The UK has just sent a message every mobility founder, investor and regulator should take seriously: in transport, the law follows control. From 2 January 2026, private hire vehicle (PHV) and taxi journeys will be excluded from the Tour Operators’ Margin Scheme (TOMS), except where they are genuinely ancillary to a broader travel package. If a platform buys and resells rides as a principal – or as an undisclosed agent – VAT will apply to the full fare, not just the commission.
This is not a technical tax adjustment. It is a strategic verdict on how digital mobility platforms are structured.
For years, parts of the ride‑hailing and transfer market have operated in a grey zone, branding themselves as “tech intermediaries” while exercising operational control more typical of transport operators. The UK’s move effectively closes that gap. It confirms what courts and regulators across Europe have been signalling for some time: when a platform sets the price, controls access to demand and assigns the driver, it is no longer a neutral information service. It is part of the transport service itself.
This distinction matters because European law has long drawn a line between Information Society Services (ISS) and transport operators. A true ISS marketplace connects independent providers with customers, allowing prices to be set by suppliers and choices to be made by users. An aggregator model does the opposite: it standardises pricing, centralises dispatch and presents the service as a single, integrated product. Control, not technology, is the decisive factor.
The UK’s VAT reform simply applies that logic to taxation. HMRC has been explicit: where a platform is the merchant of record and resells transport, normal VAT rules apply. TOMS was never designed to shield domestic taxi or transfer services from tax, and from 2026 that argument will no longer survive.
Why does this matter for Cyprus? Because Cyprus sits at the intersection of tourism and mobility. Airport transfers, hotel pick‑ups and point‑to‑point rides are a core part of the visitor economy. When those journeys take place in Cyprus, the economic reality is local: local infrastructure, local safety oversight and local taxation. If a platform set prices and assign drivers it effectively supplies the transport service, Cypriot VAT at 19 per cent is due on the full fare.
Attempts by foreign platforms to tax only their commission rest on a fragile assumption: that they act as neutral intermediaries. In practice, 99% ride and transfer apps set prices and allocate drivers algorithmically. Under EU principles, that level of control points firmly toward operator status.
There are three clear lessons for policymakers and founders alike.
First, classification must follow substance. Branding a service as a “marketplace” does not make it one if the platform controls the core commercial terms.
Second, tax enforcement should align with the merchant of record. Digital platforms generate detailed transactional data, making it increasingly difficult to argue that value is created elsewhere.
Third, founders need to choose their strategic lane early. Hybrid models may appear attractive in the short term, but they create regulatory and tax exposure that compounds with scale.
The era of grey mobility platforms is ended, not because regulators oppose innovation, but because transport is critical infrastructure. Infrastructure demands accountability. The platforms that will thrive in 2026 and beyond are those that treat compliance not as a cost to be minimised, but as a strategic design choice.
*Alexander Sapov, CEO and Co-Founder of GetTransfer.com
