The latest edition of Indirect Tax News, produced by our international network, provides timely insights into the most significant indirect tax developments across jurisdictions worldwide. Key themes include VAT reforms, developments in e-invoicing, evolving tax authority interpretations, and the increasing importance of economic substance in determining tax outcomes.
The indirect tax landscape is evolving worldwide
The global indirect tax landscape is evolving rapidly as tax authorities across jurisdictions tighten regulations, modernise compliance requirements, and place increasing emphasis on the economic substance of business activities. Recent developments, including e-invoicing mandates, VAT grouping reforms, and evolving interpretations of intermediary rules, point to a clear trend: VAT outcomes are increasingly determined by how businesses operate in practice rather than by how arrangements are structured contractually.
- Germany is preparing a structural reform of its VAT grouping rules. Under the proposed Annual Tax Act 2026, the current automatically established Organschaft regime would be replaced by a formal election-based system. At the same time, the eligibility of partnerships to become members of a VAT group would be explicitly confirmed. If adopted, the new regime is expected to enter into force in 2029.
- In Spain, recent rulings issued by the General Directorate of Taxes and the Central Economic-Administrative Court reinforce an approach that places greater emphasis on the economic substance of business activities when applying VAT exemptions and special regimes. In areas such as healthcare, financial services, and business transfers, the authorities continue to give precedence to economic reality over contractual form. This trend is also becoming increasingly evident across Europe.
- At the EU level, recent case law and administrative guidance point to a broader interpretation of intermediary and commissionaire arrangements. The focus is shifting away from formal elements, such as the name appearing on an invoice, and increasingly towards the intermediary’s actual authority, involvement, and control over the key terms of a transaction. Where an intermediary influences matters such as pricing, contractual terms, or the execution of a transaction, it may be regarded as acting as a commissionaire. This may give rise to a deemed supply chain for goods or services, affecting VAT liabilities, invoicing flows, and registration obligations. For platforms, digital business models, and businesses engaged in cross-border activities, this substance-based approach creates important considerations from both a compliance and structural perspective.
- In the United Arab Emirates, the Ministry of Finance has taken a measured approach by extending the deadline for large taxpayers to appoint an Accredited Service Provider (ASP) until 30 October 2026. However, the target date for the implementation of mandatory e-invoicing, 1 January 2027, remains unchanged.
- Botswana is undertaking its most significant VAT reform in years. From 1 June 2026, remotely supplied digital services will be clearly brought within the scope of VAT. In addition, reverse charge obligations will be introduced for government entities and large non-registered businesses, while the use of electronic fiscal devices will become mandatory for all VAT-registered taxpayers.
Taken together, these developments demonstrate that VAT systems are becoming increasingly precise, digitalised, and focused on the economic substance of business activities. Businesses that proactively review their operating models, contractual arrangements, and compliance frameworks will be best positioned to navigate an increasingly demanding global tax environment.
Explore these current indirect tax topics in the articles below.