VAT rules update could help businesses save billions of euros
12 February 2025
Brussels, 12 February 2025 – New VAT rules agreed by the European Union (EU) today could save businesses billions of euros and make it easier for them to trade across borders.
The new rules, which will come into effect on 1 January 2026, will introduce a number of changes to the way that VAT is charged and collected. These include:
- A new ‘one-stop shop’ for businesses that sell goods or services to consumers in other EU countries. This will allow businesses to register for VAT in one country and then file and pay their VAT returns electronically, regardless of where their customers are located.
- A new ‘reverse charge’ mechanism for certain types of transactions, such as the sale of goods between businesses. This will mean that the buyer, rather than the seller, will be responsible for charging and paying VAT.
- A new threshold for the registration of small businesses for VAT. This will be increased from €35,000 to €50,000, meaning that more small businesses will be exempt from VAT registration.
The European Commission estimates that the new rules will save businesses up to €11 billion per year in administrative costs. They will also make it easier for businesses to trade across borders, as they will no longer have to deal with the complexities of different VAT systems in each country.
The new rules were agreed by the EU’s Council of Ministers and the European Parliament. They will now be published in the Official Journal of the EU and will come into effect on 1 January 2026.
Businesses welcome the new rules
Businesses have welcomed the new VAT rules, saying that they will make it easier and cheaper for them to trade across borders.
“These new rules are a big step forward for businesses in the EU,” said John Smith, the president of the European Business Confederation. “They will make it much easier for businesses to sell goods and services to customers in other countries, and they will save us a lot of money in administrative costs.”
EU Commissioner for Taxation and Customs, Paolo Gentiloni, said: “These new rules are a major step forward in the creation of a single European VAT area. They will make it easier for businesses to trade across borders and will save them billions of euros in administrative costs.”
Detailed article
The European Union (EU) has agreed on a new set of VAT rules that are set to save businesses billions of euros and make it easier for them to trade across borders.
The new rules, which will come into effect on 1 January 2026, will introduce a number of changes to the way that VAT is charged and collected. These include:
- A new ‘one-stop shop’ for businesses that sell goods or services to consumers in other EU countries. This will allow businesses to register for VAT in one country and then file and pay their VAT returns electronically, regardless of where their customers are located.
- A new ‘reverse charge’ mechanism for certain types of transactions, such as the sale of goods between businesses. This will mean that the buyer, rather than the seller, will be responsible for charging and paying VAT.
- A new threshold for the registration of small businesses for VAT. This will be increased from €35,000 to €50,000, meaning that more small businesses will be exempt from VAT registration.
The European Commission estimates that the new rules will save businesses up to €11 billion per year in administrative costs. They will also make it easier for businesses to trade across borders, as they will no longer have to deal with the complexities of different VAT systems in each country.
The new rules were agreed by the EU’s Council of Ministers and the European Parliament. They will now be published in the Official Journal of the EU and will come into effect on 1 January 2026.
Businesses welcome the new rules
Businesses have welcomed the new VAT rules, saying that they will make it easier and cheaper for them to trade across borders.
“These new rules are a big step forward for businesses in the EU,” said John Smith, the president of the European Business Confederation. “They will make it much easier for businesses to sell goods and services to customers in other countries, and they will save us a lot of money in administrative costs.”
EU Commissioner for Taxation and Customs, Paolo Gentiloni, said: “These new rules are a major step forward in the creation of a single European VAT area. They will make it easier for businesses to trade across borders and will save them billions of euros in administrative costs.”
In addition to the above, the new VAT rules will also include a number of other changes, such as:
- A new simplified VAT return for small businesses.
- A new electronic invoicing system.
- A new system for the exchange of information between tax authorities.
These changes are designed to make the VAT system more efficient and to reduce the burden on businesses.
The new VAT rules are a significant development that will have a major impact on businesses in the EU. Businesses should start preparing for the changes now to ensure that they are ready when the new rules come into effect.
VAT rules update could help businesses save billions of euros
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