International Indirect Tax Update | August 2026

Each month we share a summary of key global indirect tax news to raise awareness of developments in key economies.

If you think any of these updates may affect you, please contact your usual RSM adviser or the relevant local indirect tax contact.
 

GLOBAL E-INVOICING DEVELOPMENTS GATHER PACE ACROSS EMEA

Governments continue to refine e-invoicing and digital reporting regimes ahead of major compliance deadlines, including: 

• France has clarified September 2026 e-reporting obligations for foreign VAT-registered businesses without a French establishment. The standards body, AFNOR, has published updated technical specifications ahead of the country’s 1 September 2026 e-invoicing and e-reporting mandate. 
• Lesotho has introduced the legal framework underpinning its own mandatory e-invoicing regime, also scheduled to commence in January 2027.  
• Norway has formally approved mandatory B2B e-invoicing from January 2027, alongside a transition to digital bookkeeping by 2030.
• Oman has launched its OpenPeppol Testbed, allowing accredited service providers to test interoperability and connectivity before the country’s planned mandatory rollout in January 2027.
• Poland the Ministry of Finance has launched consultations on updates to business event models, invoice process management and KSeF 2.0 API enhancements. 
• Saudi Arabia has consolidated existing e-invoicing rules into an updated VAT guideline.
• Slovakia has softened its planned 2027 e-invoicing rollout, proposing reduced reporting obligations and a penalty soft-landing period from January to March 2027 as it aligns with the EU’s ViDA reforms. 
• The UAE: has issued guidance ahead of its July 2026 pilot, clarifying invoice storage responsibilities, advance payments and VAT group transition arrangements. 
• UK has confirmed that Peppol will be the core interoperability network underpinning its mandatory e-invoicing regime from 1 April 2029. 

What it means
Peppol is an international framework that enables businesses to exchange structured invoices through accredited service providers. By adopting the network, the UK aligns itself with a growing number of jurisdictions using Peppol-based models, including Belgium, Singapore, Australia and several Nordic countries.

Contact: Christian Balk,  RSM UK

EU CLARIFIES TREATMENT OF €3 CUSTOMS DUTY ON LOW-VALUE IMPORTS

The European Commission has issued guidance notes for the launch of the EU’s €3 customs duty on low-value (up to €150) e-commerce imports effective from 1 July 2026. The levy is expected to run until July 2028, pending the EU’s wider customs reform package and Customs Data Hub. The charge will apply mainly to imports sold through the Import One-Stop Shop (IOSS), which covers around 93% of EU e-commerce imports. It will be calculated per product classification, rather than per parcel, so consignments containing goods under different commodity codes may incur multiple €3 charges. The Commission has confirmed that the customs duty must be included in the VAT calculation, increasing the VAT payable on affected imports.  

Meanwhile, the UK has confirmed that the removal of customs duty relief on low-value imports of £135 or less will now take effect from October 2028, six months earlier than previously planned. 

What it means
Businesses importing low-value goods into the EU should review pricing models, checkout calculations and customs processes to ensure the new duty and resulting VAT are correctly accounted for.

Contact: Eva Rehberg, RSM Ebner Stolz

PORTUGAL PUBLISHES VAT GROUP FILING GUIDANCE AHEAD OF JULY 2026 LAUNCH

Portugal has published the official VAT Group (RGIVA) declaration form and filing instructions ahead of the regime’s launch which took effect on 1 July 2026. RGIVA allows eligible corporate groups to be treated as a single VAT taxable person. The new framework is intended to simplify VAT administration, improve cash flow and reduce irrecoverable VAT costs by allowing group members to consolidate VAT positions. This enables VAT credits and liabilities to be offset across the group while intra-group supplies are generally disregarded for VAT purposes. To qualify, a parent company must hold at least 75% of the share capital and control more than 50% of voting rights in participating subsidiaries that are established in Portugal. 

What it means
This development brings Portugal into line with most other EU Member States that already operate VAT grouping regimes. Groups with operations in Portugal may benefit from this but will need to review eligibility and ensure that appropriate declarations are filed.  

Contact: Filipa Azevedo, RSM Portugal 

EU: G KFT: VAT CLAIMS FOR FINALISED VAT PERIODS

In many countries, VAT periods are not ‘closed’ following a tax inspection. A business can submit a claim for overpaid VAT even if the associated VAT return has already been audited by the tax authority. Other countries, however, are less flexible. In Hungary, any errors in a period under inspection must be dealt with as part of that inspection, with only a limited opportunity to extend the inspection. In G. Kft (G), the CJEU has ruled that Hungary’s approach is permissible. G was not entitled to reclaim VAT incorrectly charged on retained deposits (when pallets that it rented to fruit growers were not returned) in 2020, because the opportunity to do so had arisen during an audit in 2017.  In the CJEU’s judgment, G had a reasonable amount of time to correct its VAT (initially by self-correcting, and then as part of the tax inspection). Consequently, the Hungarian rules that effectively closed and finalised the period following an inspection did not infringe the principle of effectiveness.

What it means
Even in VAT systems which share a common framework, there can be significant differences in administrative procedures. Local advice from appropriate experts is essential to avoid unwelcome surprises.  

Contact: Lilla Németh, RSM Hungary

EU: ISOLANTI GROUP: VALIDITY OF ITALIAN STATUTORY SIMPLIFIED RESOLUTION MECHANISM

The Italian tax authorities assessed Isolanti Group for €95k (including interest and penalties) on the grounds that it had incorrectly deducted VAT on false invoices (and should have known they were invalid). Isolanti successfully challenged the assessment in the provincial tax court, but the tax authorities appealed. Rather than defending the appeal, Isolanti took advantage of a statutory simplified resolution mechanism, under which it paid €13k (40% of the VAT, but no interest or penalties) which brought the matter to a close. In the Opinion of Advocate General Dan Spielmann (C-308/25), this mechanism was unacceptable. It was too general and gave rise to unjustified differences depending on whether taxpayers contested decisions. It might even encourage tax evasion. The role of the mechanism in dealing with a significant backlog before the tax courts was not sufficient justification, and the potential requirement to revisit 40,000 other cases settled under it in the past did not warrant a change in the scheme to have a prospective effect only.  

Next steps
If the court endorses the Advocate General’s Opinion, then any business which has settled tax disputes in Italy under the scheme will need to review whether it is impacted.  

Contact: Gianluca di Fresco, RSM Italy

EU STUDY REVIVES VAT REFORM FOR FINANCIAL SERVICES

The European Commission has published a major study concluding that the EU’s long-standing VAT exemption for financial services is no longer fit for purpose. It argues that advances in technology and digitalisation mean the original technical justification for the exemption has largely disappeared.
The report identifies three options:

1. Modernise the current exemption by updating outdated VAT definitions and simplifying partial exemption rules.
2. Reduce the sector’s hidden VAT burden through wider VAT grouping, enhanced cost-sharing arrangements and an option to tax for financial services.
3. The most ambitious proposal is to narrow the scope of the VAT exemption by applying VAT to all fee-based financial services, while continuing to treat interest-based products such as loans as VAT exempt. 

What it means
The Commission estimates that around €54bn of irrecoverable input VAT is incurred annually by the sector, discouraging outsourcing and cross-border operations. While any reform would require unanimous agreement from all EU Member States, the study represents the strongest indication yet that a fundamental overhaul of the financial services VAT regime is now under serious consideration. 

Contact: Alexander Michelutti, RSM Ebner Stolz

SAUDI ARABIA APPROVES GCC VAT REFORMS FOR CROSS-BORDER TRADE

Saudi Arabia has formally approved amendments to the GCC Unified VAT Agreement, marking an important step towards modernising VAT rules for cross-border trade across the Gulf region. 

The reforms are designed to address practical issues that have emerged since VAT was introduced across GCC member states. Key changes include revised rules for intra-GCC supplies of goods and services, clearer treatment of imports moving between member states, and expanded VAT refund rights for certain individuals and non-registered businesses. 

The amendments also strengthen cooperation between tax authorities through enhanced information exchange and administrative coordination. This is expected to improve compliance while supporting the development of a more integrated regional VAT framework. 

What it means
For businesses trading across the GCC, the changes could simplify some cross-border transactions while also requiring a review of existing VAT processes and supply chain structures. Multinational groups operating in multiple Gulf states should monitor implementation closely, as member states will need to incorporate the revised provisions into their domestic VAT legislation. 

The reforms represent a further move towards greater harmonisation of indirect tax rules across the GCC, although local variations between member states are likely to remain.  

Contact: Ahmad Dardas, RSM Saudi Arabia

IRISH VAT UPDATE: 9% VAT RATE FOR FOOD-RELATED HOSPITALITY SERVICES FROM 1 JULY 2026

With effect from 1 July 2026, Ireland’s VAT rate for certain food-related hospitality services has been reduced from 13.5% to 9%. 

The reduced rate applies to restaurant and catering services, including taxable staff meals and hot takeaway food while accommodation remains subject to VAT at the first reduced rate, currently 13.5%.

What it means
For businesses which offer mixed supplies such as food and accommodation packages at a single price, the implications of the VAT rate change will particularly need to be considered to ensure continued compliance. Impacted businesses should also ensure the ERP system and internal controls have been updated for the VAT rate change, particularly where deposits or advance payments have been made. The impact on credit notes should also be considered. 

Please read our insight here for further detail on what this change means for your business.

Contact: Merille Pangasinan, RSM Ireland

UNITED STATES: STATES EXTEND INDIRECT TAX REACH INTO DIGITAL AND EMERGING MARKETS

As 2026 legislative sessions conclude, states continue to expand indirect tax regimes to capture digital and platform-based activity. Illinois and Utah have enacted new taxes on ’targeted advertising’, aimed at large digital platforms, while Colorado and California are broadening the tax base for prewritten software by revisiting longstanding exemptions. California has enacted legislation expanding sales tax to digitally delivered and remotely accessed prewritten software beginning 1 January 2027. Illinois has also enacted a first-in-the-nation digital asset privilege tax, applying a 0.2% levy to certain exchange and custodial activities. 

Beyond digital markets, states are moving to impose sales or excise taxes on various wagering models. Illinois, Kentucky and Virginia have enacted taxes targeting fantasy sports operators, with Illinois and Kentucky extending various taxes to prediction markets.

On the administrative front, states are issuing guidance to address operational questions arising from the phase-out of penny production, including how to round cash transactions and apply sales tax. At the same time, compliance initiatives continue, with Indiana launching a general tax amnesty programme from 15 July 2026 and Illinois introducing a remote seller sales tax amnesty from 1 August 2026.

What it means
States are rapidly adapting indirect tax regimes to digital business models and emerging industries, often layering targeted taxes alongside broader base-broadening measures. At the same time, administrative developments and amnesty programmes signal a continued focus on compliance and revenue collection, increasing both technical complexity and risk for businesses operating across multiple jurisdictions.

Contact: Andrienne Albritton, RSM US

If you would like more information on these topics or need assistance with VAT matters, you can contact the RSM Belgium VAT team at (vat@rsmbelgium.be).