A new year means a raft of new VAT regulations; and nowhere is this more apparent than across the European Union (EU).
Here are three new VAT mandates that either came into effect on 1st January 2025 or are due to be enacted in the early part of this year.
If your business trades in Europe, it’s worth reviewing the latest updates to ensure ongoing compliance.
1. New VAT registration threshold for EU businesses selling in other member states
A new, optional VAT registration threshold has been introduced for companies based in the EU that also sell to other member states.
The €100,000 threshold came into effect on 1st January and enables businesses to declare sales to other EU nations as exempt under a new ‘EX’ VAT registration, meaning they are no longer required to register for VAT in those countries simply to log relatively low sales volumes.
It is anticipated that the new SME Special Scheme from the EU will help to lower the burden of foreign compliance on EU businesses.
Businesses that wish to utilise the new ruling may do so on sales of up to €100,000 in other member states, but should note that sales in any one country should still not exceed that nation’s domestic threshold.
In addition to the €100,000 cross-border threshold, there is also a new €85,000 threshold for domestic purposes. This is effectively the same as the current regime.
Any organisation that chooses to take advantage of the new cross-border threshold must first register to obtain a new ‘EX’ VAT identifier from their primary country of residence.
2. New Place of Supply rules for virtual events
From 1st January, new rules apply in the EU when it comes to determining the ‘place of supply’ on ticket revenue or entrance fees for virtual events.
For digital B2C events where non-tax paying attendees are participating from a different EU member state than the country in which the event is being hosted, the place of supply was previously deemed to be the country of the host.
However, under the new regulations, the place of supply will now be the location in which the attendee is domiciled.
Rules remain unchanged for B2B events; businesses are required to apply VAT in the nation in which the customer is resident as before.
3. EU members set to mandate e-invoicing schemes without European approval
In the early part of 2025, the EU will permit all 27 member states to mandate their own e-invoicingElectronic invoicing - widely referred to as e-invoicing - is the exchange of a digital document between a supplier and a buyer. E-invoices are issued, transmitted and received in a structured data format that enabled automatic and electronic processing. They contain data in a machine-readable format so that an AP system can read an invoice without manual data entry, leading to faster and more efficient invoicing. regimes without requiring prior approval from the European Commission.
This is designed to accelerate the adoption of e-invoicing across the EU.
As part of the Digital Reporting Requirements pillar of the EU’s landmark VAT in the Digital Age scheme, the European Commission is set to make e-invoicing mandatory for all intra-community B2B transactions from July 2030.
But under the latest updates, countries will have the option to enforce this ruling at an earlier date.
This is enabled by the EU’s recent decision to update VAT Directive (Articles 218), which currently states that member states must accept paper of electronic invoices; giving equal legal weight to paper records.
However, it should be updated in the next month to remove this term and smooth the path towards wider e-invoicing uptake.