among countries pushing for the agreement given their interest in collecting VAT revenues from Airbnb, Booking.com and other short-term accommodation companies, EU diplomats said. Meanwhile, Bolt has been lobbying the government of Estonia to oppose such measure, the diplomats added.

“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 weighed in saying that “there is an absolute need to have fair taxation of digital activities.”

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