It is no secret that complicated geopolitical challenges and economic uncertainties about international rates 2025 have made a challenging year for performing businesses. However, new VAT developments come on this side of the Atlantic and may provide an opportunity for businesses to return.
New rules for involvement in simplifying complex rules to the Brexit rules regarding VAT registration and payments for UK goods entering the EU have begun to roll out. In terms of the EU reform, it will be easier for the UK companies to register and pay VAT without a complicated and expensive cross-border paper chase.
The reality of Brexit meant that VAT systems inevitably had to develop independently of one another. The EU’s modernizing legislation on VAT in a digital era (VIDA) came into effect in April and is perhaps the beginning of a new regulatory process that will reduce the burden on the supply chain and tax teams.
Member States will now be allowed to log in electronically and invoice through a single EU VAT registration, which also has positive implications in the longer term for UK businesses trading in Europe.
Vida consists of three key pillars aimed at simplifying VAT processes-digital reporting, e-invoicing and single VAT registration, which will be introduced in phases between now and 2035.
Over the next few years, it will also reform the existing ‘Call Off Stock’ arrangements for back driving items by expanding a new one stop store (OSS) process, a single VAT registration that will allow e-traders to remove foreign VAT registrations and associated costs.
The OSS makes it possible to declare and pay VAT for all EU members through one electronic portal to prevent countries from requiring multiple VAT registrations. Under the new rules, UK companies will be able to register in one EU jurisdiction to take advantage of the changes in the European block – simplify the process and reduce a timely and expensive tax administrative burden.
Other changes, including the place of supply costs – where VAT payment is delayed and imposed only at the point and time of arrival – as well as the domestic reverse costs, where the buyer of the supply chain is responsible for the VAT rather than the seller. It also seems to streamline the situation for British businesses.
Under the current arrangement, a UK company that sells retail and wholesale in various European countries will have to register for VAT in each area. However, under the vida arrangements, the movement of goods to various areas is all covered within the OSS, which means that it will no longer be taxed by domestic VAT paper work as the goods move across European borders.
Things will become even easier than 2028, when the full weight of e-examination and digital reporting draws.
As for the here and now, UK companies that export to the EU need to look at their own systems to make sure they correctly identify the right VAT treatment for each transaction. Although the arrangements for a smoother tax journey are simplified, the new rules do require detail. There are still compliance bumps in the road that British companies have to pay attention to.
Optimizing Customs Procedures, including the thorny issue of tax compliance, helps businesses meet delivery dates, increase customer confidence, loyalty, cost-efficiency and legal compliance while improving logistics and partnerships.
Such changes have been marked for several years, so there may be no surprises, but supply chains can be dynamic and have to bow with demand for the business. VAT awareness and compliance must work in the same way.
We have long advised businesses on the assurance that they understand the new arrangements. Change is not a bad thing, and the new VAT arrangements are potentially positive game changers welcomed, rather than being considered business blockers.
