- Iman Deschâtres
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E-commerce is often presented as a consumer story. We talk about marketplaces, brands, influencers, apps and shopping carts. But by value, the bigger market is B2B: global B2B e-commerce reached over $28 trillion in 2024 and is projected to hit $36 trillion by 2026, roughly three to four times the size of B2C. The reason B2C dominates the conversation is simple: it is public-facing. B2B e-commerce is quieter, hidden in procurement systems, supplier portals, repeat orders, negotiated contracts and embedded payment flows, but it is where much of the real transaction volume sits.
The same blind spot applies to VAT. Because VAT is ultimately borne by the end consumer, it is often assumed to be neutral for businesses; but that neutrality is largely a fiction.
For B2B platforms, VAT still creates complexity, cost and risk: “Liability” means (i) validating customers and sellers, determining who is responsible, (ii) applying the right treatment to transactions and commissions, (iii) understanding and managing cross-border rules, (iv) timely and correctly reporting transactions and (v) evidencing and potentially defending every decision. When something goes wrong, the impact is not just technical. It can create a liability where none exists, directly affect margins, trigger audits, slow down expansion and create reputational risk. Yet, because B2B VAT is less visible than consumer-facing tax issues, it is often underestimated, until the details become a problem.
The Uber case in Ireland is the clearest illustration of where that underestimation leads. Taxi fares are exempt from VAT in Ireland, which means taxi drivers are not VAT registered. The ride sharing platform, operating from outside Ireland, does not charge VAT on its commission and has no obligation to do so. But the taxi driver, as a business customer receiving a cross-border service, was expected to self-account for that VAT under the reverse charge mechanism, despite holding no VAT registration, and in practice VAT register for this. To add to the confusion, other ride-sharing platforms with local entities were charging VAT on their fees, creating inconsistent treatment across competitors for the same underlying transaction. The consequences were not only financial. Taxi drivers faced the loss of their operating licence. A VAT technicality became an existential business risk.
Here are the critical points that need to be considered: Tax is typically due at the place of consumption with Liability increasingly placed on the seller (local or remote) and/or the platform rather than the buyer.
Yet for cross-border B2B sales, the dominant rule remains the reverse charge mechanism: no VAT is charged on the transaction, and the business customer self-accounts in its own jurisdiction. This is the approach endorsed by the OECD and adopted, in various forms, across most VAT and GST regimes worldwide.
The reverse charge default is not universal. Several countries tax B2B and B2C transactions alike, placing the collection obligation on the supplier regardless of the customer’s status. Mexico, Switzerland, South Africa and Malaysia all follow this alternative model. And the US operates differently again: the default that most states utilize is that the transaction is taxable, and exemption is narrow. A business purchasing goods or services for its own operational use is not exempt. Exemption applies only where the purchase is for resale, or where the buyer holds a specific recognised (and provable) status such as a qualifying non-profit. In almost every case, formal documentation is critical to qualify for any such exemption.
Where a country does tax only B2C supplies, the supplier cannot simply assume that a customer is a “business” and properly registered as such. For example, VAT registration thresholds mean that many legitimate businesses operate below the threshold and can properly go unregistered without a VAT number. Exemption-based regimes add another layer of complexity: a business may be genuinely exempt based on its business model and legal status, rather than merely unregistered. How an unregistered or exempt business customer is treated varies by jurisdiction, and the supplier is obligated to understand the local applicable rules and properly apply and document such exemption before reliance.
Some countries allow the B2B exemption even without a VAT number, treating the customer as a business by definition. This creates a structural distortion: the same business receiving an equivalent service from a local supplier would be charged VAT it cannot recover. The Irish taxi driver case illustrates this precisely. Exempt from VAT on their fares, taxi drivers were nevertheless expected to register for VAT solely to self-account for the reverse charge on Uber’s commission, a compliance obligation triggered by a tax they don’t collect on their fare. The same logic applies in the UK.
Other countries take the opposite position, conditioning the B2B exemption on the existence of a valid VAT number. Italy is the clearest example. Booking.com was fined €94 million for failing to charge VAT on commissions invoiced to small bed and breakfast operators that were not registered for Italian VAT. Without a valid number, the Italian authorities treated those customers as consumers, making the platform liable for the VAT it had never collected. The operators were businesses in every practical sense. Had they held a VAT number, the financial consequences would not have existed. An administrative gap hit margins, ratios and cash position.
VAT obligations on platforms and certain marketplaces do not begin and end with charging tax. Even before the EU’s 2027 reforms, marketplaces already carried significant responsibilities. Until January 2027, EU marketplaces had no deemed supplier obligations for B2B sales, yet they remained responsible for validating customer VAT numbers. In the UK, marketplaces have no VAT collection obligation for B2B transactions, but they are required to ensure invoices carry the correct mentions. That raises an immediate practical question (and obviously potentially a “financial obligation”) for platforms that do not issue the invoice at all.
From January 2027, the EU VAT In the Digital Age directive extends the deemed supplier regime to B2B transactions by non-established sellers. Under the new Article 14a(2), a platform facilitating the supply of goods within the EU by a non-EU established supplier to: (i) a taxable person, (ii) a non-taxable legal person whose intra-Community acquisitions are not subject to VAT under Article 3(1), or (iii) any other non-taxable person, is itself deemed to have received and supplied those goods and liable for the VAT. The scope is broad: it covers both intra-Community distance sales and domestic sales within a Member State.
The explanatory memorandum to the Swedish implementing legislation characterised this as “…a minor technical shift”, on the basis that no VAT will actually be charged for genuine B2B transactions, with reverse charge continuing to apply, and the reform simply moving the compliance obligation from the foreign seller to the platform. That framing understates what is really changing.
Two consequences are routinely overlooked. First, platforms will need to determine the “establishment status” of their sellers, not their VAT registration status. These are not the same thing. A seller can hold an EU VAT registration number without being established in the EU, and it is establishment, not registration, that determines whether the deemed supplier rule is triggered under Article 14a(2). A platform that relies on a VAT number as a proxy for establishment will systematically potentially misapply the rule. Second, the reform actually shifts legal liability: if a transaction is miscategorised and VAT goes unaccounted, it is the platform that carries the exposure..
A recent UK case brings the stakes into focus. In HBS Enterprises Ltd v HMRC [2026] UKFTT 764 (TC), Amazon mistakenly misclassified a UK-based seller as a non-UK based foreign trader. On that basis, Amazon assumed the “liability” had shifted to itself, so it actually collected and remitted VAT on the seller’s transactions under the marketplace rules that apply to non-established sellers. HMRC then assessed the seller for the same VAT on the same transaction. The tribunal acknowledged the outcome could be “seen as unfair” , but held that the seller remained legally responsible for its own VAT, regardless of what Amazon had done. The VAT was effectively to be initially paid twice. The case is a reminder that misclassifying a seller’s status is not a mere paperwork issue. It determines who is legally liable, and when it goes wrong, a new financial obligation could indeed be created and that additional cost affects someone’s margins, and cashflow.
VAT obligations on platforms extend beyond tax collection. Chile and Turkey already require platforms to report their B2B sellers to tax authorities. In Europe, certain platforms fall within the scope of DAC7, which mandates reporting of seller activity to the government regardless of whether any VAT is due on the underlying transactions. The reporting obligation exists independently of the tax obligation, and a platform that has correctly concluded it has no VAT collection duty in a given jurisdiction may still face penalties for failing to report. Compliance and reporting are not the same exercise, and conflating them is its own category of risk.
Step back and the picture is clear. VAT is supposed to be neutral for businesses. No cost, no burden, a simple invoicing flow. The reality is different. The Irish taxi driver did not face only a financial adjustment. He faced the loss of his licence. That is not an anecdote. It is an illustration of something systemic: VAT obligations do not stay in the finance department. The cases surfacing them are only going to multiply.
Neutrality does not mean VAT requires no management. It means VAT is not supposed to be borne by the business. But the obligations are real, and so is the operational cost. Ignoring them does not make them go away. In fact, ignoring them or getting them wrong could create a new financial obligation or legal impediment to a business.
The cases in this article are not outliers. They are what the maturation of B2B e-commerce looks like from a tax authority’s perspective: platforms and sellers operating at scale, with obligations that were always there, in jurisdictions that are now paying attention. The question is no longer whether B2B platforms have VAT exposure. It is whether they have mapped it.
The first and most practical step, for any B2B platform or marketplace, is to collect the customer’s tax identification number at checkout from the first sale. Even if nothing else is done with it immediately, having that data creates options. It supports VAT number validation, evidence of B2B status, and provides a foundation for compliance decisions as the business scales. Build it in from day one. It costs almost nothing to do early, becomes significantly harder to retrofit, and when a tax authority makes contact asking for evidence of your customer base’s business status, that data is what stands between a manageable conversation and a serious exposure.
A valid number at onboarding is not a valid number forever. For subscription businesses in particular, periodic revalidation is not optional. A lapsed number that goes undetected means VAT was not charged when it should have been, an invoice that cannot be corrected, and margin that cannot be recovered. The operational process matters: flag unvalidated numbers, have a workflow to contact the customer, obtain an updated number or begin charging VAT. The cost of not doing this is not abstract. It is the difference between a recoverable compliance gap and a permanent revenue loss.
The VAT cases that make headlines are never about VAT. They are about a licence revoked, a fine that implodes a balance sheet, a marketplace that remits the wrong tax and creates a double obligation, a market valuation dropping. The obligation was always there. It just was not managed correctly. In B2B, that is still the norm. It will not stay that way.
Disclaimer: The views, statements or opinions expressed in this article are solely those of the author and do not represent tax advice and are not to be designated to be the views, statements or opinions of any other person, group, association or company.
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