- New SME VAT Scheme: Effective January 1, 2025, the EU will introduce a new VAT scheme for small and medium-sized enterprises (SMEs) to reduce compliance burdens and promote cross-border growth, requiring businesses to assess their EU-wide turnover and obtain a new “EX” VAT identifier for managing VAT-exempt activities.
- Place of Supply Changes: The 2025 updates include revisions to place of supply rules for virtual services, requiring businesses to tax these services based on the consumer’s location, necessitating adjustments in pricing and reporting, and encouraging the use of the One Stop Shop (OSS) for streamlined compliance.
- Simplified Reporting Framework: A new reporting framework is set to ease VAT compliance for businesses operating across multiple EU countries, highlighting the need for businesses to prepare for changes in domestic reverse charge mechanisms and evaluate the benefits of simplified reporting for cross-border goods movement.
- Enhanced VAT Compliance Processes: The complexity of the new VAT regulations necessitates robust compliance systems, including investing in VAT automation software, conducting regular compliance checks, and providing staff training to ensure alignment with evolving VAT requirements.
- Digital Reporting Preparation: While mandatory digital reporting and e-invoicing will not be required until 2028, businesses are encouraged to assess and upgrade their IT systems now, budget for necessary software investments, and develop a comprehensive digital-first VAT strategy to future-proof their operations against ongoing regulatory changes.
Source Taxually
