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2025: 3 major EU VAT rule changes

2025: Small company VAT thresholds; online events VAT rules; and VAT rate freedoms

The 27 member states of the European Union are expected to implement three major changes to their VAT rules by 1 January 2025.  These exclude the proposed EU VAT in the Digital Age reforms, which includes some changes for 2025, but now likely to be delayed until 2026.

The three changes are provided below. Some member states have already implemented the changes.

  1. Common VAT registration threshold option

EU states have agreed for member states to extend the same VAT registration thresholds enjoyed by domestic businesses to EU taxpayers from other member states (non-resident).  The aim is to encourage EU businesses to trade within the Single Market by cutting the costs and paperwork of VAT until their trade takes off. There will now be a single higher VAT threshold which businesses may sell goods below without having to VAT register if required.

  1. Place of supply rules on cross-border online live events

The EU is updating the Value Added Tax rules for determining in which country VAT is due – ‘place of supply’ – on entrance fees for virtual events. Member states are required to transpose the new obligations by 1 January 2025. This was concluded by the Council of the European Union on 6th April 2022. The main change relates to the place of supply for digital live events for B2C where non-tax paying attendees are in a different EU state. The place of supply will switch from the country of the host to the country where the attendee is domiciled.

  1. Reduced VAT rate setting freedoms

Since April 2022, member states have been given the option for more reduced VAT rates with the legislative process to be completed by the start of 2025.  The EU VAT Directive has been amended to provide member states wider rights to use reduced VAT rates, including an option to introduce a new rate below 5% on a limited range of supplies. States can apply a new reduced rate below 5% to up to 7 of a list of 24 categories of products and services. They could then also apply reduced rates of 5% or above to the remaining 24 categories of the same list. Many states have already adopted the new freedoms and have been introducing a wider range of rates.

EU VAT reforms

Reform (click for details) Update
Contact VATCalc to learn how our single VAT determination, reporting and e-invoicing platform can help you manage and thrive with global compliance change
2030? Digital Reporting Requirements and e-invoicing harmonisation Likely delay to 2030
Structured e-invoices supercede paper invoices Likely delay to 2030
EC Sales lists replaced by Digital Reporting Requirements Likely delay to 2030
2028 EU Customs reforms Published May 2023
€150 import consignment threshold removed Published May 2023
2026 DAC8 harmonised crypto asset reporting Approved May 2023
2025 VAT registration thresholds equivalence foreign businesses 1 Jan 2025
Virtual events VAT rule changes 1 Jan 2025
Single VAT Registration in the EU - extension of OSS Likely delay to 2026
Marketplace deemed supplier extended to EU sellers Likely delay to 2026
Proposal for VAT treatment of the platform economy Likely delay to 2026
EU IOSS mandated for marketplaces Likely delay to 2026
Call-off stock VAT simplification ends Likely delay to 2026
Harmonisation of B2B Reverse Charge rules Likely delay to 2026
Financial Services VAT exemption reform proposals Consultation complete; proposal awaited
Tour operator margin scheme VAT reforms EC undertaking fresh review
2024 Payment providers' seller transaction reporting and bookkeeping obligations In effect since 1 Jan 2024
2023 DAC 7 - marketplace reporting harmonisation In effect since 1 Jan 2024
2022 IOSS reforms to prevent double taxation On hold
EU reduced VAT rate freedoms Entered into force 6 April 2022
VAT in the Digital Age proposals Published Dec 2022
EU DAC8 cryptocurrency tax reporting proposals Published Dec 2022
VAT Gap Initiative Q3 2022
EU Definitive VAT System On hold
2021 One-Stop-Shop (OSS) single EU VAT return In effect since 1 July 2021
Ending €22 import VAT exemption; new IOSS return In effect since 1 July 2021
Marketplace deemed supplier EU VAT reforms In effect since 1 July 2021
2020 EU four Quick Fixes for VAT In effect
Tax authorities anti-VAT fraud cooperation In effect
Tax Action Plan - 25 VAT and other tax reforms roadmap See 'VAT in the Digital Age' and others
2019 Simplification of e-services VAT compliance and thresholds In effect
Single and multi-use vouchers In effect
2018 Lower e-book and publications VAT rates In effect, although not all EU states have adopted the option

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