From matchmaker to supplier: deemed supplies and platform classification under EU VAT

Digitalisation has placed platforms at the centre of how services are priced and delivered, from ride-hailing and short-term accommodation to streaming, reservations, and payments. The decisive issue for VAT is not only technological but also legal and economic. Does the platform act in the name and on behalf of the underlying supplier, or in its own name while acting for another? The answer determines who is the taxable person, what the taxable amount is, and even how invoicing must be structured.

The basis of the above is Article 28 of the VAT Directive, which is not something new from the digital economy. This article establishes the commissionaire fiction in services. When a taxable person acts in their own name but on behalf of another, that person is deemed to receive and to supply the same service.

In practice, and for VAT purposes only, there are two identical and successive supplies, one from the underlying supplier to the platform and another from the platform to the final customer. This construction preserves continuity of taxation, administrative control, and neutrality, and it aligns the tax position with how the transaction is perceived by the consumer.

For the digital ecosystem, the European legislator added a crucial layer in Article 9a of the VAT Implementing Regulation. For electronically supplied services provided through an interface, there is a presumption that the platform acts in its own name unless the true supplier is clearly identified in the contract and vis-à-vis the customer. However, if the interface sets essential terms and conditions and it authorises or processes the payment, the above presumption cannot be rebutted.

The Court of Justice of the EU confirmed the validity of this interpretative mechanism in Fenix International (C-695/20), holding that it neither exceeds the scope of Article 28 nor distorts the allocation of taxing rights. It simply clarifies how the “acting in his own name” fiction applies to platform-mediated digital services.

This case law sits alongside earlier decisions that prioritise economic reality. In Henfling (C-464/10), the court explained that acting in one’s own name duplicates the service for VAT purposes. In subsequent judgments, the court emphasised that ancillary functions added by the platform, such as customer support or payment tools, do not change the classification if the core of the service remains the same. The message is straightforward: what matters is who appears to the average consumer as the supplier (this is especially important), who sets essential conditions, and who bears the commercial risk.

On the policy front, the VAT in the Digital Age (ViDA) initiative consolidates and extends this trajectory. ViDA makes platforms deemed suppliers in specific sectors with many small or occasional providers. This creates an important distortion of competition with traditional operators, notably short-term accommodation (maximum 30 nights) and passenger road transport. Where the underlying provider does not account for the VAT, the platform must charge and remit this VAT on the full consideration.

Translating the above rules into day-to-day decisions requires a functional approach. Labels will not suffice if, from the viewpoint of the average consumer, it is the platform with which the consumer contracts.

Red flags include the platform effectively determining price, controlling policies on use and cancellation, administering subscriptions, or collecting or authorising the collection of the consideration.

By contrast, declared agency requires contractual and operational coherence: the real supplier must be clearly visible in the customer journey, must issue the invoice to the customer, and must bear the principal commercial risk.

The consequences of acting in one’s own name are significant for platforms and their business partners.

• The taxable amount corresponds to the total sum paid by the final customer, not merely the platform’s commission, which directly affects margins and pricing strategies.

• With regard to invoicing splits, the underlying supplier invoices the platform, and the platform invoices the consumer, increasing obligations for invoicing, filing, and digital reporting in line with the move to structured electronic invoices. Both operators preserve, in principle, their right to deduct to the extent they make taxable and non-exempt supplies, thereby maintaining neutrality.

• Finally, there is a multi-jurisdictional risk: while the framework is harmonised, national practice and transition choices might differ, so platforms must map their exposure country by country.

Aligning the contractual framework with the way the transaction is presented to the customer is crucial. If the platform asserts declared agency, the underlying supplier must be clearly identified at every stage of the customer experience and must be the party issuing the invoice. Defining clear governance over pricing and essential commercial terms is also fundamental (price setting, cancellation, refund policies, or subscription conditions) because any substantive control by the platform over these elements typically indicates that it is acting in its own name.

In practice, given the way these models are currently designed, it is difficult to sustain that the platform is not the supplier for VAT purposes. Service providers value the platform’s turnkey infrastructure for delivering the service; above all, its end-to-end handling of payments, refunds, and cancellations, processes that are disproportionately burdensome for small providers. By centralising these functions, the platform typically controls essential terms of the supply, which reinforces its classification as acting in its own name.

Read together, EU legislation, national rules, and case law point in the same direction: economic reality determines the VAT outcome. The trajectory set by ViDA strengthens this approach in sectors with many small or occasional providers.

Intermediaries with control functions are not a novelty of the platform economy. They have long been recognised within the European VAT framework. What is new is their current great relevance, driven by the proliferation of digital intermediaries that now decide on how services are offered, priced, and delivered.

Where an intermediary sets or dictates the terms of supply, manages the commercial relationship from start to finish, and intervenes in pricing and collection, it is no mere matcher of parties; it is something more, and, under VAT, that “something more” has concrete consequences.