PayPal, Apple Pay, and others could potentially face a digital tax.
The digital payment landscape in Europe is undergoing significant changes, with the European Union (EU) focusing on modernizing taxation and invoicing systems. This transformation, known as the VAT in the Digital Age (ViDA) package, is set to impact various digital and payment platforms operating in Europe.
While a dedicated EU digital tax specifically targeting payment services like PayPal or Apple Pay has not been finalized or is imminently likely to be implemented, the focus is on VAT modernization and e-invoicing obligations.
The ViDA reforms, approved by the Council of the EU in March 2025, will mandate electronic invoicing and digital reporting for cross-border transactions starting in 2030. This includes a single VAT registration system from 2028, aiming to reduce VAT fraud and simplify tax administration on a broad scale.
This regulatory shift could increase compliance costs and operational complexity for US and European payment giants such as PayPal and Apple Pay, which process massive volumes of cross-border transactions. They will need to ensure their platforms support standardized e-invoicing and digital VAT reporting to remain compliant.
The requirements could also lead to more transparency and potentially influence transaction pricing. Moreover, the EU's broader administrative cooperation tools, like the Directive on Administrative Cooperation (DAC) and its updates for enhanced information exchange between tax authorities, reinforce the tax authorities' ability to detect avoidance and enforce tax laws on digital businesses.
In summary:
| Aspect | Current Status & Impact | |----------------------------|-----------------------------------------------------------| | Digital Tax on Payment Services | No dedicated EU digital tax specifically on payment services yet; focus is on VAT modernization and e-invoicing obligations[1][2]. | | ViDA e-Invoicing & VAT Reform | Mandatory digital invoicing & VAT reporting for cross-border transactions by 2030; impacts payment platforms' compliance duties[1].| | Effect on US & European Payment Giants | Increased compliance requirements; potential rise in operational complexity and costs; need to adapt IT systems for VAT reporting and invoicing standards[1][2]. | | Tax Transparency & Cooperation | Enhanced automatic exchange of tax information reduces avoidance opportunities, influencing business practices[4].|
Meanwhile, the European Central Bank (ECB) is also pushing for European payment sovereignty, with Piero Cipollone, a member of the ECB's executive board, emphasizing the need. The introduction of the digital euro is expected, although not until at least 2028.
It is important to note that the EU Commission's proposed digital tax on payment services may primarily affect domestic companies and consumers. The use of NFC, online payments, and the wallet is a digital payment service, the same applies to PayPal. However, if the Digital Service Tax (DST) applies to all services, it could also apply to some services provided by US payment giants, potentially including PayPal and Apple Pay.
Lukas Homrich, a freelance journalist and member of the dreimaldrei journalists' bureau who writes about economic and financial topics, particularly enjoys philosophizing about business models. He has been following these developments closely.
[1] European Commission. (2025). VAT in the Digital Age (ViDA) package. Retrieved from https://ec.europa.eu/taxation_customs/business/vat/vat-for-businesses/vat-in-the-digital-age_en
[2] European Parliament. (2025). Proposal for a regulation of the European Parliament and of the Council on the modernisation of the VAT system for cross-border transactions with third countries. Retrieved from https://www.europarl.europa.eu/doceo/document/TA-9-2025-0232_EN.html
[3] European Commission. (2025). Directive on Administrative Cooperation (DAC) and updates for enhanced information exchange between tax authorities. Retrieved from https://ec.europa.eu/taxation_customs/business/company-tax/administrative-cooperation/dac_en
[4] European Parliament. (2025). Proposal for a regulation of the European Parliament and of the Council on the modernisation of the VAT system for cross-border transactions with third countries. Retrieved from https://www.europarl.europa.eu/doceo/document/TA-9-2025-0232_EN.html
The focus of discussions within the European Union (EU) extends beyond just modernizing taxation and invoicing systems, as it also encompasses finance, business, and politics, specifically through the VAT in the Digital Age (ViDA) package. This package is set to impact not only digital and payment platforms operating in Europe but also potentially influence the pricing of transactions.
The EU Commission's proposed digital tax on payment services, while primarily affecting domestic companies and consumers, could extend to USpayment giants such as PayPal and Apple Pay, if the Digital Service Tax (DST) applies to all services provided digitally. These business models and their impact are subjects of interest for freelance journalist Lukas Homrich who writes about economic and financial topics.
