Global VAT Guide: June 2025

Our June edition of the Global VAT Guide features comprehensive updates on many VAT regulations and developments from the EU, Hungary, Italy, Poland, Portugal, Netherlands, Slovakia, Slovenia, Sweden, Albania, Azerbaijan, India, Israel, New Zealand, Peru, Saudi Arabia, South Korea, Sri Lanka, Uganda and the United Kingdom.  

European Union

EU VAT Committee issues guidance on taxing SPVs across Member States

On the 23 April 2025, the EU VAT Committee published new guidance following Meeting No. 125, held on 18 November 2024. The focus? Clearing up how to determine which country gets to tax supplies made using use single-purpose vouchers (SPVs).

Here’s what businesses need to know:

1. SPVs for Electronic Services

• B2C supplies: VAT is due in the Member State where your customer lives (as per Article 58 of the VAT Directive)
• B2B supplies: VAT is due in the Member State where your customer’s business is established (according to Article 44)

2. SPVs for Non-Electronic Services

The place of taxation depends on the nature of the service:

• Services connected to immovable property: VAT is due where the property is located (Article 47)

• Services connected to goods supplied without transport: VAT is due in the Member State where the goods sit at the time of sale (Article 31).

These guidelines give businesses issuing SPVs much-needed clarity on cross-border VAT treatment. It’s a step forward in making compliance across EU Member States more predictable – and manageable.

Hungary

Hungary shifts to monthly payment schedule for tax fines

As of 15 April 2025, Hungary’s National Tax and Customs Administration (NAV) has introduced a change in how and when late payment penalties must be settled.

What’s changed?

Until now, fines were paid annually – a lump sum due by 15 November of the following year. That’s no longer the case. From 1 April 2025 onwards, penalties must be paid monthly with payment due by the 20th of the month following the period in which the fine was triggered.

Key details to know:

• NAV will only require payment once fine reaches 5,000 HUF (€12.50)
• Once that threshold is met, you’ll receive a one-time annual notice. After that, fines must be paid monthly for any new late payments.
• The fine rate hasn’t changed – it’s still based on the Hungarian Central Bank base interest rate (6.5% in 2024), plus 5 percentage points. This annual rate is broken down into a daily rate and applied to each overdue day.

Why it matters?

For small or cash-strapped businesses, this means more frequent outflows – and greater pressure on short-term cash flow and compliance monitoring. Staying on top of payment timelines is now more important than ever.

Italy

Italy sets guarantee deadlines for non-EU businesses and fiscal representatives

In April 2025, the Italian Tax Authority (Agenzia delle Entrate) published two new regulations clarifying guarantee obligations for non-EU businesses and fiscal representatives operating in Italy. These updates follow earlier guidance on specific deadlines and acceptable forms of guarantees and set out what’s required – and by when.

Regulation No. 178713/2025

Who it affects: Non-EU companies already registered in the VIES database as of 15 April 2025.

What’s required: Submit a financial guarantee to the Italian tax authorities that complies with the VAT Decree

Deadline: 14 June 2024 (60 days from publication)

Regulation No. 178713/2025

Who it affects: Fiscal representatives active in Italy as of 17 April 2025.

What’s required: Submit a self-declaration – and if applicable, a financial guarantee

Deadline: 16 June 2025 (60 days from publication)

Why it matters:

Entities failing to comply within the deadlines risk deregistration or additional administrative sanctions. If you’re acting on behalf of a non-EU entity or are a non-EU business trading in Italy, now’s the time to ensure guarantees are in place and correctly filed.

Further guidance from the Italian Revenue Agency may follow, especially around practical submission procedures and accepted financial instruments for the guarantees. But the key dates and actions are already clear and fast approaching.

Italy updates Quarterly VAT Refund Form (Modello IVA TR)

The Italian Tax Agency (Agenzia delle Entrate) has released an updated version of the Modello IVA TR – the form used by taxpayers to claim VAT credits accumulated during a calendar quarter. The changes aim to improve clarity, streamline the process and ensure alignment with EU data protection rules.

What’s new?

• Privacy notice updated to align with GDPR (EU Regulation 2016/679), offering greater transparency on how taxpayer data is handled.
• Submission instructions improved to reflect the latest changes on the Agenzia delle Entrate’s online portal, ensuring easier navigation and clearer submission guidelines.
• TA and TB sections restructured to better capture credit compensation, including clearer breakdowns of eligible percentages based on taxpayer profiles.
• Turnover threshold increased: Business under a two-year preventative agreement can now qualify with annual turnover up to €70,000, up from €50,000 (per Legislative Decree No. 13 of 2024.)

What might be required for a refund?

To be eligible for a VAT credit refund using the IVA TR form, you may need:

• A stamp of conformity (visto di conformità)
• A signature from a statutory auditor or supervisory body
• A financial guarantee

The bottom line:

The updated Modello IVA TR is built to support quicker, more accurate VAT refund claims — but full compliance with all requirements remains essential. Meeting the formalities means fewer delays and a smoother path to reimbursement.

Poland

Poland proposes higher VAT Registration Threshold from 2026

On 6 May 2025, the Council of Ministers approved a draft bill to amend Poland’s Act on Value Added Tax, submitted by the Minister of Finance – part of a broader push to cut red tape for small businesses.

What’s changing?

If passed, the new rules will raise the mandatory VAT registration threshold starting 1 January 2026.

• Current threshold: PLN 200,000 (approx. €47,000)
• New threshold: PLN 240,000 (approx. €56,000)
  

This change is to give small businesses more flexibility and reduce day-to-day VAT compliance burdens.

Key points to note:

• New businesses will still calculate the threshold proportionally based on when they begin operating during the year.
• If your 2025 turnover falls between PLN 200,000 and PLN 240,000, you’ll qualify for the exemption as of 1 January 2026.
• The Ministry estimates around 20,000 businesses could benefit from this change.
  

The bill is still under review and will take effect once formally enacted and published in the Official Gazette. Until the, businesses should track developments and start planning ahead.

Portugal

Portugal introduces simplified reporting and VAT changes for virtual events

Two important VAT developments are coming into effect in Portugal, both aimed at reducing admin burdens and aligning with the EU’s digital economy strategy.

1. Simplified reporting measures (From 1 July 2025)

On 15 April 2025, Portugal’s Tax and Customs Authority issued Circular No. 25066, announcing simplified tax reporting rules designed to lighten the load for taxpayers. These changes take effect from 1 July 2025 and form part of a wider effort to streamline compliance.

2. VAT on Virtual Events: Place of Supply changes

Separately, on 24 March 2025, the Portuguese Parliament passed Decree-Law No. 33/2025, partially transposing Directive (EU) 2022/542 — with key changes to how B2C virtual event admissions are taxed.

Here’s what’s changing:

• VAT on virtual event admissions will now be based on the customer’s country of residence — not where the event is streamed or managed.

• This shift to the destination principle ensures VAT is collected where the service is consumed, in line with EU-wide rules.

When Portuguese VAT still applies

Even under the new rules, Portugal may apply domestic VAT if all of the following are true:

• The event is hosted in Portugal
• It is broadcast in Portuguese
• It is intended for a Portuguese audience

If these conditions are met, VAT is charged in Portugal, regardless of the consumer’s location.

What this means for event organisers:

• You may need to register for the One Stop Shop (OSS) scheme to handle multi-country VAT
• You’ll need to determine the consumer’s location and apply the correct VAT rate accordingly
• You may also need to document the event’s language, hosting location and target audience to establish if the Portuguese VAT exception applies.

A wider EU shift
Since Directive (EU) 2022/542 applies across all EU Member States, similar place-of-supply rules will soon apply Union-wide. This is part of the EU’s ongoing work to modernise VAT frameworks for digital services — but it does add complexity for businesses offering virtual events across borders.

In alignment with the EU-wide directive, Portugal has updated its VAT code to reflect the increasing prevalence of digitally streamed

Netherlands

Invoicing requirements updated for public transport or taxi tickets

As of 9 May 2025, the Dutch Tax Authority has updated its invoicing requirements for public transport and taxi services., reflecting the growing shift to digital payments.

What’s changed?

A “transaction overview” (transactieoverzicht) is now accepted as a valid VAT invoice even when no physical ticket is issued.

This move supports the widespread use of:

• Contactless payments e.g. debit/credit cards
• OV-chipkaart and other digital systems

When is a digital overview valid for VAT?

To qualify as a valid invoice, the transaction statement must include:

• Date of issue
• Identity of the supplier (e.g. transport company)
• Date of the journey
• Distance travelled
• VAT amount, or enough detail to calculate it (e.g. fare with 9% VAT rate)

Why it matters:

This update simplifies VAT compliance for:

• Businesses reimbursing employee travel
• Companies and individuals reclaiming VAT on transport
• Transport providers using card-based or app-based systems

It’s a small change with a big impact — helping modernise VAT documentation in line with how people actually travel and pay.

Netherlands to reject early VAT return submissions from 27 May 2025

On 22 April 2025, the DutchTax Authority (Belastingdienst) issued a new announcement advising taxpayers not to submit VAT returns too early. This measure aims to reduce manual processing and improve overall efficiency.

What’s changing?

Starting 27 May 2025, any VAT return submitted before the 24th calendar day of the final month in the reporting period will be automatically rejected.

Example:

• Q1 VAT return submissions made before 24 March 2025 will be rejected
• Q2 VAT return submissions made before 24 June 2025 will be rejected

What happens if you file too early?

• Your submission will be rejected automatically
• You’ll receive a rejection notice, but not confirmation receipt
• You’ll need to resubmit your return after the allowed date

Why this matters

The goal is to reduce manual processing and streamline handling across the Belastingdienst systems — but it means businesses must adjust their internal VAT timelines.

What you need to do

• Review your filing schedule
• Update accounting workflows and software settings
• Submit VAT returns on or after the 24th calendar day of the last month in your reporting period

Need help with your VAT compliance?

Slovakia

Slovakia to introduce 50% VAT deduction cap on mixed-use vehicles from 1 July 2025

As first outlined in our March Global VAT Guide, Slovakia has now received EU approval to limit VAT deductions to 50% on certain vehicle-related expenses — where the vehicle is used for both business and private purposes.

The decision was officially published on 5 May 2025 and takes effect from 1 July 2025.

What’s affected?

The restriction applies to input VAT on:

• Purchase, lease, intra-EU acquisition and import of relevant vehicles
• Related expenses (fuel, spare parts, services, accessories)

Vehicle categories covered:

• M1: Passenger cars with up to 8 seats + driver
• L1e: Light two-wheeled vehicles (e.g. mopeds)
• L3e: Motorcycles not classified under L1e

Full VAT deduction still allowed when vehicles are used exclusively for:

• Resale, hire or lease
• Paid passenger transport (e.g. taxis)
• Driving instruction
• Testing and demonstration
• Temporary replacement vehicles during service or repair

Key facts:

• Effective date: 1 July 2025
• Valid until: 30 June 2028
• Applies to mixed-use vehicles – where private use can’t be excluded

What businesses should do:

• Review vehicle usage policies and documentation
• Update VAT deduction practices in ERP/accounting systems
• Document vehicle use clearly to support VAT positions
  

This is part of a broader trend across the EU to bring VAT treatment of dual-use assets in line with actual use. Businesses operating fleets or providing employee vehicles should assess the financial impact early. If Slovakia wishes to extend, it must submit a renewal request by 30 September 2027, including a report supporting the continuation of the measures.

Slovenia

Slovenia introduces VAT grouping from January 2026

Slovenia is set to implement VAT grouping, a move aimed at reducing administrative friction and streamlining compliance for related businesses. The new rules, published in Official Gazette No. 104/2024, take effect from 1 January 2026.

What is a VAT group?

Once registered, a VAT group is treated as a single taxable person for VAT purposes — allowing for simplified reporting and removal of VAT on intra-group transactions.

Who can form a VAT group?

At least two entities established in Slovenia, meeting all of the following links:

• Financial link: One entity holds more than 50% of the capital in the others
• Economic link: Activities must be similar, interdependent, complementary or pursued for a shared benefit
• Organisational link: Entities must operate under common management

Restrictions:

• Entities in insolvency or compulsory winding-up procedures cannot join
• All links must be maintained continuously for as long as the VAT group exists

Key rules:

• Once formed, the group is treated as a single taxable person
• The group must remain in place for at least 36 months from the registration period
• Intra-group supplies are ignored for VAT purposes, reducing compliance overhead

Considerations:
While grouping simplifies some aspects of VAT compliance, it brings its own challenges:

• Continuous monitoring of financial, economic and organisational links
• Coordinated VAT reporting and data sharing across all members
• Higher scrutiny of group structure by the tax authority

Further guidance is expected from the Financial Administration of the Republic of Slovenia ahead of the 2026 start date.

Points to watch

While VAT grouping offers reporting and cash flow efficiencies, it comes with operational responsibilities:

• Ongoing verification of links between members
• Coordinated systems for reporting and record-keeping
• Readiness for tax authority scrutiny of group structure

Further guidance from the Financial Administration of the Republic of Slovenia is expected in the lead-up to implementation.

Sweden

Notification of change of information on which registration is based

On 16 April 2025, the Swedish Tax Agency (Skatteverket) published an updated version of its Guide for Non-EU Taxable Persons, providing important clarification regarding VAT refund applications by non-EU VAT Groups. 

The update confirms that a non-EU VAT Group should not be treated as a single taxable person for the purpose of VAT refunds. 

Instead, each company within the group is considered a separate taxable person, and each must submit its own VAT refund application. 

Group-level applications will not be accepted. 

This clarification aims to ensure compliance with Swedish VAT rules and to streamline the refund process for non-EU entities operating in group structures. 

Sweden

Verbal VAT Registration updates now allowed

Sweden’s Tax Agency (Skatteverket) has relaxed the rules around how VAT-registered businesses report changes to their registration details.

What’s new?

As of the latest update, changes to VAT registration information no longer need to be submitted in writing

What this means

Previously:

• Tax payers were required to notify Skatteverket in writing.
• This was done either online via verksamt.se or by submitting Form SKV 4639.

Now:

• Notifications can be made verbally – by phone or in person
• This makes it easier and quicker for businesses to stay compliant

Reminder:

All VAT-registered entities must continue to report any changes to the information on which their registration is based — such as business activities, address, or responsible parties.

This simplification supports more flexible compliance but doesn’t change the obligation to notify — just how you can do it.

No VAT on cancellation or no-show fees from 23 April 2025

Sweden’s Tax Agency has updated its stance on VAT treatment for cancellation and no-show fees.

What’s changed?

As of 23 April 2025, no VAT is due on fees charged when a customer cancels or fails to show up for a service they booked but didn’t use.

These fees are now considered outside the scope of VAT.

Why it matters:

• Businesses no longer need to apply VAT to cancellation or no-show charges
• This aligns with broader EU case law treating such payments as compensation, not consideration for a service

Key action:
Update your invoicing and VAT treatment for any no-show or cancellation fees from 23 April 2025 onward to reflect the change.

Albania

VAT Compliance reminder for non-resident suppliers of digital services

In May 2025, the Albanian General Directorate of Taxation (DPT) issued an official notice targeting foreign (multinational) companies supplying electronically supplied/digital services to non-taxable persons (B2C) in Albania.

The notice emphasies the importance of voluntary compliance with VAT obligations, inlcuding:

• Appointing a local fiscal representative
• Registering for VAT purposes in Albania
• Collecting and accounting for VAT due (standard rate: 20%)

Services covered under Article 29 of Law No. 92/2014:

• Telecommunication services
• Radio and television broadcasting
• Website supply, web-hosting and remote maintenance of programs and equipment
• Software supply and updates
• Supply of images, text, information and database access
• Music, films, games (including gambling) and broadcasts/events of political, cultural, artistic, sporting, scientific and entertainment nature
• Distance teaching services

Voluntary compliance is expected. However, failure to comply may result in penalties or enforcement measures by the Albanian Tax Administration.

This aligns with the EU’s VAT framework for cross-border digital services and reflects Albania’s growing focus on digital economy compliance.

Azerbaijan

Sony registers for VAT on Digital Services

On 22 April 2025, Azerbaijan’s State Tax Service announced that Sony Interactive Entertainment Network Europe Limited has joined companies like Apple and Adobe in electronically registering for VAT purposes in Azerbaijan.

Why this matters:

This move supports Azerbaijan’s strategy to:

• Expand the VAT base on digital services
• Enhance compliance
• Create a level playing field for local and foreign providers

Key legislative basis:
Under Articles 33.8-1 and 169.8 of the Azerbaijani Tax Code:

• Once VAT registered, foreign digital service providers are directly responsible for charging and remitting VAT on B2C supplies
• Financial institutions will no longer act as VAT withholding agents for these transactions.

A dedicated e-tax portal for Digital Compliance, launched in mid-2024, allows non-established companies to register directly for VAT.

Unofficial sources suggest that VAT registration for such digital service providers may become mandatory starting January 2026.

India

Clarified document rules for GST registration

On 17 April 2025, the Central Board of Indirect Taxes & Customs issued Instruction No. 03/2025-GST, setting out clearer guidance on the documents required for GST registration.

Key clarifications:

1. Proof of Principal Place of Business

Specific documentation requirements are outlined for a range of situations, including:

• Owned premises
• Rented premises
• Premises with shared ownership
• Premises located within Special Economic Zones (SEZs).

2. Constitution of Business

The instruction details the required documents for applicants structured as:

• Partnerships
• Trusts and societies
• Government departments
• Clubs, Associations of Persons (AOPs), Local Authorities, Statutory Bodies and others

3. Review Procedure for Tax Officers

The instruction also defines:

• Timelines for application review
• Forms and annexures to be submitted in various cases
• Conditions requiring additional verification

These clarifications aim to promote greater consistency and transparency in the GST registration process across all states and union territories.

Israel

New invoicing requirements to combat fictitious VAT claims

To tackle the issue of fictitious invoices causing billions of shekels in lost state revenue annually, Israel has implemented a new invoicing model aligned with the Economic Efficiency Law 2023.

Effective from 1 January 2024, the Israel Tax Authority requires allocation numbers for tax invoices issued to authorised dealers. These numbers, issued via an online system, are mandatory for claiming input VAT deductions on transactions exceeding specified thresholds.

Thresholds for mandatory allocation numbers:

• 2024: NIS 25,000 (initially approved threshold, valid only during 2024)
• 2025: Lowered to NIS 20,000 (approx. €4,800).
• 2026:
  • NIS 10,000 (approx. €2,400) effective from 1 January 2026
  • NIS 5,000 (approx. €1,200) effective from 1 June 2026

Originally intended to phase in gradually until 2028, the thresholds have been accelerated to apply earlier.

Format and placement

The allocation number is a 9-digit code that must be:

• Labelled clearly as “Allocation number£
• Displayed on the tax invoice, preferably bellow the invoice number
• Shown on the first page, or all pages if the dealer chooses

Verification and security

Customers (authorised dealers) can verify allocation numbers via a secure digital platform by logging in with appropriate identification credentials. Only the customer and their authoirsed representatives can access this data, ensuring confidentiality and compliance with data protection standards.

The new model aims to enhance transparency, streamline input tax claims and curb fraudulent activity in the Israeli VAT system.

New Zealand

Digital services bill officially withdrawn

On 20 May 2025, the New Zealand government announced that it will discharge the Digital Services Tax Bill, originally introduced in 2023 under the previous government.

Revenue Minister Simon Watts commented:

“A global solution has always been our preferred option, and we have been encouraged by the recent commitment of countries to the OECD work in this area.”

He further explained that the Digital Services Tax no longer meets the criteria for inclusion in the Crown accounts, reflecting New Zealand’s continued support for an internationally coordinated approach to taxing digital services.

The withdrawal signals a shift away from unilateral tax measures and a recommitment to coordinated international solutions for taxing the digital economy.

Peru

Updated scope of electronically supplied services by non-domiciled providers

On 29 April 2025, the Peruvian Tax Authority (SUNAT) issued Report No. 000046-2025-SUNAT/7T0000, providing important clarifications regarding the classification of electronically supplied services by non-domiciled providers for VAT purposes.

This report updates and refines the earlier guidance issued in Report No. 000039-2024-SUNAT/7T0000.

Services no longer qualifying as digital services:

• Online technical support provided via electronic platforms where user queries are answered by technicians through the platform or email
• Consulting services delivered via traditional formats (in person, telephone or video call), with results sent via email.

Services now qualifying as digital services:

To qualify as an electronically supplied service, the activity must:

• Be a service provided by one person to another
• Be delivered via the Internet or other electronic networks/ platforms
• Be accessible online i.e. involve a connection to the Internet, a network or a site
• Be essentially automated, requiring minimal human intervention
• Depend on information technology to function

These criteria aim to clarify the scope of digital services subject to reporting and taxation, helping non-resident providers understand their obligations under Peruvian tax law.

Saudi Arabia

Amendments to VAT Implementing Regulations (Articles 50 & 70)

On 18 April 2025, amendments to VAT Implementing Regulations were published in the Official Gazette Issue No. 5082. The key updates concern Article 50 ( deductible input VAT) and Article 70 (foreign VAT refund procedures).

Article 50 – Deductible expenses

Paragraph 1: Non-deductible items (Unless legally required by employer)

• Hospitality services for employees and their families
• Insurance or health care services for employees and their families

Paragraph 2: Restricted vehicles

• Updated definition: Restricted vehicles now include any designed to carry no more than 10 persons
• Deductible exceptions (if used for economic activity):
  • Trucks
  • Cranes and other heavy machinery
  • Emergency vehicles (e.g. ambulances, fire trucks, security/guard vehicles)

Article 70 – Foreign VAT Refunds (Designated Persons)

• Monthly claims now allowed in special cases
• No corrections allowed after claim submission
• Minimum claim threshold rasied from SAR 1,000 to SAR 5,000
• Payment date of the tax invoice must be included
• Refund processing timeline reduced to 30 days (previously 60 days)
• Simplified invoices accepted for certain expenses
• Incorrect refunds must be repaid to the Tax Authority

VAT Registration cancellation grounds expanded to include:

• Loss of eligibility criteria
• The category becomes ineligible
• Intentional falsification of submitted information or dates

South Korea

VAT reporting obligation expanded to non-established intermediaries

Effective 1 July 2025, amendments to Article 75 of the Korean VAT Law will expand the scope of quarterly VAT reporting obligations to include non-established intermediaries operating in Korea without a physical presence.

Current reporting requirements applies to:

• Sales or settlement agents
• Intermediaries involved in the supply of goods or services (e.g. intermediaries or distributors for distance sales)
• Electronic financial service providers

Upcoming changes (Effective 1 July 2025)

Following legislative amendments adopted in March 2025, the scope of this reporting obligation will expand to include:

• Non-established intermediaries (i.e. intermediaries operating in Korea without physical establishment) must submit quarterly statements detailing:
  • Seller identity
  • Transaction details for sales facilitated

Reporting deadline:

Reports must be submitted by the end of the month following each quarter and the statement should include detailed information about the sellers and the sales arranged by the intermediary.

Purpose:

This expansion aims to improve VAT transparency and compliance across digital and cross-border transactions.

Sri Lanka

VAT imposed on non-resident digital platform providers

As part of the 2025 Budget, Sri Lanka has expanded its VAT regime to cover non-resident providers of electronic services. The changes were enacted through an Amendment to the Value Added Tax Act, published on 21 February 2025, and took effect from 1 April 2025.

Key changes:

• Non-resident persons supplying services via digital platforms to Sri Lankan customers are now liable for VAT.
• The Commissioner-General is empowered to establish procedures for
  • Registration
  • VAT collecting and charging
  • Filing of returns related to digital platforms

Important definitions:

• Electronic platform:
  • Any website or mobile application used to deliver services from one or more providers to recipients

• Fixed place:
  • A location with sufficient permanence and appropriate human and technical resources to supply or receive services for its own needs.

• Non-resident person:
  • Any person supplying services in Sri Lanka without a fixed place of business, excluding those registered under section 10 who operate through an agent.

Objective:

This amendment aligns Sri Lanka’s VAT framework with global best practices on cross-border digital services taxation, ensuring fair contribution from offshore service providers.

Uganda

Proposal to waive digital service tax for non-residents

On 25 March 2025, the Ugandan government released a proposal, titled Income Tax (Amendment) (No. 2) Bill, 2025. This bill proposes a key change to the country’s approach to digital taxation.

Key proposal:

• Waiver of the existing 5% Digital Service Tax (DST) for non-resident digital service providers with exceptions
• DST would still apply when digital services are supplied to associated persons within Uganda

Status and timeline:

• The bill is currently at the first reading stage in Parliament
• If approved, the amendments will take effect from 1 July 2025.

Objective:

The waiver aims to reduce the tax burden on non-resident digital service providers and encourage greater digital trade and investment in Uganda, while maintaing safeguards to prevent base erosion in related-part transactions. This proposed change marks a significant shift in Uganda’s approach to taxing digital services and is one to watch for businesses operating in the region.

United Kingdom

Corresponding with HMRC by email

On 23 May 2025, His Majesty’s Revenue and Customs (HMRC) updated its factsheet “Corresponding with HMRC by email”, outlining the procedure for taxpayers who wish to engage with HMRC via email.

Key requirements:

Taxpayers must confirm in writing (by post or email) that they:

• Understand and accept the risks of using email
• Agree to receive financial information by email
• Agree that attachments can be sent via email
• Provide the names and email addresses of all authorised individuals (staff, representatives, agents) permitted to communicate with HMRC by email.

Additionally:

• Authorised agent must confirm in writing that their client understands and accepts the associated risks.

Reminder:

Taxpayers are advised to check their junk mail or spam filters to ensure HMRC emails are not rejected or deleted automatically.

Updated process for transferring a VAT registration number

On 15 May 2025, HMRC revised its guidance on the transfer of a VAT registration number, highlighting that a VAT registration application must be completed as part of the process.

When a transfer can be requested:

Taxpayers can request a transfer of their VAT registration number when:

• Taking over a company and wishing to retain the previous owner’s VAT registration number.
• Changing the legal structure of a business (e.g. converting from a sole trader to a limited company).

Required documentation:

Taxpayers must submit both:

• A VAT registration application
• Form VAT68 (Application for transfer of a VAT registration number)

How to submit Form VAT68:

• By email to: btc.changeoflegalentity@gov.uk
  • (Include the VAT Registration Service (VRS) number as the email subject heading).
• Or by post to the address provided on the form

Increase in late payment interest from 2.5 % to 4%

On 2 May 2025, HMRC updated its guidance on late payment interest for VAT and penalties.

Key changes:

• The late payment interest rate increased significantly from 2.5% to 4%
• This new rate is calculated as the Bank of England base rate +4%, effective from 2 May 2025
• Interest applies to:
  • VAT due in VAT returns
  • VAT from amendments or corrections
  • Assessments raised by HMRC
  • Missed payments on account

Additional guidance now includes:

• Detailed examples showing how interest and late payment penalties are calculated
• Interest is reflected in the taxpayer’s VAT account
• Interest applies regardless of the reason for the late payment

• HMRC continues to offer Time to Pay arrangements for taxpayers in financial difficulties; while interest may still accrue, such arrangements help avoid penalties and ensure compliance

Businesses should:

• Review payment processes to prevent late charges
• Monitor the Bank of England base rate as changes will affect the interest rate
• Contact HMRC early if facing payment challenges to arrange instalment plans

New regulation formalises flexibility for final VAT return deadlines

On 13 May 2025, HMRC published Regulation 2025 No. 578, amending the Value Added Tax Regulations 1995 to formally allow the extension of the due date for submitting a final VAT return upon VAT de-registration by direction of the Commissioners.

Key update:

A new paragraph (4AA) has been added to Regulation 25 (making of returns):

• “Any period specified in paragraph (4) for the making of a final return may be extended by direction of the Commissioners whether or not that period has ended at the time the direction is made.”
• The amendment takes effect from 13 June 2025.

Context:

• Currently, final VAT returns are due within one month of of cancellation, with an additional week is submitted electronically.
• The deadline for payment coincides with the return submission date; failure to meet these triggers automatic penalties and interest.
• Internal processing delays by HMRC previously caused compliance issues, despite being outside a business’s control
• Until now, extensions were granted informally on a case-by-case basis.

Impact:

• This amendment provides a formal regulatory basis for deadline extensions
• Aligns legislation with HMRC’s existing operational practices
• Reduces the risk of unjust penalties and interest due to processing delays

This change improves clarity and fairness for businesses undergoing VAT deregistration.

Updated HMRC Guidance: Supporting your VAT repayment claims

On 12 May 2025, HMRC updated its guidance titled “Send details to support your VAT repayment claim”, outlining the types of evidence required to support VAT repayment claims on goods and services received before VAT registration.

Required evidence includes:

• A stock account detailing:
  • Description of goods
  • Date of purchase
  • Quantity
  • Amount paid (including VAT)

• Details and dates of disposal of goods, including the manner of sale or disposal and quantities.

• An account for services describing:
  • Services received
  • Date received
  • Amount paid (including VAT)

When to use the supporting form:

• Taxpayers or their agents should only use the form referenced in the guidance if:
  • A VAT repayment has been claimed on the VAT Return, and
  • HMRC has issued a letter or email advising that the taxpayer is subject to an audit and has requested supporting details.

Update of VAT Notice 723A (Refunds for non-UK businesses)

Effective: 2 May 2025

HMRC revised VAT Notice 723A covering refunds of UK VAT for non-UK businesses with key changes including:

• Postal claims:
  • Certificate of VAT Status is still required as an original document
  • All other documents may be submitted as copies (originals no longer returned)
  • Claimants must retain original documents until the claim is fully processed

• Document retention:
  • Original hard copies must be kept and available until the claim is fully processed.
  • HMRC may request to see these originals at any time.
  • Failure to provide originals on request can lead to rejection of the claim in whole or in part.

• Electronic submissions:
  • The section on accessing the Secure Data Exchange Service (SDES) has been removed
  • Related content has been consolidated under the ‘Electronic submission of claims’ section.

Other updates:

• Minor renumbering and wording changes were made for improved clarity and readability.

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Navigating global indirect tax doesn’t have to be complicated. At Fintua, our dedicated team brings clarity to compliance. Whether you’re expanding into new markets or streamlining existing obligations. We combine expert insight with tailored technology to support businesses in a digital-first landscape. Whatever the jurisdiction, whatever the challenge – we’re ready. 

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