Food Delivery and On-Demand Platforms
How do food delivery platforms manage VAT between platforms, restaurants, and consumers?
Food delivery platforms facilitate orders between consumers and restaurants. VAT applies to the food order (at the applicable food rate) and to the delivery service fee. When the platform acts as principal, it is the taxable supplier of both the food and delivery service. When acting as agent, the restaurant is the supplier of food and the platform charges commission. The business model determines VAT registration obligations and invoice structure.
How does the platform business model determine VAT obligations?
The agent vs. principal determination drives VAT treatment for food delivery platforms:
- Principal model: Platform buys food from restaurant and sells to consumer; full VAT on food and delivery
- Agent model: Platform facilitates sale between consumer and restaurant; only commission is platform's supply
- Mixed: Food supplied as agent; delivery supplied as principal; separate VAT treatment for each component
- Restaurant invoicing: Platform invoices restaurants for commission fees with applicable VAT
- Consumer invoicing: Consumer receipts show VAT on food at applicable rate and VAT on delivery service
- Tax authority scrutiny: Platform VAT models heavily scrutinized in EU; DGFiP and HMRC have issued guidance
Frequently Asked Questions
- Are food delivery services taxed at the food VAT rate or the service VAT rate?
- Delivery services separate from the food supply are typically taxed at the standard VAT rate, not the reduced food rate. The food itself is taxed at the applicable food VAT rate (which varies by country). However, if delivery is not separately charged and is included in a bundled price, VAT allocation between components must be made. Most platforms charge delivery fees separately to allow clear VAT treatment.
- How do food platforms handle receipts and VAT for consumer transactions?
- Consumer transactions in food delivery are B2C, so simplified invoices or receipts are typically sufficient rather than full VAT invoices. However, consumers who are VAT-registered businesses (e.g., buying food for a business meeting) may request a full VAT invoice. Platform apps should offer the ability to generate a full VAT invoice for any transaction when a VAT number and company name are provided, converting the simplified receipt to a full invoice.