VAT & digital services: latest interpretations from the CJEU & legislative developments

A major legislative transformation with the ViDA project

The March 11, 2025, the Council of the European Union has definitively adopted the package of measures on the”VAT in the digital age“(ViDA), marking a decisive step in the modernization of the European tax system. This reform, which will come into force twenty days after its publication in Official Journal, is fundamentally transforming the VAT approach to digital services.

The new obligations for digital platforms

Starting from January 1, 2030 (or from 1 July 2028 on option), online platforms will have to pay VAT on the services of short-term housing rental and the services of passenger transport in most cases where individual service providers do not charge VAT. This measure aims to fill an important fiscal gap where many individual providers evade VAT obligations, despite the declaration. DAC 7.

The complete digitalization of reporting obligations

From here 2030, VAT reporting requirements will be fully digitised for cross-border transactions between businesses, based on a system of electronic invoices and reporting in real time. Businesses will issue electronic invoices for cross-border B2B transactions and automatically report data to their tax authorities. This digitalization will in particular simplify the VAT calculation for businesses operating in several Member States.

The evolution of the CJEU's case law

Clarifications on permanent establishments in VAT

The June 13, 2024, the CJEU delivered an important judgment in the case C‑533/22 SC Adient Ltd & Co. KG, again specifying the criteria for the recognition of a permanent establishment for VAT purposes. This decision is part of the Court's praetorian construction to differentiate VAT rules from traditional concepts of permanent establishment applicable to corporate tax.

Key points of the decision:

• Les VAT rules benefit from complete autonomy with respect to corporate tax rules
• The same technical and human resources cannot be used simultaneously to participate in services in a Member State and to receive these same services.
• The recognition of a permanent establishment Determine which Member State has the right to tax the service

Complex operations and digital services

Recent case law specifies the approach to be adopted for composite offers in the digital sector, in particular when several access rights with different service areas are marketed within the same offer.

Practical examples:

• A digital service provider offering basic services with paid options
• The marketing of offers at increasing prices including access to previous services plus additional services

The new territoriality rules

Virtual cultural and sports services

Starting from 2025, the provision of services relating to cultural, artistic, sporting, sporting, scientific, educational or entertainment events carried out in a manner Virtual will be taxed at the place of establishment of the lessee, whether he is a taxable person or not.

This major evolution distinguishes between:

• For B2B transactions : application of the general rule (place of establishment of the taxable customer)
• For B2C operations : taxation in France only if the non-taxable customer is established there

Impact on franchising in base

The diet of Exemption based on VAT will be brought into line with the new unified regime for small businesses applicable in the European Union as of January 1, 2025. The ceilings will be lowered and will no longer be updated every three years, with immediate cessation if they are exceeded.

Practical implications for businesses

Operational recommendations

Business model audit : Verify the qualification of services in light of the new territoriality rules, in particular for Calculate VAT applicable depending on the place of service.

Technological compliance : Prepare systems for mandatory electronic invoicing by 2030, using tools to improve customer and supplier bases.

Platform Management : Anticipate new obligations for short-term rental and transport services, including the management of VAT number service providers.

Tax optimization : Reassess structures in light of the permanent establishment criteria clarified by the CJEU, in particular for VAT groups.

Points of vigilance

• The concept ofunique complex operation remains decisive for the fiscal qualification of digital offers
• Les virtual services benefit from a specific treatment requiring a case-by-case analysis
• THEinteroperability national systems must be ensured by 2035
• The management of the VAT collected requires particular attention in this new context

Development perspectives

ViDA calendar

2025 : End of the Commission's approval requirement for national electronic invoicing systems

2027 : Extension of one-stop shops (OSS) to electricity, gas and heating

2028-2030 : Full deployment of the European electronic invoicing system

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Implementation challenges

Les national tax authorities will share data using a new computer system capable of providing analyses of suspicious activities, significantly strengthening the fight against VAT fraud. This evolution will also allow better management of VAT credits cross-border.

Key points to remember

La transformation of the European tax landscape in the field of digital services is accelerating with the adoption of the ViDA project and the constant evolution of the case law of the CJEU. Businesses must now anticipate these changes in order to adapt their tax processes and structures to the new requirements, in particular by using tools for VAT calculation adapted to European specificities.

For international businesses, verifying the VAT number and using a VAT checker become essential in this new regulatory framework.

Chez Cyplom, we support our customers in this transition by offering automation and compliance solutions adapted to the specificities of each business sector. Our expertise in European tax law and our mastery of technological tools allow a pragmatic and secure approach to these regulatory changes.