Weekly VAT News

We are delighted to invite you to join us for our webinar in conjunction with Vertex on Wednesday 10 December, 14:00-14:45, where we will explore recent changes in tax rules and reporting requirements for e-commerce and marketplace businesses.

This is the first webinar in a series where we will discuss:

• How digital business models have evolved and what that means for tax
• Common challenges for e-commerce and marketplace businesses
• Why automating tax determination and reporting is becoming essential
• Practical steps to reduce tax compliance risk and support international growth

This will be particularly insightful for:

• Tax and Finance leaders in digital goods/services businesses
• E-commerce directors and marketplace business leaders
• Anyone looking to simplify tax compliance and scale confidently

Secure your spot now to gain insights, practical strategies, and actionable steps to stay compliant. For further information on how to register please contact Ruby Buckland. You can also contact EY’s Gaurav Patney who will be speaking at the event.

The UK Government has announced a UK-US pharmaceuticals deal, which will “secure and expand access to vital drugs, safeguard our medicines supply chain, and drive crucial investment while supporting UK patients and industries”.  The press release is available here.

The deal, as part of the UK-US Economic Prosperity Deal (EPD), means that UK pharmaceutical exports to the US will be subject to zero percent tariffs for three years. The press release notes that the deal also secures preferential terms for the UK’s medtech exports meaning no additional new tariffs on medtech.

The UK Government has confirmed that “the UK has secured mitigations under the US’ Most Favoured Nation drug pricing initiative.” The National Institute for Health and Care Excellence (NICE) will increase its baseline threshold for judging cost-effectiveness from £20,000-£30,000 to £25,000-£35,000 per quality adjusted life year gained over and above current treatments, which could allow more drugs and treatments to be approved in the UK.

For further information please contact Marc Bunch or Ross Freeman.

Topics – Triangulation – four party supply chain

T-646/24 MS KLJUČAROVCI

On 3 December 2025, the Court of Justice of the European Union (CJEU) released its decision in this Slovenian referral concerning a complex supply chain and the interpretation of Article 141(c) of the VAT Directive and the conditions for the ‘triangulation’ simplification.

This case concerns the calculation of VAT in the context of a supply chain involving four parties registered in three different EU member states. The goods are transported directly to the fourth party in the chain, who has ownership rights over the goods, usually stored in a warehouse or mixed-use facility.

MS KLJUČAROVCI (MK) is a company registered in Slovenia for VAT purposes. During the period subject to the tax inspection, it acquired, on several occasions, soya seed and rapeseed press-cakes and rapeseed oil from suppliers registered in Germany and then resold them to taxable persons in Denmark. According to the tax authorities, the Danish companies are all shell companies and ‘missing traders’.

MK provided a Slovenian VAT identification number to the suppliers. The transportation of the goods from Germany directly to Denmark was organised and paid for by ML, which acted as ‘second trader’ in the supply chain. MK reported the acquisitions of goods from the German suppliers and the subsequent delivery to the Danish taxable persons in its Slovenian VAT return and in its recapitulative statement. It included the words ‘Reverse Charge of tax liability’ in its invoices made out to its customers. Accordingly, it used the administrative simplification that applies in connection with ‘triangular transactions’ and transferred the tax liability to the person to whom the supply was made, thereby avoiding the obligation to register for VAT purposes in Denmark.

The goods in question were transported from Germany directly to Denmark, but were not delivered to the declared Danish customers, but to one of their own customers, acting as the subsequent operator in the supply chain in Denmark (ANC Group). MK, responsible for organising transportation, delivered the goods to different addresses in Denmark. The goods were delivered to warehouses and mixing plants, where they were received on behalf of ANC Group by various recipients.

The goods in question were therefore the subject of a single dispatch, or a single transport operation within the EU, with three subsequent supplies. The supply chain was:

• German suppliers, German VAT identification number; to
• MK, with Slovenian VAT identification number; to
• Missing trader, Danish VAT identification number; to
• ANC Group, Danish VAT identification number

However, the goods were physically conveyed from Germany directly to Denmark, to the last of the aforementioned companies or to warehouses/mixing plants in that company’s name.

The referring Court notes that the case concerns the calculation of VAT in the event of a supply chain involving four parties, which are located and VAT registered in three different Member States. The tax authority concluded that MK could not apply the simplification for triangular transactions because more than two supplies occurred in a single transport operation. The Finance Ministry upheld the tax authority’s findings, stating the transactions did not meet the criteria for genuine triangular transactions, as the goods were not made available to the third party in the supply chain.

MK argues that the simplification rules could apply to more than three taxable persons in a chain and that delivery logistics did not negate the triangulation definition.

The CJEU recalled that a ‘triangular transaction’ is a transaction by which goods are supplied by a supplier, identified for VAT purposes in a first Member State, to an intermediary purchaser, identified for VAT purposes in a second Member State, who, in turn, delivers those goods to a final purchaser, identified for VAT purposes in a third Member State, the goods being transported directly from the first Member State to the third Member State.

Triangulation provides for a derogation from Article 2(1)(b) of the VAT Directive by first exempting the intra-Community acquisition made by the intermediary purchaser, who is identified for VAT purposes in the second Member State, and, second, in deferring the taxation of that acquisition to the final purchaser, established and identified for VAT purposes in the third Member State, the intermediary purchaser being exempted from the obligation to identify for VAT purposes in the latter Member State. That scheme results from the relationship between the rule laid down in Article 40 and the derogation resulting from Article 42.

In the immediate proceedings, unlike a 'traditional' triangular transaction (that is to say, involving three operators), the supply chain involves four taxable persons identified for VAT purposes in three different Member States. This is the situation where A, a taxable person registered for VAT purposes in Germany, sells goods to B, a taxable person registered for VAT purposes in Slovenia, who sells those same goods to C, a taxable person registered for VAT purposes in Denmark, who in turn sells those goods to D, a taxable person also registered for VAT purposes in Denmark.

The CJEU noted that Article 14(1) defines the supply of goods as the 'transfer of the right to dispose of tangible property as owner'. The concept of 'supply of goods' does not refer to the transfer of ownership in the manner provided for by the applicable national law but includes any transfer of tangible property by one party which entitles the other party to dispose of it as if it were the owner of that property. It does not require that the party to whom that property is transferred physically holds that property or that that property be physically transported to that party and/or physically received by that party.

Article 141(c) and (d) does not require the recipient of a 'subsequent supply', within the meaning of those provisions, to physically hold the goods supplied or that those goods be physically transported to that person and/or physically received by that person. Thus, such a supply may be made in the context of a single transport to the person to whom that recipient resells the goods.

The CJEU considered that the objectives pursued by the derogation provided for in Articles 42 and 141 fully support such an interpretation.

In conclusion on the first question referred, the CJEU held that Article 141(c) must be interpreted as meaning that the fact that the goods supplied in the context of a triangular transaction are not physically transported to the person for whom the subsequent supply is made, but to its customer, to whom it resells them and who is identified for VAT purposes in the same Member State as the reseller, does not preclude the condition laid down in that provision from being satisfied.

The CJEU also held that an operator’s awareness that the subsequent supply was made to the customer of the intended recipient, rather than to the recipient directly, does not affect compliance with the condition set out in Article 141(c).

Finally, the CJEU considered whether Articles 41 and 42 must be interpreted as meaning that, in circumstances such as those in the immediate proceedings, the place of the intra-Community acquisition of goods is deemed to be in the territory of the Member State which assigned the VAT identification number under which the purchaser made that acquisition and that purchaser is not eligible for the reduction in the taxable amount provided for in the second paragraph of Article 41 if it is found that he knew or ought to have known that he was participating in transactions constituting an abuse of the VAT system.

The CJEU noted that individuals cannot exploit EU law for fraudulent or abusive purposes. Preventing tax evasion, avoidance, and abuse is a core objective of the VAT Directive. Therefore, if it is established that a purchaser knew or should have known they were participating in VAT fraud within a supply chain, the authorities and courts of the Member State that issued the VAT identification number may deny that purchaser the benefits of the relevant VAT schemes and reductions.

In summary:

• Article 141(c) must be interpreted as meaning that the fact that the goods delivered in the context of a triangular transaction are not physically transported to the person for whom the subsequent supply is made, but to his customer, to whom he resells them and who is identified for VAT purposes in the same Member State as the reseller, shall not preclude the condition laid down in that provision from being regarded as satisfied.
• Article 141(c) must be interpreted as meaning that the fact that the trader benefiting from the triangulation simplification measure is aware that the goods concerned are not physically transported to the person for whom the subsequent supply is made, but to his customer, to whom he resells them and who is registered for VAT purposes in the same Member State as the reseller, does not affect compliance with the condition laid down in that provision.
• Articles 41 and 42 must be interpreted as meaning that it is for the authorities and courts of the Member State which has assigned the VAT identification number under which a purchaser subject to VAT has made an intra-Community acquisition of goods to refuse to grant that purchaser the benefit of the scheme provided for in Articles 42 and 141 and of the reduction of the taxable amount provided for in Article 41, if it is established that the purchaser knew or ought to have known that, by the transaction relied on to justify the application of that scheme, he was participating in VAT fraud committed in the context of a chain of supplies.

Comments: Those involved in cross-border supply chains should ensure that they have a clear understanding of what constitutes a ‘triangular transaction’ for the purposes of VAT simplification. The CJEU has clarified that the definition does not require the goods to be physically delivered to the purchaser; instead, it suffices that the goods are supplied under a single transport operation to a customer who is registered for VAT in the same Member State.

Topics – Copyright and related rights – communication to the public of protected works – supply of services

T-643/24 CREDIDAM

On 3 December 2025 the Court of Justice of the European Union (CJEU) delivered the opinion of Advocate General Martín y Pérez de Nanclares (AG) in this Romanian referral which asks whether VAT is due in a situation of tortious civil liability concerning copyright and related rights. On a proper construction of Article 2(1)(c), Article 24(1), and Article 25(a) of the VAT Directive, do holders of related rights carry out a supply of services for consideration where the user carries out a communication to the public of protected works in the absence of a licence to that effect.

The Romanian Centre for the Administration of Performing Artists’ Rights (CREDIDAM) is a collective management organisation which collects and distributes remuneration due to Romanian or foreign performing artists who are holders of rights related to copyright and whose artistic performances are used in Romania.

CREDIDAM sought, on the basis of tortious civil liability, an order that the defendant – now the respondent – pay a sum of money (including VAT) representing three times the remuneration due to performing artists for the communication to the public of protected musical works or reproductions thereof and artistic performances in the audiovisual field during the period from 1 October 2019 to 31 December 2022, and order the respondent to conclude authorisations in the form of non-exclusive licences with CREDIDAM.

The action was dismissed as unfounded, the court holding, with regard to the first head of claim, that the respondent had not carried out any commercial activity during the period at issue, with the result that, although it owned a space in which it could have communicated protected musical works or reproductions thereof or artistic performances in the visual field, in practice, this did not happen. With regard to the second head of claim, the court took into account, on the one hand, the fact that the space owned by the respondent had been removed in February 2023 and, on the other, the fact that domestic copyright law does not derogate from the principle of freedom of contract governed by the Civil Code and impose only an obligation on the appellant to grant users authorisations in the form of non-exclusive licences if those users intend to request such authorisations.

CREDIDAM brought an appeal against that civil judgment, requesting that the appeal be upheld, that the civil judgment under appeal be set aside in its entirety and that the action as brought at first instance be upheld, considering, in essence, that it had proved that the respondent had carried out a communication to the public. In the course of the proceedings, in view of the fact that CREDIDAM requested that the claims should also include VAT, the Court of Appeal put it to the parties that a reference could be made to the CJEU.

CREDIDAM asserts that it is a legal person liable to pay VAT and that there is no clear provision in the domestic Tax Code to the effect that compensation (or a surcharge) claimed under tortious civil liability would not be subject to VAT. The respondent has taken the view that there is no need to make such a reference as the amounts are not subject to VAT, as provided for in the Tax Code.

The Court of Appeal considered it necessary, for the purposes of adjudication, to refer the case to the CJEU for a preliminary ruling. The referral concerns the classification of a supply of services in the circumstances of the immediate case and the concept of ‘consideration’ in a case where part of the remuneration has punitive or compensatory features (surcharge).

The concept of ‘supply of services’

The AG recalled that domestic legislation provides, first, that, in the absence of a licence, the communication of protected works to the public must be tolerated by rightsholders and, secondly, in return, the user is required to pay a fee of a certain amount. Romanian legislation therefore establishes a correlation between the users’ right of communication and their obligation to pay to exercise that right.

This legal requirement to tolerate such acts can be likened to the mandatory licensing discussed in UCMR. It aligns with two of the three transactions outlined in Article 25 of the VAT Directive, specifically the ‘obligation to tolerate an act and the provision of services as mandated by law’. Furthermore, classifying the act of allowing communication of protected works as a supply of services is supported by the nature of VAT as a general consumption tax, which aims to tax the financial cost of obtaining consumable goods or services.

Whether the supply is for consideration

The AG opined that the identified service is carried out for consideration. Domestic legislation establishes a direct link between the supply of that service and the payment of remuneration. That legislation thus establishes a legal relationship pursuant to which there is reciprocal performance. The absence of a contractual relationship between the holders of copyright and the users is irrelevant in that regard.

Article 2(1)(c), Article 24(1) and Article 25(b) and (c) must be interpreted as meaning that the regulatory obligation to tolerate, in return for a fee, the communication of protected works to the public by a user, who has not previously obtained the licence required for that purpose, must be classified as a ‘supply of services for consideration’.

The existence of a ‘direct link’ between the service and the surcharge applied to the basic amount of the fee

The AG went on to consider whether the ‘consideration’ for the service at issue in the immediate proceedings includes only the basic amount of the fee payable by the users of protected works or whether it must be held that VAT must be determined on the basis of the increased amount of that fee; is the surcharge sufficiently directly linked to the supply of services in question.

The AG considered that the payment in the immediate case is in part compensatory in nature. The fact that it is made in the context of the provision of a service is a strong indication that it should be classified as ‘consideration’. That is all the more so since the criterion relating to the existence of a legal relationship, meaning the exchange of reciprocal services, must be interpreted broadly.

In this regard, the AG considered it necessary to determine whether, despite the supply of a service, part of the remuneration received, namely the surcharge, cannot be classified as ‘consideration’. That would be the case if it were to be classified as ‘compensation not directly related to that service’.

The amount of the fee charged

The AG recalled that the concept of ‘consideration’, used in Article 73 to determine the taxable amount, is also decisive in determining whether services have been supplied ‘for consideration’ within the meaning of Article 2(1)(c). In the absence of consideration, there is no taxable amount and the VAT system does not apply. ‘Consideration’ is the subjective value, that is to say the amount actually received and not an amount estimated according to objective criteria.

The AG opined that in the immediate case, there is no need to distinguish between the surcharge and the basic amount of the fee at issue, since the sum of the two is effectively payable to CREDIDAM for copyright. The high amount of the surcharge is not a relevant factor in answering the question whether it forms part of the consideration received.

The cause and purpose of the payments

The AG considered that it is irrelevant whether national law classifies the sums to be paid to the service provider as remuneration, compensation or a penalty. The assessment of whether a payment is made in consideration for a supply of services is a question of EU law. By contrast, the legal cause or, rather, the legal basis of the payments is indeed a factor that must be taken into account in order to determine the existence of consideration. The same applies to the objective pursued, even if this is only an additional indicator, which cannot be decisive in itself. To assess those two factors, account must also be taken of the economic reality of the transactions.

The AG opined that the immediate case concerns a situation which is comparable not to that at issue in the case that gave rise to the judgment in Société thermale d’Eugénie-les-Bains, but that referred to in the case that gave rise to the judgment in Apcoa Parking Danmark. The surcharge is simply a result of changing the method used to calculate the payment for communicating protected works to the public, based on the legal conditions provided to users. Where appropriate, it should be considered that, in cases where a licence has not been obtained before the communication, the surcharge forms an integral part of that remuneration.

The economic reality of the surcharge is that it takes into account the higher cost incurred by CREDIDAM for copyright due to the failure of users to comply with the legal obligation to obtain the necessary licences, on the one hand, and to ensure compliance with that obligation, on the other.

It is for the referring court to examine the factors which might confirm the existence of a ‘direct link’ between the service supplied and the ‘consideration’ received, including the surcharge. It is for that court to assess the national law and the legal and economic context of the transaction between the collective management organisation for copyright and the user who communicated the protected works without having first obtained the necessary licence.

In summary, Article 2(1)(c), read in conjunction with Article 73, must be interpreted as meaning that the remuneration, which is payable for the communication of protected works to the public, which consists of a basic fee and a surcharge applied where a licence has not been obtained prior to that communication, may be classified as ‘consideration’, which it is for the referring court to ascertain, in particular in the light of the legal basis and the purpose of that remuneration.

Comments: Whilst we await to see whether the Court follows the AG’s opinion, those involved in copyright and protected works must recognise that the communication of such works without proper licensing may not only lead to legal repercussions but also financial liabilities, including VAT on any remuneration paid. Businesses should ensure compliance with copyright laws and obtain necessary licenses to avoid punitive fees and VAT charges. Furthermore, the classification of payments – including surcharges – as consideration for services highlights the importance of understanding the legal and economic context of transactions involving copyright. As a result, businesses should proactively review their licensing agreements and payment structures to mitigate any risks. The Opinion provides for a distinction between payment of taxable consideration and compensation.

Thursday 11 December

Judgment – C-796/23 Česká síť

Topics – Societies – liability of designated partner

A Czech referral which asks whether a situation in which, pursuant to special national VAT arrangements for ‘societies’ (associations of persons that do not have legal personality), a ‘designated partner’ is liable for the payment of the VAT for the entire society, despite the fact that another partner had dealt with the end customer in relation to the supply of services, is compatible with the VAT Directive. Does the compatibility of the situation with the VAT Directive depend on whether the other partner had overstepped the rules of representing the society and dealt in his, her or its own name with the end customer.

Judgment – C-121/24 Vaniz

Topics – Joint and several liability to pay VAT after the principal debtor has ceased to exist as a legal person

A Bulgarian referral which asks whether Articles 44 and 205 of the VAT Directive, and the principles of transparency and proportionality of liability, permit the initiation, after the principal debtor has ceased to exist as a legal person, of a procedure intended to establish a person’s joint and several liability to pay VAT and the extent of such joint and several liability. Do they, following the removal of the debtor from the commercial register without a legal successor assuming that debtor’s rights and obligations, allow the existence of a registered claim against that debtor, for which a third party is liable a posteriori (knowledge based solely on experience or personal observation).

Thursday 17 December

Hearing – T-198/25 G Kft.

Topics – Correction and refunding of VAT improperly – closed period

A Hungarian referral which asks whether Articles 167, 168, 179, 180, 183, 250 and 252 of the VAT Directive, together with the principles of tax neutrality, effectiveness and proportionality, must be interpreted as permitting domestic legislation to the effect that, in relation to a period closed by means of an inspection, the correction and refunding of VAT improperly invoiced is only possible if there are new facts and circumstances that demonstrate that the taxable person did not previously have, nor could in good faith have had at its disposal, or of which the taxable person was not, nor could in good faith have been aware, even if there was no risk of any loss of tax revenue?

• T-773/25 Finanzamt für Großbetriebe – An Austrian referral which asks whether Article 42(a) of the VAT Directive must be interpreted as meaning that the first issuance of an invoice, that is necessary for the application of the derogation for ‘triangular transactions’ but which is issued a number of years after the supply was effected, triggers the legal consequences of the administrative simplification scheme ex nunc (from now on).

Finance Bill 2025-26 has been published. The Bill is available here and the explanatory notes can be found here.

First reading took place on 2 December and the second reading will take place on Tuesday 16 December.

Many of the measures relate to announcements made in the Budget. Finance Bill Indirect tax measures include:

Part 3

VAT and insurance premium tax

• Clause 77 – Zero-rating of leases of vehicles to recipients of disability benefits
• Clause 78 – Insurance premium tax relief limited to adapted vehicles
• Clause 79 – Private hire vehicles or taxis
• Clause 80 – Certain charitable donations not to be treated as supplies of goods
• Clause 81 – Refunds of VAT to combined county authorities

Gambling duties

• Clause 83 – Rate of remote gaming duty
• Clause 84 – General betting duty on remote bets
• Clause 85 – Abolition of bingo duty – Also Schedule 13 – Abolition of bingo duty: consequential and transitional provision

Alcohol duty

• Clause – 86 Rates of alcohol duty

Tobacco products duty

• Clause 87 – Rates of tobacco products duty effective from 6pm on 26 November 2025
• Clause 88 – Rates of tobacco products duty effective from 1 October 2026

Taxes relating to vehicles

• Clause 89 – Vehicle excise duty for light passenger or light goods vehicles etc
• Clause 90 – Vehicle excise duty for rigid goods vehicles without trailers and tractive units
• Clause 91 – Vehicle excise duty for rigid goods vehicles with trailers
• Clause 92 – Vehicle excise duty for vehicles with exceptional loads etc
• Clause 93 – Vehicle excise duty for haulage vehicles other than showman’s vehicles
• Clause 94 – Vehicle excise duty: expensive car supplement
• Clause 95– Rates of HGV road user levy
• Clause 96 – Rates of air passenger duty

Environmental taxes

• Clause 97– Rates of climate change levy
• Clause 98 – Rates of landfill tax
• Clause 99 – Rate of aggregates levy
• Clause 100 – Aggregates levy: amendments relating to disapplication of levy to Scotland – Also Schedule 23
• Clause 101– Rate of plastic packaging tax
• Clause 102 – Chemical recycling: mass balance approach
• Clause 103 – Pre-consumer plastic
• Clause 104 – Sections 102 and 103: commencement

Soft drinks industry levy

• Clause 105 – Rates of Soft Drink Industry Levy

Customs duties

• Clause 106 – Amendment of customs tariff power
• Clause 107 – Dumping and subsidisation investigations
• Clause 108 – Safeguarding investigations
• Clause 109 – Customs facilities at approved wharves and other places

Part 4

Vaping products

• Clause 112 – Excise duty: Vaping products charge
• Clause 113 – Vaping products
• Clause 114 – Production of vaping products
• Clause 115 – Excise duty point and payment
• Clause 116 – Vaping products duty – Administration
• Clause 117 – Stamping of vaping products
• Clause 118 – Issue and management of duty stamps
• Clause 119 – Approved stamp holders
• Clause 120 – United Kingdom representatives
• Clause 121 – Forfeiture
• Clause 122 – Dealing in unstamped vaping products
• Clause 123 – Loss and misuse of duty stamps
• Clause 124 – Failure to comply with this Part etc
• Clause 125 – Forfeiture: civil penalties
• Clause 126 – Dealing in duty stamps
• Clause 127 – Dealing in unstamped vaping products
• Clause 128 – Sales ban following conviction for unlawful use of premises
• Clause 129 – Offences: penalties
• Clause 130 – Forfeiture: offences
• Clause 131 – Publication of information
• Clause 132 – Information sharing
• Clause 133 – Investigation and enforcement
• Clause 134 – Regulations: further provision
• Clause 135 – Regulations: procedure
• Clause 136 – Amendments of other enactments
• Clause 137 – Interpretation
• Clause 138 – Commencement and transitional provision
• Schedule 14 – Vaping products duty: amendments of other enactments

Part 5

Carbon Border Adjustment Mechanism (CBAM)

• Clause 139 Introduction to CBAM
• Clause 140 Charge to CBAM
• Clause 141 Importation
• Clause 142 Goods processed under a special customs procedure
• Clause 143 Person liable: the importer
• Clause 144 Exemptions
• Clause 145 Embodied emissions
• Clause 146 Rate
• Clause 147 Carbon price relief
• Clause 148 Administration and enforcement
• Clause 149 Criminal offences
• Clause 150 Supplementary amendments
• Clause 151 Emissions: meaning etc
• Clause 152 Interpretation
• Clause 153 Power to make provision for linked emissions trading schemes
• Clause 154 Regulations and notices
• Clause 155 Commencement and transitory provision
• Schedule 15 – CBAM Goods
• Schedule 16 – Administration of CBAM
• Schedule 17 – Offences relating to CBAM
• Schedule 18 – Supplementary amendments relating to CBAM

Part 6 – Avoidance

Part 7 – Tax Advisers

• Schedule 19 – Registration of tax advisers: exceptions
• Schedule 20 – Registration of tax advisers: reviews and appeals
• Schedule 21 – Conduct of tax advisers

This Notice provides information regarding group and divisional VAT registration and the forms you should use to apply. Information about the definition of 'protection of the revenue' has been updated in section 4.1 (see below). Updates include reformatting, re wording regarding revenue loss that does not follow the normal operation of grouping and clarification regarding what is meant by ‘revenue loss’.

4.1 The definition of ‘protection of the revenue’

Where this is considered necessary for the protection of the revenue, the VAT grouping legislation gives HMRC the power to:

• prevent a person joining a VAT group
• remove an existing member from a VAT group

We usually will not use our protection of the revenue powers if the revenue loss follows from the normal operation of grouping. If we feel that the revenue loss does not follow the normal operation of grouping, then we would consider using our protection of the revenue powers, such as:

• • where we identify enhanced risks to the collection of revenue
• • the use of VAT avoidance and distortion in the liability of the group’s supplies

In this context, ‘revenue loss’ means the VAT that is not charged when one company in a group sells to another company in the same group. This usually happens when one or more companies in the VAT group cannot reclaim all the VAT they pay because they make supplies that are exempt from VAT.

We will use our revenue protection powers if it looks like the main reason for VAT grouping someone is to ignore supplies from that company’s overseas branches to other members of the VAT group. This applies whether that person is established in the UK or has a UK fixed establishment.

This Guidance explains how to use the bulk import reduced data set to declare one or more low value parcels in a single import declaration when you import goods into Great Britain. Information about the value of the consignment has been updated in section 'Who can use the bulk import reduced data set'.

For further information regarding global trade, please contact Gerard Koevoets.

UK

On 26 November 2025, as part of the UK Budget, the Government confirmed its intention to implement mandatory e-invoicing in the UK, requiring all VAT invoices to be issued in a specified electronic format from April 2029 (covering business-to-business and business-to-government transactions). For details on the new budget, see EY Global Tax Alert, UK introduces Budget 2025.

The Government plans to publish an implementation roadmap with Budget 2026, and businesses are encouraged to participate in the upcoming consultation beginning in January 2026 to prepare for compliance.

Key themes from the response document to an earlier UK consultation are included in our alert.

Affected entities should begin assessing their current invoicing processes, data quality and technology to ensure readiness for the new requirements, as failure to comply could hinder their ability to issue and receive invoices in the UK and other jurisdictions implementing similar measures.

For further information please contact Chris Taylor.

Saudi Arabia

The Gulf Cooperation Council Financial and Economic Cooperation Committee has issued an amendment to the excise tax methodology for sweetened beverages, shifting the basis of taxation to the total sugar content per beverage. This new approach, termed the Tiered Volume-Based Excise Tax Model, will supersede the current fixed rate of 50% of the retail price, introducing a system that calculates tax according to the sugar content per 100ml of ready-to-drink beverages.

The revised methodology will impose excise tax based on the total sugar content per 100ml of sweetened beverages. This tiered structure will categorise beverages into segments, enhancing clarity on the application of excise tax.

UAE

The Ministry of Finance has published Cabinet Decision No. 106 of 2025 on the penalties for non-compliance with e-invoicing.

The Cabinet Decision applies to all persons subject to e-invoicing, excluding voluntary participants, and introduces a structured penalty regime for non-compliance, including delays in system implementation, failure to issue or transmit electronic invoices and credit notes and failure to report system failures or update registered data.

Businesses operating in the UAE should review and update their current invoicing practices to avoid potential administrative penalties.

Kenya

The High Court has determined that digital platforms that exercise significant control over transactions and connect service providers and customers are deemed principal suppliers for VAT purposes. This means that the digital platforms are deemed to supply the entire service rather than merely providing access to the platform and are liable for VAT on the full customer payment, not just the platform's commission.

This decision is likely to influence VAT compliance requirements for digital platforms operating digital marketplaces in Kenya, including Digital Platforms Logistics, ride-hailing, e-commerce delivery and gig platforms, particularly for platforms that exercise control over pricing, payment and service delivery.