BDO Indirect Tax News – July 2026
BDO Indirect Tax News – July 2026
VAT rules are changing, economic reality is what matters
The global indirect tax landscape is undergoing significant change. Tax authorities across jurisdictions are tightening the rules, modernising reporting requirements and placing increasing emphasis on the economic substance of transactions.
Recent developments—from the introduction of e-invoicing and reforms to VAT grouping to new interpretations of the rules governing intermediaries—confirm a clear trend: VAT treatment is increasingly determined by how businesses operate in practice, not merely by how their contractual arrangements are structured.
Digitalisation
E-invoicing and new digital reporting obligations are changing how businesses process and manage tax data.
Stricter rules
Registration requirements, control mechanisms and penalties for late or incomplete compliance are expanding.
Economic substance
Tax treatment increasingly reflects how a transaction operates in practice, not merely its formal or contractual structure.
What is changing around the world?
Selected jurisdictions are introducing new e-invoicing requirements, extending the scope of VAT and revising the conditions for VAT grouping.
United Arab Emirates
The UAE Ministry of Finance has extended the deadline for large taxpayers to appoint an Accredited Service Provider to 30 October 2026. However, the e-invoicing go-live date of 1 January 2027 remains unchanged.
The extension provides additional preparation time rather than a reason to delay. Systems upgrades, process redesign and data readiness remain critical priorities, particularly given the penalties for late or incomplete compliance.
E-invoicing from 1 January 2027Botswana
Botswana is introducing one of its most significant VAT reforms in recent years. From 1 June 2026, remotely supplied digital services will fall within the scope of VAT.
Government entities and large unregistered businesses will be subject to reverse charge obligations, while electronic fiscal devices will become mandatory for all VAT-registered businesses. With registration deadlines already in motion, businesses have limited time to align their systems and processes.
New rules from 1 June 2026Germany
Germany is preparing a fundamental change to its VAT grouping rules. The draft Annual Tax Act 2026 would replace the automatic formation of an “Organschaft” with a requirement to submit an explicit declaration.
The proposal would also confirm the eligibility of partnerships, aligning domestic rules with recent decisions at EU level and by the German Federal Fiscal Court. If adopted, the new regime should provide greater legal certainty while requiring more active management of VAT matters across the group.
Proposed effective date: 2029Spain
Recent decisions by the General Directorate of Taxes and the Central Economic-Administrative Court reinforce an approach based on economic substance.
When applying VAT exemptions and special regimes—whether in healthcare, financial services or business transfers—the authorities prioritise economic reality over the formal wording of contracts. A similar approach is becoming increasingly prominent across other European jurisdictions.
Economic reality over contractual formThe EU broadens its approach to intermediary arrangements
Recent case law and administrative guidance point to a broader interpretation of the rules governing intermediary and commissionaire arrangements. The focus is shifting away from formal indicators, such as whose name appears on an invoice, towards the intermediary’s actual authority, involvement and control over the essential elements of a transaction.
Where an intermediary influences the price, contractual terms or execution of a transaction, it may be treated as a commissionaire for VAT purposes. This may create a fictitious chain of supplies and affect VAT liability, invoicing flows and registration obligations.
For digital platforms, cross-border operators and businesses using new commercial models, this interpretation may have significant implications for both structural arrangements and tax compliance.
What does this mean for businesses?
VAT rules are becoming more explicit, more digital and increasingly focused on the economic substance of transactions. Businesses that review their operating models, contractual arrangements and tax reporting systems in good time will be better positioned to manage the growing demands of the global tax environment.