UK VAT Compliance Guide - See how VAT applies in the UK to different goods and services including VAT Rates, VAT Registration, VAT returns and VAT Recovery. Autumn Budget Read More VAT Risk & Control Framework Read More UK Carbon Border Adjustment Mechanism (CBAM) - 2027 Read More Oil and Gas - Place of Supply for VAT Read More Banking - How VAT is Applied to Services and Recovered on Costs Read More Fuel & Power - How VAT Applies Read More UK VAT is primarily governed by Law ( VAT Act 1994) and is enhanced by case law and administered by the UK Tax Authority known as HMRC (Her Majesty's Revenue & Customs). VAT (Value Added Tax), is a consumption tax levied on goods and services at each stage of the supply chain, with the final cost being borne by the end consumer. VAT Registered Businesses will collect VAT (output) from customers and pay this to HMRC usually on a monthly or quarterly basis. VAT Registered Businesses can also fully recover the VAT they pay on their own purchases subject to any partial exemption restrictions . On this page you will find detailed UK VAT guides, articles and links to help you better understand the key issues in relation to UK VAT compliance and other indirect taxes and help your business stay VAT compliant. For quick and immediate answers for specific VAT queries you may have, use our AI VAT Advisor which will provide guidance and key VAT information along with detailed summaries from the knowledge base of our site. UK VAT Registration Businesses in the UK (including Isle of Man) are required to register for VAT If the value of their Taxable Turnover (standard rate, reduced rate and or zero rated supplies) in the preceding 12 months or less goes over the registration threshold of £90,000 If the value of their taxable turnover (standard rate, reduced rate and or zero rated supplies) is likely to exceed £90,000 in the next 30 days if the business is based outside the UK and supplies goods or services in the UK or are expected to in the next 30 days. (Threshold does not apply here) If a businesses is being taking over a VAT registered business as a going concern If you make distant sales into Northern Ireland and exceed the annual threshold. Note: Businesses include Sole Traders, Partnerships, Limited Companies, Clubs, Associations. What is Taxable Turnover Standard Rated Sales of goods and services Zero Rated Goods and Services Reverse Charge Output VAT Any Goods or Services you barter or part exchange The value of any goods you have used for private use Property services supplied (rent and service charges) where you have opted to tax the building. What is not Taxable Turnover Sales of capital items such as buildings , machinery, cars Exempt supplies Voluntary Registration You can apply to HMRC for voluntarily registration if: you are making taxable supplies where their value is under the £85,000 threshold. This will allow you to recover VAT expenses incurred. You are intending to make taxable supplies in the near future Register - online here UK VAT Explained VAT (Value Added Tax) is a tax on consumption and is added to the sale of goods and services supplied by VAT Registered businesses. Not all products and services sold attract VAT and there are a number of VAT rates or categories as follows: Standard Rated 20% (taxable) Reduced Rate 5% (taxable) Zero Rated (taxable) Exempt Outside The Scope Depending on the goods being sold or services being provided, one of the categories above will be applied to the sale. Standard Rated Goods and Services Standard Rated goods and services are goods sold or supplied by VAT registered businesses and include 20% VAT. Therefore invoices to customers will include 20 % VAT. Standard Rated services fall into the taxable services bucket and where businesses make taxable sales and exceed or are likely to exceed £90,000, they are required by law to Register for VAT. Examples of Standard Rated goods and services include: Fuel Professional Services such as Legal and Accountancy Computers and Mobile phones Hotel Accommodation No Domestic Energy Alcohol Restaurant food and hot takeaways Reduced Rate Goods and Services Reduced rate VAT of 5% is mainly applied within the domestic fuel and construction industry. Examples of Reduced Rate VAT at 5% include: Domestic / residential energy bills (Gas & Electric) Gas fired boiler installation Radiator Connection or re-connection to the gas mains Renovating a dwelling that has been empty for at least 2 years Zero Rated Goods and Services Goods and services supplied as Zero Rated VAT are taxable supplies but without VAT applied. Therefore invoices generated and sent to customers for zero rated supplies will not include VAT. Examples of Zero Rated goods and services include: Children's clothing Books Sewerage services supplied to domestic or industrial customers Water supplied to domestic households Insulation Take away - cold food Note: where businesses make sales of goods and services to non UK business customers, these can also be treated as Zero Rated in some instances as they are deemed outside the scope of UK VAT but are classed as taxable services which carry the right to deduct Input VAT. (Please see place of supply button) Exempt Goods and Services Exempt supplies of Goods and Services unlike standard rated and zero rated are not taxable supplies. Exempt supplies are listed in the VAT Act 1994 Sch 9 and include the following: Postal Services Insurance Land and Property Rental Education Financial Services Tax Point Rules Tax points are the specific points in time when sales of goods or services take place and are governed by rules set out by HMRC. VAT registered businesses must account for VAT within the period the tax points for their sales occur. So if a tax point occurs in March and the businesses next VAT return period is January to March then the VAT on the sale will have to be included within the quarter ending March VAT return. Basic Tax Point Goods - The date when you send them to your customer or the customer takes them away or for goods assembled at a suppliers premises, when the goods are made available to the customer Services - The date when the service is performed — it’s normally taken as the date when all the work except invoicing is completed Actual Tax Point The basic tax point will be overridden if an actual tax point is created. An actual tax point is created when: An invoice is issued or payment is received (whichever is first) before the basic tax point. An invoice is issued up to 14 days after the basic tax point You do not have to follow the 14 day rule, but if you decide not to you must tell HMRC by writing to the VAT Written Enquiries Team . If you wish to have an extension of the 14 day rule, then you must apply to HMRC by writing to the VAT Written Enquiries Team , giving your reasons. Note: Failure to tell HMRC about extending the 14 day rule will result in the tax point reverting to the basic tax point. Continuous Supplies of Services If you supply services on a continuous basis and receive payments regularly or from time to time, there’s a tax point every time you issue a VAT invoice, or receive a payment, whichever happens first. If payments are due to be made at regular intervals (for example, by banker’s order or direct debit), you can issue a VAT invoice at the start of any period of up to one year (provided that more than one payment is due in the period) to cover all the payments due in that period. For each payment you should set out the: VAT-exclusive amount Date on which the payment is due Rate of VAT VAT payable If you decide to do this, you do not have to account for tax on any payment until the date on which it is due, or date you receive it, whichever happens first. Your customer must not reclaim, as input tax, any VAT shown on the VAT invoice until the date on which the payment is due, or you have received the payment, whichever happens first. The same procedures apply to continuous supplies of goods, in the form of water, gas and electricity. Goods supplied on sale or return, approval or similar terms When you supply goods on sale or return, for example, they have not been sold and you still own them until such time as they’re adopted by your customer. Adoption means that the customer indicates a wish to keep them. Until your customer does so, your customer has an unqualified right to return them at any time, unless you have agreed a time limit. You may have fixed a time limit of adoption of less than 12 months from the date when the goods were sent. If a time limit has: Been fixed for a period of 12 months or less, then the Basic Tax Point is the date the time limit expires Not been fixed or fixed for a period of more than 12 months, then the Basic Tax Point is 12 months from the date when the goods were sent Note: In either case if your customer adopts the goods before the time limit expires the date of adoption becomes the basic tax point. Also the basis tax point as mentioned above will be overridden by the actual tax point on the date an invoice issued by the business providing the goods or the date payment is received for the goods, which ever is earlier. If you receive a payment which is not returnable, this will normally indicate that the goods have been adopted. The payment of a deposit required as a condition of delivery — which is repayable if the goods are returned — does not constitute adoption. Finally, It is a businesses responsibility to make sure that its customers notify them promptly when they have adopted goods. Goods taken for personal or other non-business use Goods that are taken out of a business: Permanently for non-business use will have a basic tax point on the date when the goods are taken or set aside for this purpose Temporarily for non-business use, but they’re still part of its stock or business assets, then a tax point is triggered each time they’re used or — if the non-business use continues over a period of time — on the last day of each tax period that the goods are used or made available for that purpose VAT Returns VAT Registered businesses that make supplies of goods and services are required to file their VAT returns to HMRC either monthly or quarterly (depending on VAT scheme) to pay over the Output VAT collected on sales to their customers and also to recover any Input VAT they have incurred on supplies they have purchased for operating their business. The difference between the Output VAT collected and the Input VAT incurred will form the basis as to whether VAT is payable or recoverable from HMRC. VAT collected on Sales greater than VAT incurred on purchases = Payment due to HMRC VAT incurred on purchases greater than VAT collected from customers = Recovery of VAT from HMRC Any exempt and zero rated supplies a firm makes to its customers or purchases from its suppliers also need to be included on the VAT Returns in boxes 6 and 7 respectively. Partial Exemption - VAT Recovery In addition to Output VAT that is collected by a business on its sales and then paid over to HMRC, businesses can also recover VAT on expenses they incur. The recovery of VAT depends highly on the nature of the supplies being made by the business. Business is only making Taxable Supplies (Standard rated, reduced rate or zero rated) - then the Input VAT incurred on its purchases is directly attributable to its taxable sales and can be fully recovered from HMRC. Business only makes Exempt Supplies - Then it cannot recover any of the input VAT incurred on purchases as the input VAT is directly attributable to supplies of exempt goods or services. Businesses making a mixture of Taxable and Exempt Supplies - This type of business is known as a partially exempt business and because not all of its supplies are taxable, it can only recover a calculated percentage of the input VAT it has incurred. Partially Exempt Businesses - will be required to calculate their partial exemption recovery percentage or rate and then apply this rate to their pool of input VAT that they have incurred. The standard method for calculating the partial exemption recovery rate is as follows: Taxable Sales (Standard, Zero, Reduced Rate) / Total Sales (Standard, Zero, Reduced Rate, Exempt) = VAT Recovery Rate Percentage % Example - Standard Rated Sales £1,000, Zero Rated Sales £500, Reduced Rated Sales £200 and Exempt Sales £2,000 £1,000 + £500 + £200 / £3,700 = 46 % RR If the input VAT pool is £20,000, then the business can recover £9,189 from HMRC via its VAT return. Note: Many larger and more complex businesses (such as banks) will have Partial Exemption Special Methods which will have been formulated specifically for their business and agreed with HMRC. Many businesses will have multiple internal business areas and products and as such using the standard method may not be suitable. Once formulated businesses will be required to adhere to their agreed Partial Exemption Special Methods and keep HMRC up to date on any internal business restructures that might affect the agreed method. HMRC - has the right to issue a Special Method Override where they believe the existing method in use does not produce a fair and reasonable level of VAT recovery. Annual Input VAT Adjustments As part of the VAT return process partially exempt businesses are required to complete annual Input VAT adjustments to ensure the correct amount of VAT has been recovered from HMRC for the overall year. Normally businesses will file quarterly VAT returns which include VAT recoverable for the quarter. The recovery of VAT on the quarterly returns will be based on the input VAT allocated between Taxable and Exempt sales for the quarter or based on the previous years VAT recovery rates which are being provisionally used for the current year until the annual adjustment is completed. So VAT returns completed during the year are actually provisional in terms of the recovery of VAT. As such at the end of the year input VAT recovery will need to be revisited to: Review how input VAT has been used in the business to see if there has been any change in use. (Taxable / Exempt) Recalculate VAT Recovery Rates based on the current years sales data Review input VAT allocations to different areas of the business Once the above process has been completed, the recalculated input VAT recovery for the whole year will then be compared with the input VAT reclaimed on the quarterly returns. Any under or over recovery of VAT will then be refunded or repaid to HMRC normally via the first VAT return of the following year. From a business perspective, it maybe important to carry out mid year reviews of the VAT recovery by looking at aspects such as actual VAT incurred and Actual VAT recovery rates so as to not have large swings in irrecoverable VAT which can affect P&L where the input VAT throughput is significant. (Most relevant to partially exempt businesses where VAT recovery is high). Reverse Charges Where firms purchase services from non UK suppliers that would normally have VAT applied in the UK, they will have to self account for reverse charge VAT in the UK. The purpose of this measure is to ensure UK companies have a level playing field competitively and as such ensure companies do not make their purchases abroad just to avoid paying 20% VAT. The following purchases would attract Reverse Charge VAT Legal and Accountancy services Software Advertising Consultancy For example if a UK company purchased legal services from a company in France for £1,000 then the UK company would have to include £200 on its UK VAT return as output VAT and will equally it will able to include £200 as recoverable input VAT. Note: as mentioned under partial exemption above, the level of input VAT recoverable by a business will depend on the type of sales it makes. If a firm only makes taxable (standard and zero rated supplies), then it will be able to recover the full £200 reverse charge VAT which is payable to HMRC. In this case, as the reverse charge VAT payable is equal to the reverse charge VAT recoverable and as such there is nothing to pay HMRC. If the firm also made exempt supplies to it's customers and the French legal fee charge was not related to a specific taxable supply being made by the UK company, then it would only be able to recover a portion of the £200 reverse charge VAT based on its Partial Exemption Recovery rate. On its VAT return the business would enter £200 in box 1 (Output VAT) and £200 in box 4 (input VAT recoverable) and thus box 5 ( VAT payable of recoverable from HMRC ) would be nil. The net values of the services would go in box 6 (net outputs) and (net inputs) respectively. For more information on reverse charges, please click on reverse charge button on the home page. Pre VAT Registration Expenses Where a business buys goods or services before it registers for VAT, to support taxable business activities when it is registered, it can recover the tax provided that: in the case of goods (either stock for resale or fixed assets), the goods remain on hand at the date of registration and will be used in the newly registered business. These goods must have been bought within the time limits that are set out in regulation 111; for businesses with a registration date after 1 April 2010 the time limit will be 4 years in the case of services the supply was made not more than six months before the date of registration. Six months represents a period in which it is deemed that services obtained will relate to business activity carried on at the time of registration. Tax incurred on goods on hand at registration (other than capital items - see below) cannot be deducted if the VAT was incurred outside of the time limits set out in regulation 111. This includes VAT incurred on services performed on those goods. If a business is given a backdated registration date this becomes the relevant date for working out the extent of the time limits. Businesses are not required to reduce the VAT deducted in respect of pre-registration use of fixed assets. For example, VAT incurred on a van purchased three years before registration and used before and after registration would be recoverable in full, subject to the normal rules on VAT deduction. You can only reclaim VAT on purchases for the business now registered for VAT. They must relate to your ‘business purpose’. This means they must relate to VAT taxable goods or services that you supply. Please see below HMRC link for more information. VIT32000 - How to treat input tax: pre-registration, pre-incorporation and post-deregistration claims to input tax under regulation 111 - HMRC internal manual - GOV.UK (www.gov.uk) Required VAT Records and Accounts All taxable persons must keep and preserve certain records and accounts. This VAT record-keeping requirements that anyone who is registered for VAT must comply with includes: The VAT account What records must be kept Maintaining and preserving records For more information see Record keeping (VAT Notice 700/21) . -Contains public sector information licensed under the Open Government Licence v3.0. E - Invoicing in UK from 1 April 2029 Read More VAT Digital AI VAT Explained VAT Registration Making Tax Digital Place of Supply Business Expenses VAT Invoicing VAT Accounting P&L - BS & VAT VAT - Risk Correcting VAT Errors Disbursements VAT Exemptions Importing & Exporting Reverse Charges Salary Sacrifice & VAT VAT - Employee Expenses Bad Debt Relief Motor Vehicles & VAT Self Billing Agreements VAT Automation Selling a Business Debt - (Sale of Debt) Pension Schemes Opting to Tax Property Barter & Part Exchange Capital Goods Scheme Agents and VAT Catering - Food & Drink Delivery of Goods Margin Schemes Intercompany Recharges Risk & Control Framework Business Risk Reviews Banks & VAT Barristers & VAT Charities & VAT Commodities & VAT Construction (CIS) & VAT Crypto Currencies Digital Services Global VAT Rates Energy & VAT Financial Services & VAT Insurance & VAT Intermediaries & VAT Limited Partnerships Online Market Places Supply of Staff & VAT Taxi Services & VAT VAT Number Checker VAT Groups Good & Services VAT VAT Schemes E Invoicing UK VAT IOSS Scheme Senior Accounting Officer VAT Risks - Where? Read More Business Expenses & VAT Read More Listed Places of Worship Grant Scheme - £25,000 Cap on VAT Recovery Read More UK Financial Services - VAT Explained. Explore Financial Services Product List and VAT Liability Explore Are you Self Employed or a Landlord? Making Tax Digital Applies from 6 April 2026 Explore HMRC - (P2P) Procure to Pay (Accounts Payable) Risk Mitigation Explore HMRC's Transformational Roadmap Enhanced Learning and AI Tools No MTD for Corporation Tax E Invoicing Rollout Phase out of Govt Gateway Stricter Rules for Umbrella Companies Read More Reverse Charges - How VAT Applies Read More The Sale of Debt & VAT Read More UK VAT Guide - Comprehensive UK VAT Compliance Guide. Select Topic Welfare & Care Services

VAT DIGITAL.COM - UK & Global VAT News & Compliance for Europe, the Americas, Africa & Asia, Online AI VAT Advisor,E Invoicing, HMRC & Case Law updates, MTD, etc Making VAT Simple Making VAT Simple Vat Digital.Com Vat Digital.Com VAT DIGITAL.COM - UK & Global VAT News & Compliance UK & Global VAT News US Sales Tax News UK VAT Guides UK Tax News & Updates Country VAT Rates Country VAT Guides HMRC Updates Global E Invoicing News and Updates VAT Automation Guide VAT for Small Business VAT for Banking & Financial Services VAT for the Construction Industry VAT for the Energy Industry VAT AI Advisor - Online 24/7 VAT Accounting & VAT Recovery VAT Returns & E Filer Links VAT Risks & Controls Global VAT Calculators VAT DIGITAL. COM - Making VAT Simple VAT Digital AI - Advisor - Online 24/7 Demystifying VAT - Online 24/7 VATDIGITAL.COM - VAT Digital.Com making vat simple Intercompany Recharges and VAT - VAT Rules & Risks Read More VAT Digital.Com making vat simple Financial Services VAT Banking - VAT UK VAT & When to Register Country VAT Guides UK VAT Guide VAT News UK Tax Rates Check a VAT Number is Valid Global VAT Rates VAT on Business Expenses Europe VAT Guide UK - VAT Invoicing Rules Finance - VAT Liability Table E - Invoicing Updates Mergers & Acquisitions VAT Construction - VAT P/L & VAT VAT Risk VAT Accounting Reverse Charges VAT Rates - Goods & Services Importing & Exporting VAT Groups Intercompany Recharges & VAT Selling a Business & VAT VAT Risk & Control Framework VAT Compliance Automation VAT & Food VAT Error Correction Careers in VAT Bad Debt Relief - UK VAT Digital Media Banking - VAT Compliance & Advisory Investment Banking Corporate Banking Retail Banking Private Banking Read More Partial Exemption Special Methods (PESM) VAT Allocation & Recovery MTD & VAT E2E Automation Interco Recharges & Reverse Charges Banking income - VAT Liability International Trade Fixed Establishment & VAT Grouping Risk Management & Controls E Invoicing

VAT digital media - Global VAT, GST, E invoicing and Key Case Law updates from around the globe. Europe VAT News Africa VAT News US Sales Tax News International VAT News VAT Digital Media - Keep up to Date with the latest VAT, GST and E Invoicing News Asia VAT News South America VAT News Global e invoicing News OECD Digital Platform Review

Global e invoicing guide - e invoicing explained including the different e invoicing models, UK, EU, Americas, Middle East and Asia timelines and updates. Electronic Invoicing Guide - e Invoicing Guide, News, Models and its Global Implementation What is Electronic Invoicing Electronic Invoicing (e-invoicing), is the process where invoices are digitally exchanged between suppliers and buyers. An e-invoice is an invoice that has been issued, transmitted and received in a structured data format which allows for its automatic and electronic processing. Electronic invoicing in Europe for businesses and Public Administrations is governed by the EU Standard on e-invoicing with its foundations based on the EU e-invoicing directive. This model has also been adopted by other non EU countries such as Australia, Singapore, Japan etc . Many countries in Europe and around the world have already implemented or are adopting e-invoicing for Business to Government (B2G) (Public Administration) and Business to Business (B2B) invoicing as they continue to move into the digital age. The below e invoicing guide provides a comprehensive Benefits of Electronic Invoicing: Eliminates the need to review paper invoices Introduces integrated electronic formats into invoicing processes Streamlines the Accounts Payable process with E2E automation for invoicing and payments Reduces risk and improves accuracy Reduces invoicing processing costs as automated Enables companies to manage their procurement and invoicing with Government Institutions more efficiently Faster processing and payment of invoices Facilitates greater Electronic Invoicing in Europe E-invoicing in the UK E invoicing as announced in the UK Autumn Budget of 2025 will be mandatory in the United Kingdom from 1 April 2029 for both B2B and B2G VAT invoicing. While e-invoices can currently be used in the UK, there are no formal standards setting out their format, content, application, or delivery. This means that there is no generally accepted model, and multiple, potentially incompatible, approaches can be in use. The exception to this is suppliers to NHS England who are required to issue e-invoices via the Pan-European Public Procurement On-Line (PEPPOL) network. Although several accountancy software providers offer e-invoicing capability in the UK, we understand that the uptake of e-invoicing is low. UK E-Invoicing: core interoperability network announcement On June 23 2026, The UK government has announced that the electronic procurement system Peppol will be the core interoperability network for e-invoicing in the UK. This will give software developers and taxpayers an indication of the direction of travel for our work towards the e-invoicing mandate in 2029, enabling them to begin planning their product development and rollout of e-invoicing. The government will continue to engage with stakeholders regarding the role of legacy systems which cannot interoperate in the future system. Why are standards important? Interoperability: They facilitate the seamless exchange and automated processing of e-invoices between businesses even if they use a different provider (like sending a text to someone on another phone network) preventing the need to use different systems for each supplier/buyer. Network effect: Interoperable systems improve business administration efficiency helping to reduce cost and administrative burdens. E-invoice standardisation reduces the work businesses need to do to onboard and maintain suppliers and buyers on their systems. With higher uptake and improved interoperability these benefits are increased. International trade: As increasing numbers of countries adopt e-invoicing models, increasing numbers of UK businesses will need to engage with international systems. Adopting a standard that supports interoperability with international trade partners could support trade and UK businesses. Current standards in the UK An example of standard setting in the UK is the NHS requirement for suppliers to use the PEPPOL standard. The PEPPOL standard is a network used globally by most EU member states, Australia, Japan and Singapore. E-invoices from suppliers in countries mandating PEPPOL and the UK’s NHS can be processed by IT systems with ease, as they share a common standard. This facilitates automated invoice processing, driving efficiencies across both international trade and domestic transactions. Other international standards PEPPOL is not the only international e-invoicing network setting standardised format. There are numerous international, and country specific standards driven by regional and national differences as well as industry specific needs. In this consultation we are not looking to identify a specific standard or standards to adopt in the UK but broader views on how standards could be used to support e-invoicing adoption and increase potential benefits. Models and approaches Voluntary / Mandated G lobally, many countries have taken different approaches to e-invoicing. This includes whether to introduce a mandate. Examples of countries who currently have voluntary models of e-invoicing for Business-to-Business transactions include Singapore, New Zealand and Australia. Each of these countries has introduced standards for software providers to adhere to, to support interoperability between businesses who choose to adopt e-invoicing. Adoption levels have varied between jurisdictions, sectors and business size. Conversely, countries across Latin America, Asia and Europe and several EU member states have introduced mandates for e-invoicing. Businesses falling within a mandate are required to issue and receive e-invoices for all relevant transactions. In the UK, a business can choose whether to adopt e-invoicing systems into their business systems. Under this voluntary system we are seeing increasing number of software providers including e-invoicing as part of their accounting packages. This does carry risk as a business does not know if their supplier will provide e-invoices or their customers will accept them, creating the potential for having to run dual systems. This may reduce the potential benefit of investment. The network effect created by a mandate could maximise the potential benefits of e-invoicing. What is included in mandates varies globally. Examples for Business-to-Business and Business-to-Government transactions could include (but are not limited to): Requiring that e-invoices are issued for all Business-to-Business supplies Requiring that e-invoices are issued for all Business-to-Government supplies Requiring all businesses over a certain size to be able to receive e-invoices Requiring all businesses over a certain size to both issue and receive e-invoice E-invoicing models When considering different models of e-invoicing, a key question is whether a model has centralised or decentralised platforms. With a centralised model, e-invoices are submitted to the tax authority before being issued to the buyer. With a decentralised model, there is no central ‘hub’ through which invoices are routed, with businesses submitting their invoices through their software providers direct to their customers. Centralised models
 Centralised models have been implemented in several countries (such as Italy and Chile) and they require the government to build a centralised system and process all invoices. This model does not always improve business efficiency and is costly for tax authorities to implement, and we do not plan to explore this model in detail. Supplier creates e-invoice and submits to the Central Platform. Central Platform receives the e-invoice and takes any required actions before issuing on to the Customer. This could include standardising, retrieving data or validating and clearing. Customer receives and processes the e-invoice. Payment issued to supplier. Decentralised models In a simple decentralised e-invoicing system, a supplier’s financial system generates an invoice for the buyer. This information is passed through the invoicing network which validates key information. This information is then passed to the buyer’s financial system where it is reconciled against the purchase details and is ready to be paid. This is also sometimes known as a 4-corner model and has been implemented in Belgium and Australia. Businesses use software providers to issue and receive invoices. When Business A issues an invoice to Business B, they upload it onto their e-invoicing platform. Business B then receives it via their platform and it automatically enters their accounting software. Business B can then check the invoice and either query it or issue payment. 4-corner’ model E-invoice created by supplier Supplier’s software provider issues e-invoice Customer’s software provider receives and processes e-invoice Customer issues payment to supplier Decentralised models can be complementary to Making Tax Digital and further build on the business and tax benefits observed in the digitalisation of business records. They also provide greater flexibility to businesses to choose a platform and supplier that fits within their business needs. Real time reporting and Continuous Transaction Controls (CTC) Both centralised and decentralised models offer the opportunity for real or near real-time reporting of transactional data to the tax authority and has been implemented in a number of countries (such as Hungary and South Korea). This data transfer could potentially be automated to support and simplify businesses tax reporting processes and improve tax compliance activity. Decentralised (5 Corner) share model may work as follows: There are variations in how this is operates in practice globally: E-invoice created by supplier Supplier’s software provider issues e-invoice Customer’s software provider receives and processes e-invoice Customer issues payment to supplier E-invoice data is shared in real time, or close to real time with the tax authority. This can occur at the same time the e-invoice is issued, or shortly after. Centralised data share model may work as follows: There are variations in how this is operates in pratcice globally: Supplier creates e-invoice and issues through the Central Platform Central Platform reads the required data and issues the invoice to the Customer Customer receives and processes the e-invoice Payment issued to supplier Real-time reporting requires businesses to submit transactional data to their tax authority in real or near real-time. CTC and Decentralised CTC and Exchange (DCTCE) models contrast to the current VAT system as they allow tax authorities to better estimate VAT income, detect discrepancies, identity fraud and support businesses to get their tax right. By building in a data feed to HMRC, it could enable HMRC to take further steps to simplify tax reporting, reduce error and support businesses to get their tax right. This could include: improving accuracy of the VAT return and facilitate nudges and prompts to reduce errors more targeted compliance activity reducing the need for compliance engagement and visits to compliant businesses supporting HMRC efficiency A data feed also provides potential wider benefits for government efficiency: provides an improved understanding of the economy possibility of using data for business support schemes (for example, in emergency situations similar data has been used to develop and implement business support) The inclusion of a data feed can also be implemented later following the creation of a decentralised system without data sharing. For more in-depth understanding of the EU e Invoicing Directive and the current status of e invoicing globally for B2G (Business to Government), G2G (Government to Government), B2B (Business to Business) and B2C (Business to Consumer), please use the links below. Europe e Invoicing Country Factsheets for each Member State and other countries (europa.eu) Malaysia Tax Authority - e invoicing https://www.hasil.gov.my/en/e-invoice/ Singapore Government Agency - e invoicing https://www.imda.gov.sg/how-we-can-help/nationwide-e-invoicing-framework For more of a detailed and interesting read on global e - invoicing and mandates and challenges faced with implementation of E - Invoicing, please see links below. E-invoicing compliance simplified: Global mandates and trends (Source - Gulf News Feb 24) 2024 Guide to Global e-Invoicing Mandates Position Paper | OpenText https://www.pagero.com/uk/blog/what-is-an-e-invoice (Note these links are displayed here for information purposes only and are not intended to convey ownership or endorsement) Please see below e invoicing country snapshots for B2G / B2B / B2C including implementation timelines. Belgium - E Invoicing Belgium - B2B E Invoicing. On 1 February 2024, the Belgian parliament approved the law implementing mandatory domestic B2B e Invoicing in Belgium as from 1 January 2026. Royal Decree published on 14 July 2025 confirms that the Peppol network will be the default method for issuing these invoices. Belize E - Invoicing Belize Budget 2026/27 - E invoicing and e receipts for B2B Mandated from 2027 As part of its modernization strategy, the Belize Tax Service will oversee the full implementation of Electronic Invoicing supported by the Inter-American Development Bank and CIAT. It is expected that this will significantly reduce opportunities for tax evasion, improve compliance, and simplify reporting obligations for businesses within the GST regime. Source - Belize Budget Presentation Estonia E Invoicing Estonia - will roll out B2B E- Invoicing in two phases. Phase 1 - July 2025 buyers can request e invoices from their suppliers Phase 2 - 2027 Mandatory E - Invoicing for all B2B transactions. France - E Invoicing Mandatory B2B E Invoicing - The issuance of e Invoices in France will be made mandatory on 1 September 2026 for large companies and mid-cap companies, and from 1 September 2027 for Small and Medium Enterprises (SMEs). From 1 September 2026, the obligation for receiving e Invoices will be mandatory for all entities. From 1 September 2026, companies will have to submit their invoices via a government-approved platform, directly or through a compliant solution. Each company must designate its platform to issue and receive its electronic invoices or declare its data. Electronic invoicing concerns all transactions between companies established in France and subject to VAT. The following are therefore subject to electronic invoicing: Supplies of goods or services situated in France which a taxable person carries out with another taxable person and which are not exempt from VAT; the advance payments relating to those transactions; deliveries at public auction of second-hand goods, works of art, collectors' items or antiques. In addition, new information will have to be added to invoices issued to 1er September 2026 for large companies and medium-sized companies (MID-caps) and 1er September 2027 for small and medium-sized companies (SMEs) and micro-companies: - The SIREN number of the customer; - The delivery address of the goods, where different from the billing address; - The information that the transactions giving rise to an invoice consist exclusively of supplies of goods or services or consist of those two categories of transactions; - The payment of VAT on debits, where the supplier has opted for it. (Source: French Tax Authority) Germany - E Invoicing - Mandatory B2B 1 Jan 2025 Mandatory B2B Invoicing introduced from 1 Jan 2025 - Transitional period - Mandatory issuance of e Invoices in Germany for companies with an annual turnover exceeding 800 000, 00 EUR will occur in 2027 and the mandatory issue of e Invoice for every B2B transaction will come into effect in 2028. Greece E Invoicing Mandatory B2G e Invoicing since September 2023 Mandatory B2B e Invoicing proposed 2 February 2026 Ireland - E invoicing Mandatory e invoicing will be rolled out in 3 phases. Phase 1 (November 2028) - Mandatory e Invoicing Real-time Reporting for B2B Domestic Transactions for VAT Registered Large Corporates. Phase 2 (November 2029) - Mandatory e Invoicing Real-time Reporting for B2B Domestic Transactions for all VAT registered businesses engaged in intra-EU trade. Phase 3 ( July 2030) - Mandatory e Invoicing Real-time Reporting for all Intra-EU B2B Transactions for all VAT registered businesses engaged in intra-EU trade Italy - E Invoicing Mandatory E invoicing - As of January 2019, e Invoicing in Italy has been mandatory for B2B and B2C among Italian operators. . Luxembourg E Invoicing B2G - Mandatory Since 2022. B2B - Proposed timeline for domestic transactions is: * 1 January 2028 - Mandatory for all businesses to receive electronic invoices * 1 July 2028 - Mandatory for medium sized and large businesses to issue electronic invoices * 1 January 2029 - Mandatory for all businesses to issue electronic invoices Malaysia - E - Invoicing Mandatory E - Invoicing from 1 August 2024 for larger entities then phased in stages to end of 2025. Timeline * Taxpayers with an annual turnover or revenue of more than RM100 million - 1 August 2024 * Taxpayers with an annual turnover or revenue of more than RM25 million and up to RM100 million - 1 January 2025. * Taxpayers with an annual turnover or revenue of more than RM500,000 and up to RM25 million - 1 July 2025. * Taxpayers with an annual turnover or revenue of up to RM500,000 - 1 January 2026 Netherlands - E - Invoicing B2B Mandatory E-Invoicing from 1 July 2030 & Digital Reporting for Domestic Transactions from 1 July 2031 Nigeria E - Invoicing The Federal Inland Revenue Service (FIRS) will begin rolling out E invoicing in Nigeria using the Merchant Buyer Solution (MBS) platform from 1 August 2025. Larger taxpayers or companies with revenue of N5bn or over have been granted an extension to 1 November 2025 to onboard onto the MBS. For more information on how the MBS will operate, please visit https://einvoice.firs.gov.ng/ Norway E-Invoicing Norway Proposes Mandatory B2B E invoicing from 1 January 2027. (Brought forward from 1 Jan 2028) 1 January 2030 - Fully Digitalised accounting / bookkeeping system requirements Oman - Mandatory E Invoicing From 1 April 2027 Oman - Mandatory E Invoicing (Phase 1) from 1 April 2027 for VAT registered businesses with annual turnover greater than OMR 5m and (Phase 2) from 1 October 2027 for VAT registered businesses with annual turnover of OMR 5m or less. Pakistan - E invoicing Pakistan - Federal Board of Revenue - Mandatory e invoicing for all sales tax registered businesses to be introduced in phases from September 2025. https://download1.fbr.gov.pk/SROs/2025811681810559SRO1413.pdf Poland - E Invoicing. E Invoicing B2B - Mandatory e Invoicing for all commercial transactions (B2G and B2B) e Invoicing from April 2026. Portugal E - Invoicing The European standard on e invoicing The European standard on e Invoicing is fully implemented. Electronic invoicing is mandatory for B2G relations between suppliers and public administrations. B2B e invoicing is still optional and private companies can use PDF invoices or decide whether to adopt electronic invoicing. However, as of January 1, 2026, a Qualified Electronic Signature (QES) or a Qualified Electronic Seal will be mandatory for PDF invoices in B2B and B2C transactions. So while companies can currently use PDF invoices, they will need a QES from January 1, 2026 issued to taxpayers by certified third-party provider to be considered compliant. Romania - E Invoicing Romania - B2B E Invoicing Mandatory from 1 July 2025. San Marino - E - Invoicing - Mandatory e - invoicing will be introduced for domestic B2B transactions from 1 Jan 2027. - Mandatory cross border e - invoicing for goods between San Marino and Italy since July 2022. Singapore - E - Invoicing Mandatory E - Invoicing for new companies from 1st November 2025. E-Invoicing Journey - Singapore * 2018 - IMDA adopted Peppol as the standard for the nationwide e-invoicing initiative and became the first Peppol Authority outside of Europe. * 2019 - The network was launched with 11 Access Point providers. * 2020 - The Government public procurement was connected to Peppol, providing an additional channel for Government vendors to issue invoices to Government. * 2021 - IMDA rebranded Peppol to InvoiceNow in Singapore, drawing on the public’s familiarity with PayNow, the widely adopted e-payment system in Singapore. * 2022 - IMDA introduced additional document types – purchase order and invoice response, on the InvoiceNow network, aiming to further streamline the procure-to-pay process for businesses. * 2023 - The Government announced the plan to make InvoiceNow the default channel for public procurement in the next few years. * 2024 - IRAS announced the GST InvoiceNow Requirement, which requires GST-registered businesses to transmit invoice data to IRAS via the InvoiceNow network. The requirement will be implemented progressively, starting from November 2025. * 2025 - Progressively implementation of e invoicing starting from November 2025. Source - Singapore Gov Agency Slovakia - E invoicing Slovakia has had mandatory E - invoicing for B2G since 2022 and mandatory B2B e - Invoicing will commence from January 2027. Slovenia E - Invoicing * B2G - e invoicing has been mandatory in Slovenia since 1 January 2015. * B2B - e invoicing will be mandatory in Slovenia from 1 January 2028. South Africa - E-invoicing South Africa - E - Invoicing mandatory from 2028 with real-time reporting of transactions. SARS proposes in its consultation (Aug 26) to use 5 corner decentralised model (Peppol) for e-invoicing in South Africa with real-time e reporting to the tax authority and pre-filled tax payer VAT returns. Spain E Invoicing E Invoicing B2B Law 18/2022 - Businesses with total revenues of 8 million Euros or more a year will be required to comply with the mandate by July 2025 and other businesses a year later in 2026. ( 24 March 2026 Council of Ministers adopt Royal Decree mandating electronic invoicing) UAE - E - Invoicing Mandatory E - Invoicing for all transactions from July 2026. Feb 26 Ministry of Finance Publishes E invoicing Guidelines. See Link UAE Electronic Invoicing Guidelines United Kingdom - E Invoicing Autumn Budget 2025 - UK E - Invoicing for B2B and B2G will be Mandatory from 1 April 2029. https://www.gov.uk/government/consultations/promoting-electronic-invoicing-across-uk-businesses-and-the-public-sector/outcome/promoting-electronic-invoicing-across-uk-businesses-and-the-public-sector-consultation-response#foreword

Global VAT News - Get a round up of the latest UK, EU and Global VAT news including HMRC and Tax Authority updates, UK Tax Tribunal, Supreme Court & CJEU case updates. Global VAT News - VAT News, stay up to date with the latest UK, EU, Asia, Africa and Americas VAT News and articles. Outlined in the VAT news galleries below are summaries of the latest VAT news items and Tribunal / Court cases in relation to VAT and there is a separate section for global news items, updates and court cases relating to VAT with relevant links provided. The world of VAT and GST is rapidly changing, driven by the increased focus on digitalisation, e-invoicing, and tax authority focus on the tax gap and harmonisation. The EU's VAT in The Digital Age package (VIDA) reforms will become mandatory from 1 July 2028 with e invoicing for B2B inter EU transactions becoming mandatory from 1 July 2030. The UK Chancellor announced as part of the 2025 Autumn budget that e invoicing will be mandatory in the UK for B2B and B2G VAT invoicing from 1 April 2029. E invoicing in particular has been mandatory for years in many South American nations such as Chile, Argentina, Brazil, Columbia and in some European countries such as Italy. European countries such as Germany, Romania, Poland have adopted mandatory e invoicing more recently. In Africa, Kenya, Nigeria, Egypt, Uganda and Tunisia have all adopted and implemented mandatory e invoicing. Latest UK VAT News VAT News - 10 September 2026 - HMRC issues GFC20 Guide - VAT on Fund Management Services - How to determine the correct VAT treatment of outsourced fund management services. The guide sets out HMRC’s recommended approach for the correct VAT treatment of outsourced fund management services, including whether services should be treated as single or multiple supplies. See link below. Help with VAT on fund management services — GfC20 VAT News - 26 July 2026 - UK Government announces temporary (6 months) cut to the rate of VAT on domestic electricity from (5% to 0%) From 1 Oct 2026 The United Kingdom Government (new Prime Minister) announced on the 26 July 2026 that VAT on domestic electricity will be cut from 5% to 0% from 1 October 2026 for 6 months. The reduction is expected to apply to: Domestic Customers (households) Businesses that consume electricity within the de minimis level (33 kilowatt-hours (kWh) per day or 1,000 kWh per month) Residential Care Homes Charities - Non Business Electricity Use Other ancillary and inseparable electricity related supplies that are currently covered under qualifying use Points to note are: The change will not apply to domestic gas consumption The change will likely widen the disparity between the VAT on domestic driveway electricity charging (5% to 0 %) and charging at public charging points where 20% VAT is applicable. See below announcement link. New PM cuts tax on household electricity bills to give ... HMRC Guidance on how the VAT rate should be applied to pre and post 1 October 2026 consumption is set out in notice VFUP3100. (See below extract). For supplies spanning a change of VAT rate, businesses may normally choose to adopt the rate or liability in force at the basic tax point. But as there is no basic tax point for supplies of electricity or piped gas, our policy on previous occasions has been to accept an apportionment based on: A meter reading by the customer or the supplier (this takes precedence, if known); The number of days before/after the change of rate; or The number of days before/after the change of rate, but weighted for seasonal use. This method - generally based on the supplier’s billing system that estimates consumption - should be agreed between HMRC and the supplier. VAT News - June 2026 - HMRC Update on VAT Recovery for funded Occupational Pension Schemes HMRC have updated their guidance on the recovery of input VAT incurred directly by the employer in relation to its funded occupational pension scheme as follows: Input tax incurred by an employer on services provided in relation to its funded occupational pension scheme will be the employer’s input tax. This input tax is considered an overhead, as it is directly linked to the employer’s business as a whole. It is therefore recoverable in full, subject to any partial exemption restrictions. This treatment is the same whether the costs incurred relate to administration or management of the scheme’s investments. If the employer contracts directly with a provider of fund management services, then it can deduct the input tax incurred, with the normal evidential requirements, such as an invoice in its name (an invoice ‘care of’ will be acceptable for this requirement, and alternative evidence may be considered in line with guidance at VIT31200). Invoices correctly made out to a Trustee, and not the Employer may not be re-issued to the sponsoring employer, in line with normal VAT invoicing rules. Any input tax on them is the Trustees to be deducted in line with their Partial Exemption recovery position. If the contract for management services is between the fund manager and the trustees, then for the employer to deduct, the trustees should make a taxable charge to the employer for their services of running the scheme on the employer’s behalf. The employer will then be able to deduct input tax on this charge. As per normal VAT rules, issuing an invoice which is not paid does not give a right to recovery. A payment must be made; an agreement to make contributions does not provide proof of payment of VAT invoices. There are two routes for an employer to evidence that they paid the costs of running a scheme: Invoices from the fund managers issued to the employer directly which they paid or deducted from the pension pot; either is acceptable as long as the employer holds an invoice and can evidence the payment; or The Trustees of the scheme incurred all of the costs (unable to recover because they did not incur costs for their taxable business activity) and raise a taxable charge for managing the scheme to the employer, so that they hold a valid invoice. Source - HMRC Input VAT manual VIT44650 - Link - VIT44650 - Specific issues: Attribution of VAT on services .. . VAT News - May 2026 - Temporary Introduction of Reduce Rate VAT of 5% The Government has announced the introduction of a temporary reduced rate of VAT (5%) for supplies of children’s meals and tickets to certain attractions, intended to reduce the cost of selected activities and services for families with children during the summer holiday period. The reduced rate will apply from 25 June 2026 to 1 September 2026 (inclusive). The reduced rate for children’s meals and children’s tickets for cinemas, theatres, exhibitions and shows covers those supplies that are marketed, priced and presented as intended for children. These do not generally apply to supplies aimed at adult customers, except where those supplies form part of a qualifying family package as described in this brief. The reduced rate will apply to tickets for all customers for attractions set out within this brief. This cut in VAT rate from the standard rate of 20% will be introduced by statutory instrument and have effect on admissions from 25 June 2026 to 1 September 2026 and will apply to the following supplies (where conditions are met): Children’s meals Children’s cinema, theatre, show and concert tickets Admission to certain attractions Read More: Temporary reduced rate of VAT for children's meals, tickets ... VAT News - 18 June 2026 - Beritaz Care Group vs HMRC - FTT Beritaz Care Group submitted an application to add a care home to its VAT Group (back dated 4 years) and HMRC missed the 90 day cut off to refuse the application which meant VAT grouping was deemed at that date rather than the earlier back dated date on the submitted VAT group application. The FTT ruled that it had no jurisdiction in law to back date application before the deemed date. See attached link to FTT decision below: Beritaz Care Ltd v Revenue and Customs (VAT - Grouping UK VAT News - Latest UK VAT News headlines 10 Sept 26 - HMRC issues GfC20 - VAT liability on Fund Management Services and Outsourced Fund Management Services. ( Single or Multiple Supplies) 8 Sept 2026 - UK VAT refunds for non-UK. All non-UK businesses that are members of a VAT group must submit their own claim for any UK VAT they incur. HMRC will no longer accept claims from a representative member unless that representative member incurred the VAT. 2 Sept 2026 - HMRC Brief 9, VAT liability of supplies of education by alternative providers of higher and further education. Following the Court of Appeal’s decision, HMRC recognises that some businesses may want to protect their position, pending the outcome of the appeal to the Supreme Court. July 21 2026 - UK Government announces temporary cut (6 months) to the rate of VAT on domestic electricity from 5% to 0% from 1 Oct 2026 . 8 July 2026 - Capital Goods Scheme Simplification. HMRC announces that from 29 July 2026, computers and items of computer equipment will be removed from the list of assets covered by the scheme. The expenditure threshold for land, buildings and civil engineering work will increase from £250,000 (exclusive of VAT) to £600,000 (exclusive of VAT). 23 June 2026 - The UK Government has announced that the electronic procurement system Peppol will be the core interoperability network for e-invoicing in the UK. This will give software developers and taxpayers an indication of the direction of travel for our work towards the e-invoicing mandate in 2029, enabling them to begin planning their product development and rollout of e-invoicing. The government will continue to engage with stakeholders regarding the role of legacy systems which cannot interoperate in the future system. 23 June 26 - UK Government announces plans to bring forward plans to scrap duty relief on cheap imports valued at £135 and also review how online sellers pay VAT to clamp down on dodgy traders. The aim is to create a level paying field between the UK high street and online sellers. As part of this review, the Government will consult on reforming VAT on land for new social housing, helping speed up delivery of affordable homes. 18 June 2026 - FTT Case -Beritaz Care Group vs HMRC - Beritaz submitted an application to add a care home to its VAT Group (back dated 4 years) and HMRC missed the 90 day cut off to refuse the application which meant VAT grouping was deemed at that date. FTT ruled that it had no jurisdiction to back date application before the deemed date. 8 June 2026 - Barclays Services Corp vs HMRC - UTT upholds HMRC's refusal admit BSC to the BBPLC VAT Group. Fixed Establishment Case June 2026 - HMRC VS Bolt Services UK Limited. The UK Court of Appeal passed judgment in favour of HMRC in its appeal against the earlier UTT ruling that Bolt Services UK Limited was able to use the "Tour Operators Margin Scheme" to only account for VAT on the margin on customer journeys via its App as it was intended for the travel agent industry. April 2026 - Domestic Reverse charge does not apply to the supply of electricity at a charging point for electric vehicles. This is because either the vehicle user is not VAT registered, or because it is not a wholesale supply. This applies whether or not the electricity is supplied at a public charging point. Paragraph 3.2 describes wholesale as having an ordinary meaning where the supply is business to business and there is little or no consumption of the supply. Electric vehicle charging does not fall within this definition. HMRC to Appeal FTT Decision - Feb 2026 Ruling that 5% VAT should apply to EV charging in Public Places where consumption is below 1000 kwh / month for a customer. May 2026 - Colchester Institute vs HMRC - Court of Appeal - Grant Funding from Gov't agencies such as SFA/ EFA for building works was consideration for educational services and thus Vatable as there was a direct link between grant funding and the supply of educational services. Mar 26 - The UK VAT Gap (difference between the VAT HMRC expects vs receives) widens by £3bn for 2024/25 from initial estimate of £8.9bn to £11.9. Carbon Border Adjustment Mechanism - HMRC Technical Consultation on Draft Legislation open until 24 March 2026. UTT - Feb 26 - Upholds FTT decision in Lycamobile vs HMRC case confiming that payment for plan bundles are subject to VAT immediately and not when customers access or use associated benefits. Feb 26 - British Independent Retailers Association (BIRA) and coalition of key retailers and tax experts write to UK Treasury calling for consultation on online VAT reform. HMRC - Guidlines for Software Developers using Generative AI Products used for Tax & VAT Reporting Budget 2025, Climate Change Levy Exemption for electricity used in electrolysis to produce hydrogen and natural gas used as a source of carbon dioxide to produce sodium bicarbonate from soda ash will be exempt from the Climate Change Levy (CCL) From 2 Jan 2026, Online Taxi operators can no longer use the Tour Operators Margin Scheme loophole. VAT must be paid on full ride fare. (Not commission only) FTT - Rules that the supply of Locum (temporary medical staff) is exempt under 5, Group 7, Schedule 9, VAT Act 1994. ICAEW - Finance Bill Threat to Tax Advisors 2026 - Read ICAEW Article! Electronic Invoicing will be Mandatory in the UK from 1 April 2029 for all B2B transactions. Autumn Budget UK 2025 - Key VAT & Tax Changes. HMRC Issues New VAT Grouping Rules For Overseas Establishments Global VAT News - Global VAT News Headlines September 26 - Netherlands confirms plans to introduce mandatory B2B e-invoicing for domestic transactions from 1 July 2030 and e reporting from 1 July 2031. 18 Aug 2026 - South Africa VAT modernisation consultation including proposed mandatory e invoicing (5 corner Peppol model) and e reporting. June 26 - OECD - Proposed targeted amendments to the Model Reporting Rules for Digital Platforms to support exchange of tax information June 2026 - Moldova to introduce VAT on international purchases from online market places to protect domestic traders. All goods will be subject to VAT at 20% from 1 October 2026. May 2026 EU Court of Justice rules that Stellantis Portugal - Inter-company Transfer Pricing adjustments with local dealers were not vatable supplies and thus VAT was not due. Mar 2026 - European Commission launches public consultation on the revision of the eInvoicing Directive Mar 2026 - From 10 April 2026, Gibraltar is introducing a new Transaction Tax of 15% on imported and locally Manufactured goods. The rate will rise to 16% in 2027 and 17% in 2028. Mar 26 - South Africa announces increase in VAT registration threshold from R1m to R2.3m and the voluntary registration threshold from R50,000 to R120,000, effective 1 April 2026. UAE Ministry of Finance - Feb 26 - Publishes E Invoicing Guidlines. Nigeria Revenue Service (Feb 26) Implementation time line guide for e invoicing (MBS) guide. British Columbia - From 1 October 2026 - Provincial Sales Tax (PST) applicable to Accounting, Architectural, Engineering, Security Services, Property Management Services. Also PST Exemptions for Basic Cable Television, Residential Landline Telephone Services, and some Clothing and Footwear items will be Eliminated. CJEU AG Brkan opinion on the VAT treatment for the Management of Credit where the loan has been sold (Securitisation). Where Credit Management Services continue to be provided by the original loan issuer, the services are not Exempt under art. 135(1) (b) EU VAT Directive. (Basically Taxable) Lebanon - VAT increased From 11% to 12% to fund increases in Public Sector Pay. OECD - Digital Continuous Transaction Reporting - Jan 2026 Mauritius Revenue Authority - Foreign suppliers of Digital or Electronic Services in Mauritius must register with the MRA and account for VAT in Mauritius EU Council agrees to levy 3 Euros on small parcels valued at less than 150 Euros entering the EU from 1 July 2026. UAE - Ministry of Finance - From 1 Jan 2026 -VAT Changes to Reverse Charge Invoicing & 5 Year Limit to Input Tax Recovery. RCV - Applies to Scrap Metal Trading From 14 Jan 2026. European Commission Releases Report "Mind the Gap" Estimating the EU VAT compliance gap is EUR 128bn. Portugal Introduces VAT Grouping for Tax Periods Starting 1 July 2026. This will allow VAT amounts owing and recoverable to be netted within the group. However inter-group transactions remain Vatable. Ireland - VAT Groups - Only Branches and Head Offices Established in Ireland Allowed. CJEU - Arcomet Towercranes - Transfer Pricing adjustments - Potentially Vatable India GST Reforms - 2025 Russian Ministry of Finance - Raising VAT rate From 20% to 22% from 1 Jan 2026. Sweden will Temporarily reduce VAT on Food From 12% to 6% from April 2026 OECD - Tax Administration and Digitalisation Report 2025

Use our online VAT Calculators to determine the VAT applicable locally on your supplies of goods and services in the UK, EU and other major jurisdictions. VAT Calculators - UK and Global VAT Calculators Our aim at VAT Digital.Com is to help businesses and individuals demystify VAT by providing them with relevant and up to date news and information, AI and other calculation tools to simplify VAT reporting and help them stay compliant with Tax Authorities. As such we have built a range of free to use VAT calculators to enable you to quickly determine VAT amounts for different VAT reporting scenarios. UK VAT Calculator Use this calculator to determine what the VAT amount should be on your invoices or ascertain the VAT amount included within a gross amount on an invoice. EU VAT Calculator Use this calculator to determine what the VAT rate, VAT amount and VAT inclusive total should be for invoicing for specific EU countries. Domestic Reverse Charge VAT Calculator Use this calculator to determine what the domestic reverse charge VAT amount should be for goods and services subject to UK domestic reverse charge legislation including which boxes to include amounts in on your VAT returns. Use the slider to set the applicable VAT rate.

Read our Comprehensive Europe VAT guide including the One Stop Shop process, Cross Border VAT Refund for EU businesses, Small Business Scheme, VAT in the Digital Age etc. Europe VAT Guide - Europe VAT - Guide for Businesses Operating in the EU European Union The European Union (EU) is a political and economic union of 27 countries. It comprises a single market which allows free movement of goods, capital, services and people between member states. The EU countries include: Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden. Value Added Tax (VAT) The Value Added Tax (VAT) is a consumption tax levied on nearly all goods and services bought and sold and brought into the EU and is ultimately borne by the final consumer. VAT is charged, at the applicable rate, on the sales price of the goods or services. VAT is collected at each stage along the supply chain. It is charged on the value added to goods and services at each stage of production and distribution based on a standard set of invoicing rules. Each EU country is responsible for setting their own VAT rates but the standard rate cannot be less than 15% and the reduced rates cannot be less than 5%. VAT-registered businesses can deduct the VAT they have incurred on purchases from other EU & Non EU businesses from the VAT they have collected from businesses they have sold goods or services to. This means where a business makes purely taxable sales (not Exempt) they are tax neutral in that there is no VAT loss or P&L VAT cost. To calculate VAT on the net sale price in a EU country, please use our To validate an EU VAT Registration number to ensure its not fraudulent, please see our VAT number checker page Taxable Transactions in the EU Under the VAT Directive, a taxable transaction is a transaction that is subject to VAT. Not all taxable transactions are taxed - some can be exempt. EU rules recognise 4 types of transactions on which VAT is chargeable (Article 2(1) VAT Directive): Supply of goods in an EU country by a business Supply of services Intra-Community acquisition of goods Importation of goods Except for imports, for a transaction to be liable for VAT, it must involve consideration (e.g. payment). However, to prevent avoidance, evasion or distortion of competition, some transactions that do not involve payment are also treated as taxable. Supply of Goods in the EU Main rule: a supply of goods is the transfer of the right to dispose of tangible property as an owner (Article 14(1) VAT Directive) Other transactions considered as supply of goods are (Article 14(2), VAT Directive): the transfer, by order made by or in the name of a public authority or in pursuance of the law, of the ownership of property against payment of compensation; the actual handing over of goods pursuant to a contract for the hire of goods for a certain period, or for the sale of goods on deferred terms, which provides that in the normal course of events ownership is to pass at the latest upon payment of the final instalment; the transfer of goods pursuant to a contract under which commission is payable on purchase or sale In addition, EU countries may regard the handing over of certain works of construction as a supply of goods (Article 14(3) VAT Directive). Supply of Services in the EU Main rule: a supply of services is any transaction which does not constitute a supply of goods (Article 24 VAT Directive) Intra - Community Acquisition of Goods An intra-Community acquisition of goods is the acquisition of the right to dispose as owner of movable tangible property dispatched or transported to the person acquiring the goods, by or on behalf of the vendor or the person acquiring the goods, in a EU country other than that in which dispatch or transport of the goods began (Article 20, VAT Directive). On an intra-Community acquisition of goods, the acquirer is liable to pay the VAT under the reverse-charge mechanism. Example: A French company orders an aircraft part from a German manufacturer. The manufacturer arranges for the part to be air-freighted to the French company’s factory in Toulouse. The French company has made an intra-Community acquisition of goods. The manufacturer, on the other hand, has made an exempt supply of goods. Importation of Goods into the EU The importation of goods is a taxable transaction. Anyone who imports goods into the EU (business, non-taxable legal entity - such as a public body, private person, etc.) is liable for VAT on the transaction. Under EU VAT rules, import means the entry into an EU country of: Goods which are not in free circulation Goods which are in free circulation from an EU customs territory not covered by EU VAT rules (Article 30, VAT Directive) Free circulation means: The goods have complied with all import formalities The country of importation has levied any customs duties or equivalent charges due (with no total or partial drawbacks) VAT in The Digital Age (VIDA) Europe VAT in The Digital Age is an EU package adopted in March 2025 which aims to modernise the VAT system in line with digitalisation, reduce fraud and make the system more efficient for businesses. The package is made up of 3 main pillars with an implementation timeline between 2025 to 2035 an include: Real time Digital Reporting Requirements for cross border (B2B) EU trade based on e-Invoicing using structured electronic invoices for real-time digital reporting.The timelines for implementation are (a) 14 April 2025 - EU Member States can introduce mandatory domestic e invoicing without requiring EU approval (b) 1 July 2030, E-invoicing will become mandatory for all cross-border B2B transactions in the EU. (c) 1 January 2035, all domestic e invoicing and reporting must align with the EU standard. Platform Economy - There will be new rules for online platforms in the short-term accommodation rental and passenger transport sectors. Platforms facilitating supplies in the passenger transport and short-term accommodation sectors will become responsible for collecting and remitting VAT to tax authorities when their users do not, for example because they are a small business or individual providers. This will become effective from 1 July 2028. Single VAT Registration - Building on the already existing ‘VAT One Stop Shop’ (OSS) model for e-commerce, the proposals would allow more businesses selling to consumers in another EU country to fulfil their VAT obligations via an online portal in one EU country. Further measures to improve the collection of VAT include making the ‘Import One Stop Shop’ (IOSS) mandatory for certain platforms facilitating sales by persons established outside the EU to consumers in the EU. This will become effective from 1 July 2028. In May 2026, the European Commission has published the work programme for VAT in the Digital Age (ViDA), covering implementation activities planned for 2026. See link to information : VAT in the Digital Age: 2026 Work Programme available EU Cross Border Refunds for EU Businesses EU businesses can claim and obtain refunds of VAT incurred in performance of their business in other EU member states where they do not supply goods and services.and are not VAT registered there. So in effect, businesses should not have been based in the respective EU Member State during the period the refund claim relates to, or supplied goods and services (including to customers required to apply the reverse charge procedure). Requests for refunds must be made to the claimants own country Tax Authority via their online portal where they will be checked for their validity and the claimants identity and VAT registration number will also be verified. Once verified, claims will be forwarded by the businesses Tax Authority to the Member State where the VAT was incurred provided: The claimant is a taxable person Does not supply only exempt goods and services Is not covered by the special scheme for small business Is not covered by the flat rate scheme for Farmers For more information on the refund procedure, see the Summary of VAT refund procedure Source; European Commission EU Changes From 1 January 2025 Place of supply for Virtual / live Streamed Events On 1 January 2025 EU VAT rules change for businesses providing virtual and streaming services for conferences, distant learning and other live events streamed online (with a fee for viewing). From 1 Jan 2025, EU countries must apply the 'where services are consumed' rule and VAT will be accountable in the country of the recipient of these services. This change basically aligns the VAT treatment of virtual services with electronically supplied / digital services. Currently the general B2C rule applies - so VAT is due the supplier's country. Businesses in the EU providing these services will need to update their billing systems to reflect this change so that VAT will not be applied locally. Recipients of these services will need to ensure they account for VAT locally on these services. Small Business (SME) VAT Exemption Scheme From 1 January 2025, the special VAT regime (the SME scheme) allows small enterprises to: sell goods and services without charging VAT to their customers (VAT exemption) and, alleviate their VAT compliance obligations. Small enterprises choosing VAT exemption will lose the right to deduct VAT on goods and services used to make exempt supplies. Who Can Benefit Any small enterprise with a total annual turnover of no more than EUR 100 000 (or the equivalent in national currency) in all Member States in the current calendar year and in the previous calendar year are eligible for the VAT exemption in its Member State of establishment (MSEST) and/or in other Member State(s) under the cross-border SME scheme. This is applicable only if the Member State concerned has implemented the scheme in its national legislation. The SME scheme is optional. Non-EU small enterprises cannot apply the SME scheme. In the context of the SME scheme, small enterprises established in the United Kingdom, including Northern Ireland, are non-EU small enterprises. New Maximum for National Annual Threshold The maximum national annual threshold set by Member States under which small enterprises can VAT exempt their supplies of goods and services under the SME scheme (domestic and cross-border) is EUR 85 000 (or the equivalent in national currency). Member States have the possibility to set more than one national annual threshold. These are called ‘sectoral thresholds’. In case a small enterprise can benefit from more than one sectoral threshold, the tax authorities will, based on its activities, inform the small enterprise about the threshold to use since only one threshold can be applied per taxable person. Cross Border Application Small enterprises established in another Member State than where VAT is due can VAT exempt their supplies (cross-border), in the same way that small enterprises established in that Member State already can for domestic transactions. This will help place all small enterprises on an equal footing, whether they are based in that Member State or not. For more information please use this link - VAT rules for small enterprises Distant Selling - VAT Rules The distance selling VAT rules in the EU require businesses selling physical goods online or via mail order including digital services to consumers (business to consumers - B2C) in other EU countries to apply the VAT rate of the buyer's destination country once their total EU wide cross-border sales exceed €10,000 per year. However, provided a businesses EU wide sales do not exceed €10,000 per year, they should charge the VAT rate applicable in their own local EU country for such distant sales. Where the €10,000 per year threshold is exceeded, then EU VAT registered businesses should use the Union (OSS) Scheme (see below) to allow them to register and pay for VAT in one EU country for all EU wide sales. The EU One Stop One Stop Shop Scheme The EU One Stop Shop scheme allows online sellers, including online marketplaces and platforms to register in one EU Member State (member state of identification) for the declaration and payment of VAT on all distance sales of goods and cross-border supplies of services to consumers within all EU member states. This option therefore removes the need for online sellers / marketplaces / platforms to register and declare VAT in each EU country where they have made distant sales. This therefore reduces the administrative burden for taxable businesses making cross border sales from outside or within the EU. The One Stop Shop consists of three optional schemes namely Non-Union (OSS) Scheme - Is for Non EU Businesses (Company, Partnership, Sole Trader) that do not have an established place of business in the EU or a fixed establishment in the EU and provide Business to Consumer (B2C) services in the EU such as accommodation, transportation, admission to events Union (OSS) Scheme - Is for EU e-commerce businesses that have an established place of business in EU or have a fixed establishment) selling B2C goods or services within the EU. Services such as telecommunications, broadcasting, or electronically supplied services and intra-Community distance sales of goods. Import (IOSS) Scheme. Is for EU established or non EU established businesses that sell low value goods of up to 150 euros imported into the EU. Note - for businesses that are not established in the EU, are required to appoint a representative or intermediary before they can use the IOSS scheme. Registration for IOSS To use the Import One-Stop Shop, the company carrying out distance sales of goods imported from third territories, or third countries must register in the Member State where it has established its business, or, if it has established its business outside the Community, in one of the Member States where it has a fixed establishment. There are no VAT advantages in choosing one Member State over the other. VAT Return A taxable person using the IOSS is required to submit a monthly VAT to the Member State of Identification detailing: Total taxable amount for each product supplied to each Member State in which the dispatch or transport of the goods to the customer ends. VAT amount 3) VAT rate The import declaration shall contain the valid IOSS Identification number of the taxable person or of the appointed Intermediary established in the Union. Member State of Identification tax authorities provide the VAT return information to each Member State mentioned on the VAT return in which the dispatch or transport of the goods to the customer ends. VAT Payments The company pays the VAT declared in its VAT return, to the Member State of Identification tax authorities. Member State of Identification distributes the VAT to the Member States mentioned on the VAT return. Registration Process Direct Registration in the Member State of Establishment Any taxable person who carries out distance sales of goods imported into the EU from a third territory or a third country in consignments with an intrinsic value not exceeding EUR 150 can register for the Import scheme. If that person has no establishment in the EU, they need to appoint an Intermediary to be able to use the scheme. For the Import scheme, the Member State of Identification is the Member State in which the taxable person has established their business. About the Intermediary Taxable persons, suppliers, and electronic interfaces, which are not established in the EU or in a third country with which the EU has concluded a VAT mutual assistance agreement, need to appoint an Intermediary to be able to use the Import scheme. Other taxable persons, the ones established in the EU, are free to appoint an Intermediary, but are not obliged to do so. The Intermediary needs to be a taxable person established in the EU. They must fulfil all obligations laid down in the Import scheme for the supplier or electronic interface that appointed them, including the submission of IOSS VAT returns and payment of VAT on the distance sales of imported low value goods. Direct registration with Intermediary and in the Member State of Identification If the taxable person has not established their business in the EU, the Member State of Identification is a Member State in which the taxable person has a fixed establishment. Where the taxable person has more than one fixed establishment, that taxable person can choose any Member State in which they have a fixed establishment to be their Member State of Identification. I f the taxable person is established outside the EU, but in a third country with which the EU has concluded an agreement on mutual assistance for the recovery of VAT and makes distance sales of imported goods from that third country, they are free to choose any Member State as Member State of Identification. In this case, there is no need to appoint an Intermediary to be able to use the Import scheme. For more information please see link below to source information: IOSS Scheme - Customs & Tax EU Learning Portal Sources of Information - EU Commission Matrix of Supply Type and Applicable OSS Scheme Type of Supply Supplies of Services to Consumers (B2C) Distant supplies of goods by deemed suppliers Domestic supplies of goods by deemed suppliers Distant sales of imported goods from 3rd countries in consignments not more than EUR 150 Non - EU Established Entity Non Union Scheme (OSS) Union Scheme (OSS) Union Scheme (OSS) Import Scheme (IOSS) and Intermediary Required (Fiscal Rep) EU Established Entity Union Scheme (OSS) Union Scheme (OSS) Union Scheme (OSS) Import Scheme (IOSS) and Intermediary Required (Fiscal Rep) VAT Calculator

International VAT News - read our collection of international VAT news articles from multiple news websites from around the globe including UK and global sites. "Take the heavy lifting out of your role search!" International VAT News - Read the latest VAT News Headlines Updated 24/7 International VAT News articles from across the globe - providing you with up to date information on changes in global VAT & GST rates & legislation, the ongoing digitalisation of VAT functions and processes including AI and other smart technologies. VAT Digital.Com Demystifying VAT

VATDIGITAL.COM - Providing you with the latest UK and Global VAT News, VAT Compliance Guides, e Invoicing Updates, Country Guides and an AI VAT Advisor - online 24/7. About - VAT Digital.Com - UK & Global VAT News & Compliance Making VAT Simple VAT Digital.Com - Is a London based VAT News, Compliance and Technology platform designed to seamlessly "Demystify VAT " and help businesses and individuals to stay compliant by providing the latest UK & Global VAT , GST & US Sales Tax News, HMRC and other global Tax Authority updates, case law updates and analysis, VAT compliance guides & Tools, VAT calculators, country VAT guides & rates, global E invoicing mandates and implementation timelines. Our website also provides UK VAT guides and updates for specific industries and areas such as Financial Services and Banking, Energy, Construction, Charities, Hospitality & Catering, Taxis & Private Hire and much more. For specific queries on VAT and GST, please use our AI driven " VAT Advisor " for quick, immediate and reliable online guidance 24/7. We hope you find the information on this site useful and enhancing. For any queries, please email the team at enquiries@vatdigital.com or contact us using the form below. VAT DIGITAL. com VAT - TAX - Accountancy - London Anthony Ene - Founder - Accountant & Tax Specialist Our website is updated regularly by our Team of VAT and Tax specialists who have years of experience working in industry and practice. To contact us, please use the form opposite and we will endeavour to get back to you as soon as possible. Alternatively please use the "Lets chat" button. We hope you enjoy reading and find the information on our website enhancing and useful. Best Regards The Team - vat digital .com -------------------------------------------------------------------------------------------------- - Email: enquiries@vatdigital.com Submit Thanks for submitting!

Find out how VAT works in Sweden - Link to tax authority - VAT Rates on Goods and Services Introduction The Standard Rate of VAT in Sweden is 25% and is levied on most goods and services and there are reduced rates of 12% and 6% for items such as hotel accommodation and books respectively. Similar to many other EU and non EU countries, Financial Services such as Loans (borrowings and advances), Foreign Exchange, Payment Services etc are Exempt from VAT. Please click on the attached button for more details. VAT Rates Applicable to Goods & Services sweden-VAT

VAT Risk - Identifying VAT risk areas in an organisation, controls and how to mitigate against VAT errors and Introduction VAT Risk - Failure to introduce and continually develop robust controls in relation to VAT within the E2E processes in an organisation and can result in: The over-payment of VAT to HMRC Under recovery of VAT From HMRC Fraud HMRC Penalties and Fines Reputational Damage with HMRC Increase in VAT P&L Cost VAT Risk Areas Client On-boarding Risks (know your Client Failure to document and verify a client's residence or their businesses country of operation resulting in incorrect VAT determination within billing systems and thus incorrect VAT applied on invoices. Potential fines and penalties from HMRC. Failure to obtain and verify a clients VAT registration number or determine if they are in business resulting in incorrect billing for VAT and potentially aiding fraud. Potential fines and penalties from HMRC. Note - Issues such as above can usually be identified during HMRC audits where samples of client details are requested along with their country of residence or operation which HMRC will then test against VAT applied to their Invoices. Supplier On-boarding Risks Failure to obtain and verify a suppliers VAT registration details and number, potentially resulting in the invalid recovery of input VAT Failure to obtain and verify a suppliers VAT registration details and number resulting in carousel fraud where fraudulent suppliers do not pay the VAT to HMRC. Note: Domestic reverse charging in some industries like Telecoms (mobile phones etc) and the construction industry were introduced to combat this problem. Accounts Payable Risks Invalid VAT Invoices - Failure to review and validate supplier invoices to ensure they are compliant from a HMRC perspective and thus risking recovering VAT on invoices that are invalid resulting in HMRC claw-back and penalties Poorly Trained Staff - Staff with little or no understanding of VAT can result in incorrect coding of invoices for VAT and potential under or over recovery of VAT. Mistakes caused by incorrect coding will result in repeated Error Correction Notices (ECN's) having to be raised and submitted to HMRC which will attract penalties and damage the organisations reputation with HMRC Failure to Reverse Charge Non UK Supplier Invoices for Services - Invoices received from non UK suppliers for services in the majority of cases (exceptions hotels, admissions to events, overseas property transactions, non UK transport) are required to be reverse charge and thus the organisation will be required to self account for output VAT to HMRC. This is a common problem. Failure to Reverse Charge UK Supplier Invoices Subject to the Domestic Reverse Charge Rules - Supplier invoices in certain industries are subject to the domestic reverse charge where the customer is responsible for accounting for the output VAT to HMRC. This is normally the case in the construction industry, wholesale electricity and gas sales, mobile phone and computer chip industry. Processing Invoices Issued in a Foreign Currency where the VAT is not Translated to GBP - Supplier invoices issued in the UK in a foreign currency are required to display the VAT amount in GBP along with the exchange rate used. Invoices where the VAT is not translated into GBP should not be processed as they are invalid from a HMRC perspective. Application of Reverse Charge to Goods that have been Imported to the UK - Where goods have been imported into the UK and import VAT has been levied at the border or via the Postponed VAT Accounting (PIVA) procedure (where VAT is paid and recovered via the VAT return), there is no need to account for reverse charge VAT again. Procedures should be in place in Accounts Payable to identify and distinguish between invoices for goods and those for services to avoid such mistakes and potential VAT errors. Input VAT Directly Attributable to Onward Supplies to Clients - Input VAT that is directly incurred (linked) to onward supplies to clients such as legal fees will often be recharged to the clients during billing. Where the underlying deal is a taxable supply in the UK or the supply is to a non UK counter-party then the associated VAT on such third party cost can usually be recovered in Full from HMRC . If the underlying deal is a Financial Service provided to a UK counter-party and is Exempt from VAT, then the input VAT on such cost (legal fees etc) would normally be fully irrecoverable . If an organisation does not have a process in place to identify and apply the correct VAT recovery to these costs then this can result in the under or over recovery of VAT from HMRC. Third Party Costs Incurred - Input VAT can only be claimed by the recipient company as addressed on the supplier invoice. Therefore where a company pays for goods or services on behalf of a client or customer for example and the invoice is addressed to the client, then the company has no right to recover any input VAT shown on the invoice. (Even though it paid for the services). Hence VAT recovery should be blocked in such cases. Payments made Outside of the Accounts Payable System - Whereas the majority of payments made to suppliers by an organisation will usually be processed by its main accounts payable team, there can be instances where payments are made by functions directly to suppliers and thus the usual checks and application of VAT may be bypassed unintentionally. For example this can occur where front office functions pay for trading type costs direct or where self billing invoices are processed outside of the accounts payable function. The best way to monitor and mitigate against such risks is for tax teams to have regular catch-ups and with Finance, Front Office, Accounts Payable, Sourcing and other teams to identify such processes early. Accounts Receivable (Billing) Risks Manual Billing Processes - Where customer invoicing is carried out via manual billing processes such as using MS Word or Excel, errors can occur where the VAT liability determination is not automated leaving staff to apply the correct VAT treatment. If staff are inadequately trained in relation to VAT, then this can result in the issue of incorrect invoices . Applying VAT to Inter- Company Invoices issued within a VAT Group - Companies within a VAT Group benefit from VAT free invoicing among group members and as such its imperative that there are controls in place to ensure VAT is not added to inter VAT group invoices resulting in additional costs for the recipient entity. Not Applying VAT to Intercompany Invoices Issued to Non VAT Group Members - Whilst VAT will not normally be applicable to invoices issued to other entities within the VAT group, output VAT should always be applied to standard rated supplies on inter-company invoices where the UK recipient entity is not a member of the VAT Group that the issuing entity belongs to. Incorrect Static Data - It is common for billing systems to be fed with client data from static data systems to enable them to populate invoices with the name and address of clients, their VAT registration number and in some cases determine the correct rate of VAT to apply on invoices. Where the static data held for clients is incorrect or not up to date, then this will inevitably result in invoices being issued with incorrect data and rates of VAT. Inadequately Trained Staff - the application of VAT is based on a number of factors such as product type, type of customer (business / non business), customer residence / country of operation etc. If billing staff have a limited understanding of the application of VAT, then errors can occur during customer billing. Intervention and its Impact on Billing - A company may provide services to a non UK counter-party but its local branch may actually be heavily involved in providing the service. Where this occurs, some countries (France for example) may have rules in place that state that local VAT should be applied to the transaction. In such cases, even though the invoices are raised from the UK to the overseas customer, local VAT (French for example) should be applied to the invoice to ensure it complies with local VAT rules. VAT Accounting Risks Failure to Reconcile VAT Accounts - Accounting for and posting VAT correctly within the financial accounting system should always be followed up by preparing a monthly reconciliation of the output VAT, input VAT and VAT control accounts to ensure all balances are fully supported by detailed and itemised lists showing what is items and actions are required to clear the balances. For example, the output VAT balance may contain VAT payable to HMRC next month or quarter, the input VAT balances may contain VAT recoverable amounts still pending for payment from HMRC. Or both input and output VAT balances may contain amounts to be swept to the VAT control account for balancing with payments to and from HMRC. Failure to carryout reconciliations regularly can result in significant uncleared balances being built up that are not fully understood or explainable by accounting staff and can result in errors going undetected. This can also cause delays and the need to employ costly consultants to rectify when such issues are detected during annual external or internal audits. Failure to Book The VAT on Invoices Issued - There can be instances where invoices are issued and sent to customers but the VAT is not correctly booked to the output VAT account or worse booked to a revenue account which is contrary to the VAT accounting standard. This will result in the incorrect reporting of VAT to HMRC and possible penalties when the errors are detected. Note such errors can be detected by HMRC when a customer includes an issued invoice within their VAT return to recover the VAT incurred. In such cases the errors will be categorised as careless by HMRC and result in severe penalties. Sourcing / Procurement Risks Procurement for Major Contracts - There should always be a policy within an organisation for procurement teams to engage with both Legal and Tax teams prior to entering into contracts for the purchase of goods or services. It is important that such contracts are efficient for VAT in terms of ensuring that the organisation does not incur unnecessary VAT costs. A common example of this is where a firm enters into a contract with a supplier to provide global services to its organisation without considering how the contract should be formulated to ensure that local business contract for supplies directly. Also where the UK head office is the main party to the contract and the supplier bills the UK, reverse charge VAT will be a significant cost which may not be fully recoverable. VAT on such contracts will often not be budgeted for creating large unexpected costs during the yea and impacting the P&L account. Also VAT registered companies importing goods should always ensure that they actually own the goods they are importing as import VAT is only recoverable where the goods are owned by the VAT registered entity. Purchase of Goods from Overseas The importation of Goods from overseas will result in input VAT (20%) being levied at the boarder and paid to HMRC or included on the VAT return to pay and recover the VAT from HMRC under the Postponed Import VAT Accounting (PIVA) process. Input VAT is only recoverable by the owner of the goods and as such the legal owners of the goods should ensure that they are the importer of record and own the goods at the time of importation to ensure they can successfully recover the VAT paid to HMRC. New System Implementation VAT Determination - The introduction of new billing or accounts payable systems in an organisation will require close liaison with a VAT specialist or team to ensure the systems are correctly configured for VAT and more specifically to determine the correct VAT liability to apply to transactions. Regular and continuous engagement here between IT, Finance and Tax teams is critical during the build or implementation process to ensure VAT is correctly set up within the system and to avoid costly reconfiguration. Making Tax Digital Requirement - All VAT registered businesses are required by HMRC to be MTD compliant by ensuring that their billing, AP and accounting systems are digitally linked (E2E) right up to filling their VAT return to HMRC via e-filler (API link). Failure to do this will result in HMRC penalties and possible reputational damage. Automation - Although automating processes within the VAT compliance area can result in significant benefits in terms of time saving, accuracy and data quality, it can also result in over engineering and create risks if the audit trail is lost and processes are subsequently changed. It is therefore important that a complete integrity review of the existing processes is carried out prior to automation. VAT Report Design and Parameters VAT Reports Used for VAT Reporting - The design of reports that are extracted from systems to provide data for VAT reports is critical as getting this wrong can lead to significant errors within the VAT return that can continue for years leading to over paid or under recovered VAT. All reports designed for VAT reporting should go through extensive testing, review and documentation prior to deployment to avoid future errors, losses in the P&L and reputational damage. Ongoing Annual Review of VAT Report Content & Parameters - To ensure the continued accuracy of data contained in reports used for VAT reporting, it is essential that VAT report parameters and content are up to date and continue to capture all the required information including impacts of changes in tax authority rules and Government legislation. Key Man Risk Over Reliance on Key Individuals - Over reliance on individuals to manage specific processes in Finance or Tax brings with it the risk that key knowledge can simply evaporate if and when these individuals suddenly leave the business due to redundancy, illness, or simply move on to new role. Organisations can then be left exposed to VAT risks due to the inability of existing staff to complete and file correct VAT returns. Larger organisations with more complex operations may be forced to hire expensive contractors to plug the gap. To prevent this, organisations need to ensure they have robust and up to date process notes which include diagrams to illustrate key parts of processes. Rotation of staff or work sharing can mitigate against such risks becoming embedded. Changes in Business Structure Partial Exemption Special Method - PESM's are designed and agreed with HMRC to ensure there is a fair and transparent allocation of input VAT to different areas of the organisation and to ensure VAT is recovered in line with a prescribed recovery method. To ensure PESM's are up to date it is essential that tax teams hold regular and annual meetings with both revenue generating product departments and accounts payable to ensure that any changes to the business structure or new products on boarded can be reviewed and the PESM amended and re agreed with HMRC. Failure to do this will result in incorrect input VAT allocation and recovery and can be costly in terms of the P&L hit when VAT has been over-recovered and a repayment is required to HMRC. Fixed Establishment Branches and Fixed Establishment - Where UK companies set up branches overseas for example in EU countries, they need to be aware of local rules sometimes driven by case law such as Skandia and Danskie Bank (see UK news page) which can impact the VAT liability of recharges between branches and their head office and visa versa. Also where UK companies have subsidiaries overseas and those subsidiaries have UK branches that are a member of the head offices UK VAT Group, care must be taken to ensure those branches meet the criteria of having a fixed establishment in the UK. That is, they are resourced with sufficient human and technical resources and are actually providing services in the UK. Branches that are merely "brass plates" where they have few or no employees or infrastructure and have no major trading activity and are mainly conduits of overseas recharged cost, may fall foul of HMRC fixed establishment and VAT grouping rules. HMRC can de-group such branches. Services Provided to Staff via Salary Sacrifice Benefits Provided to Staff via Salary Deduction - Benefits such as car parking, bikes for work where the cost is deducted from an employees salary are vatable and Standard Rated VAT at 20% is due to HMRC on such cost. As these are not normally processed via the accounts payable team and are employee expense or payroll related, there is the risk that they will not be included in the VAT return process and overtime a significant VAT liability can build up which will eventually have to be declared to HMRC via an Error Correction Notice. As a result HMRC can impose penalties and may lead to reputational damage. VAT Risk and Control Framework Risk Documentation, Controls and Testing - To avoid and mitigate against many of the possible errors identified above, it is essential for organisations large and small to ensure that they have an internal VAT Risk and Control Framework that sets out all the potential risk that can affect the accuracy of the organisations VAT return. This will involve preparing a schedule of all the potential risks, the controls required to mitigate against these risk, who is responsible for operating each control, who has overall accountability for signing off that the controls are in place, documented and are operating correctly and finally what testing is required and the frequency. HMRC - have also recently published guides on VAT compliance and what they expect from businesses in terms of controls and the required testing of these controls to ensure VAT reporting is accurate and compliant. See links below. Help with VAT compliance controls — Guidelines for ... Help ensuring documents filed with HMRC are correct and ... Senior Accounting Officer Requirements Annual Senior Accounting Officer Compliance - Schedule 46 of the Finance Act 2009 contains the Senior Accounting Officer (SAO) provisions. These provisions apply to larger qualifying companies and require them to appoint a Senior Accounting Officer (SAO) to represent the company in confirming annually via a certificate in which they must state whether the company had appropriate tax accounting arrangements. If the company did not have appropriate tax accounting arrangements they must also explain what the shortcomings were. Penalties can be applied by HMRC in the event that: It fails to notify the name of its SAO, or If they fail to meet their main duty (though an SAO may escape a penalty if they have made reasonable efforts to rectify shortcomings), or If they fail to give HMRC a certificate within the required timescale, or they provide a timely certificate that contains a careless or deliberate inaccuracy. It is therefore even more paramount for larger companies to ensure that their risk and control environment is robust and they have adequate controls and updated process notes, flow diagrams and other documentation in place. For more information in relation to the SAO process, please see the link below to HMRC guidance in this area. Senior Accounting Officer Guidance - HMRC internal manual HMRC - Business Risk Review The Business Risk Review (BRR+) is the process by which we evaluate and discuss with the customer where we think they sit on the compliance spectrum and in particular whether they meet the criteria for Low Risk. It is based on the principle that, while factors such as the size and complexity of a business create their own risks and can make it more challenging for customers to comply with their tax obligations, even the largest and most complex businesses can be classified as Low Risk if they mitigate these risks to an acceptable level through their behaviours. The results of the BRR+ inform both our overall approach to a customer and the focus of any future Risk Assessment activity. The BRR+ will take place at least annually for customers who are not Low Risk. For Low Risk customers a BRR+ will, in general, be carried out on a three year cycle. The BRR+ process involves the following steps: Considering the landscape in which the business operates, and it’s potential impact on the inherent level of tax compliance risk the customer presents For each applicable tax regime, considering the effect of the customer’s behaviour on this inherent risk - does their relationship with HMRC, their Systems and Processes, Internal Governance and their Approach to Tax Compliance tend to increase or decrease this inherent risk Considering the overall risk rating of the business Agreeing the customer’s overall risk status Agreeing any action required to reduce the level of risk Open Government Licence v3.0 VAT Risk

Find out how VAT works in German including VAT Rates, VAT Rules, VAT Registration, Exemptions and much more. VAT - Norway German-VAT- Guide on how VAT applies in Germany Most goods and services in Germany are taxed at the standard rate of VAT which is 19%. There are two rates of VAT in Germany: Standard Rate 19% Reduced Rate 7% Reduced Rate The reduced rate of VAT (7%) is applicable to goods and services such as: Hotel Accommodation Museums Theatres Exempt Goods and Services Medical Services Insurance Property Sales Charging VAT Customer located in: In German - 19% or 7% B2B customer outside EU - 0% B2B customer in EU - 0% (Reverse Charge Invoice B2C (to private individual) Less than 10,000 Euros - 19% VAT B2C (to private individual) Greater than 10,000 Euros - VAT rate applicable in customers country. German business must either register in customers country or use the One Stop Shop Process. Broadcasting, Telecommunications, Electronically Supplied Services - Place of supply where customer located and as such apply VAT rate in customers country. Input VAT Recovery Input VAT is deducted from output VAT to arrive at the net VAT payable on the VAT return E - Invoicing Guide - German Ministry of Finance E-Invoicing