Global VAT Guide: April 2025

The April edition of the Global VAT Guide features comprehensive updates on VAT regulations and developments from Estonia, France, Poland, New Zealand, Switzerland, and The United Kingdom.

Estonia

As reported in our February Newsletter, the European Commission approved Estonia’s request for an extension to apply the 50% VAT deduction on the purchase and leasing of passenger cars, including expenses related to maintenance, repairs, and fuel, for vehicles not solely used for business purposes.

This measure was originally set to expire on 31 December 2024.

The timeline for the extension is as follows:

• 28 March 2024: Estonia formally requested a three-year extension of the measure.
• 18 October 2024: After two requests for additional information, Estonia was informed that the European Commission had all the necessary details to consider the extension request.
• 4 February 2025: A proposal decision was issued by the Commission.
• 18 March 2025: The official Commission Decision extended the measure until 31 December 2027.

The special measure applies to passenger cars with a maximum authorized weight not exceeding 3,500 kg and no more than eight seats in addition to the driver’s seat.

However, certain vehicles are excluded from the VAT deduction restriction and are subject to the normal VAT rules. These include:

• Cars purchased for resale, hire, or lease.
• Cars used for passenger (e.g., taxis) or goods transportation.
• Cars used for driving lessons.

Similar derogations have been granted to other EU Member States, including Latvia, Italy, Croatia, Hungary, Poland, and Romania.

France

The government has announced a postponement of the planned reduction in the VAT exemption threshold for small businesses to EUR 25,000.

This reduction was originally scheduled to take effect on 1 March 2025, under the recently adopted Finance Law for 2025.

This change will now be implemented from 1 June 2025.

This decision follows a public consultation that concluded on 28 February 2025.

Until the new effective date, the existing VAT exemption thresholds—as outlined in the previous version of Article 293 B of the General Tax Code—will continue to apply.

In addition, the tax authorities have issued a clarifying ruling addressing the transitional measures for businesses that exceed the current exemption thresholds during 2025.

Poland

Effective 1 April 2025, all communications with Polish public administration services will require the use of the new e-Delivery (e-Doręczenia) system.

This system will replace traditional postal letters and the existing ePUAP platform.

The new e-Delivery system applies to all businesses registered in the Polish National Court Register (KRS), including:

• Limited liability companies
• Cooperatives
• Branch establishments of foreign companies
• Other business entities

Steps to Activate the e-Delivery Service:

• Submit an Application & Activate an e-Delivery Inbox:
  • Businesses must apply for access to the e-Delivery system and set up an e-Delivery inbox to receive and send communications.

• Appoint a Responsible Person:
  • Assign a designated individual to operate and manage the e-Delivery inbox, ensuring that communications are processed efficiently.

• Prepare Internal Processes:
  • Organize internal channels to ensure the timely reception and dispatch of communications via the e-Delivery system. This includes making adjustments to internal workflows and systems.

• Maintain Other Correspondence Channels:
  • Businesses must continue to maintain operations of other established communication systems, such as ePUAP, and ensure that all correspondence channels remain functional and up-to-date.

e-Delivery is designed to streamline and modernize the way Polish administrations communicate with registered businesses.

It is a mandatory system that aims to improve efficiency, reduce delays, and centralize administrative processes.

For businesses, this transition will require adapting to a new digital communication method, ensuring the proper setup of internal systems, and maintaining compliance with the updated regulations.

New Zealand

On 10 March 2025, the New Zealand parliament announced that it is considering changes to the Goods and Services Tax (GST) regulations that would affect digital economy traders, including businesses operating in online marketplaces, ride-sharing, food delivery, and short-stay accommodation services.

Below is a list of the affected businesses:

• Online marketplaces
• Ride-sharing services
• Food delivery services
• Short-stay accommodation providers

• Online marketplaces and listing intermediaries can claim a credit adjustment for flat-rate credits passed onto sellers, but they must keep a record of:
  • The seller’s name
  • The seller’s IRD number
  • The seller’s GST registration status

• GST must be accounted for no later than 7 days after check-out, though businesses can choose to account for it earlier, such as at check-in

• Online marketplaces must provide taxable supply information within 28 days of the service unless the seller opts out. Listing intermediaries can also provide this information if they have a written agreement with the marketplace.

• Accommodation providers using a listing intermediary can opt out of marketplace rules if they make over $500,000 in sales per year by notifying the intermediary (not the marketplace).

• Sellers who are not GST-registered can still include flat-rate credits as income in their tax return and deduct their costs (even if those costs include GST).

Switzerland

On 3 March, the Swiss Federal Tax Administration (ESTV) updated its Reciprocity list (Form 1124) for the Foreign VAT Refund procedure, adding New Zealand to the list.

This expansion will be effective 1 January 2025 for invoices issued in 2024.

If the country in which the applicant is domiciled is not included in the list, the applicant has the option to provide evidence to the ESTV that the conditions for granting reciprocity, as per Article 152, paragraph 1 of the VAT Ordinance, are met. The ESTV will verify the evidence under the following conditions:

• The applicant must provide a confirmation from the competent tax authority of their country, stating that one of the conditions outlined in Article 152(1)(a), (b), or (c) of the VAT Act is fulfilled in that country.
• The confirmation must be in German, French, Italian, or English. If it is not, a notarized translation into a local language is also required.
• If the ESTV determines that reciprocity is granted, the Swiss VAT refund will be processed. The list will be updated accordingly after each review, typically at the end of each year.

According to Article 152, paragraph 1 of the VAT Ordinance, reciprocity is considered to be granted if:

• Companies in Switzerland are entitled to a VAT refund in the foreign country for services purchased there, with rights and restrictions that correspond to those enjoyed by companies in the foreign country;
• No tax comparable to Swiss VAT is levied in the foreign country; or
• The foreign country levies a different type of VAT that imposes the same burden on businesses as Swiss VAT does.

United Kingdom

On 27 January 2025, HMRC updated its official guidance regarding VAT Payments on account, introducing the option to make payments via an online bank account.

Below are the steps to follow to Complete VAT Payment via Online Bank Account:

• Log in to Your HMRC Account:
  • Access your HMRC account using your VAT ID number.

• Select ‘Pay by Bank Account’:

• Redirect to Online or Mobile Banking:

• Select Payment Date:
  • Choose a payment date, ensuring it is before the payment deadline to avoid penalties.

Some important things to note:

The payment transfer is typically instantaneous but can take up to 2 hours to process.

The payment reference should be your UK VAT ID number without any spaces.

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