VAT & Indirect Tax Intelligence
VAT news digest
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Ukraine’s parliament has exempted the supply of ground‑based unmanned ground vehicles (UGVs) to the Defense Forces from VAT. The exemption, enacted via Bill No. 15259, aims to accelerate delivery of logistics and medical evacuation equipment. The law takes effect from 28 May 2026.
In today's VAT news, European countries are implementing changes to value-added tax regulations, including a VAT cut on children's meals aimed at reducing costs for families. Meanwhile, Germany is introducing stricter VAT group rules to enhance compliance and prevent abuse. Additionally, Spain has released a technical update for its B2B Crea y Crece e-invoice e-reporting system, further streamlining electronic invoicing processes.
Today's VAT news highlights significant developments in European and international taxation, including the implementation of automated VAT assessments and e-invoicing systems in several countries. Italy and Sweden are leading the charge in Europe with new measures to enhance tax compliance, while the Dominican Republic has introduced mandatory e-invoicing in the Americas. Additionally, proposed taxes on e-commerce parcels in Austria and VAT increases in Ukraine in exchange for EU loans demonstrate the ongoing evolution of VAT policies worldwide.
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Italy has amended its 2026 barter VAT rules, replacing the cost‑based valuation model with a contractual value approach. The change, effective 1 January 2026, requires the taxable amount to reflect the parties’ agreed monetary value but not fall below the supplier’s direct costs, and applies retroactively to contracts from that date while protecting earlier invoices.
The Supreme Court of Korea ruled that fresh flower decorations supplied at hotel wedding venues are a provision of services, not a supply of goods, and therefore subject to VAT. The ruling overturned a lower court decision that had treated the decorations as exempt unprocessed agricultural products. As a result, the tax office assessed significant VAT amounts for Josun Hotel & Resort for 2018.
The UK Chancellor announced temporary VAT cuts from 20% to 5% on family attractions during school holidays, effective from the end of June to 1 September 2026. Additional measures include free bus journeys for under‑16s in England in August, a 12‑month HGV road tax holiday, and a one‑third reduction in red diesel duty until the end of 2026. Business leaders argue the cuts are insufficient to support hospitality and other sectors.
The UK government has introduced a temporary 5% VAT rate on admission to certain family attractions, effective from 25 June to 1 September 2026, replacing the standard 20% rate. The cut covers museums, planetariums, heritage sites, nature reserves, botanical gardens, children’s meals and performance‑venue tickets marketed for children, but excludes seasonal passes beyond 1 September unless priced similarly to day tickets. Charities already exempt from VAT do not benefit unless they operate through a VAT‑registered trading subsidiary.
Kazakhstan has launched a pre‑filled VAT return system that automatically populates Form 300.00 using data from its Electronic Invoice Information System, taxpayer accounts and customs declarations. The system updates VAT return data on a T+1 basis, requiring VAT credit notifications to have a ‘confirmed’ status. Businesses must ensure accurate and timely submission of invoices and credit adjustments to avoid errors in the pre‑filled returns.
The Court of Cassation’s Order no. 17536/2025 clarifies that formal violations of VAT bookkeeping and invoice preservation do not automatically bar the right to deduction, provided substantive obligations are met. The ruling sets two exceptions—fraudulent intent or inability to prove substantive compliance—under which deduction is denied. It reinforces the principle of fiscal neutrality while maintaining sanctions for formal non‑compliance.
Austria’s parliament approved legislation halving the VAT on essential food items to 4.9% from 10% effective 1 July 2022. The measure covers staples such as milk, bread, eggs, rice, flour and selected fruits and vegetables, and is expected to save households about €100 a year.
Austria has approved legislation to halve the VAT on essential food items, reducing the rate from 10% to 4.9% effective 1 July 2026. The measure covers staples such as milk, bread, eggs, rice, flour, and certain fruits and vegetables. The government estimates the cost at €400 million and household savings of about €100 per year.
UK announced a temporary emergency VAT reduction from 20% to 5% on children’s meals and family attraction tickets for the 2026 summer holidays. The relief applies from 25 June to 1 September 2026 and covers specific categories such as dedicated children’s meals, family admission tickets, and attractions like theme parks and museums. Businesses may adjust VAT retrospectively and refund excess charges.
Latvia will lower the VAT rate on a range of essential food items from 21% to 12% effective 1 July 2026, following an agreement between the Ministry of Economics and retailers. The change covers bread, milk, poultry products, eggs and flour, and is designed to be fully reflected in consumer prices. The move is part of a broader low‑price basket initiative aimed at easing food costs for residents.
China has expanded its instant VAT refund scheme for foreign tourists, allowing refunds at the point of sale and simplifying customs checks. From 1 July 2026, customs will conduct random inspections for claims below CNY 10,000, while tourists must validate claims within 28 days of purchase. The reforms aim to boost inbound tourism and consumer spending.
The UK will apply a temporary 5% VAT rate to children's meals, admission tickets to theatres, cinemas, concerts, exhibitions, shows, and family attractions from 25 June 2026 to 1 September 2026 inclusive. The reduced rate ends on 1 September 2026, after which the standard rate resumes.
Greece has rolled out its first phase of mandatory B2B e‑invoicing, targeting large companies from March 2026 and all companies by October 2026, with full penalty enforcement from May 2026. The e‑transportation regime, part of the myDATA platform, now requires real‑time tracking of goods, with Phase A becoming fully mandatory in December 2025 and Phase B fully mandatory from October 2026. The new rules also introduce item‑level classification using the Unified Commodity Coding System from January 2027.
