VAT Newsletter second quarter 2026

Newsletter – 28.07.2026

Please find below the VAT newsletter for the second quarter of 2026 highlighting the latest developments in the field of VAT in:

Austria, Bulgaria, Croatia, Czech Republic, Germany, Hungary, Poland, Serbia and Slovenia.

Austria

CASE LAW

Allocation of Transport in Chain Transactions
- The Austrian Supreme Administrative Court has clarified the application of the triangulation simplification in chain transactions (A–B–C).
- The simplification does not apply where the final customer (C) collects the goods directly from the supplier (A) under an ex works arrangement, as in such case the transport is allocated to the second supply from B to C, the conditions of Article 25(4) of the Austrian VAT Act are not met (Supreme Administrative Court, 22.01.2026, Ra 2025/15/0038).
Abuse of Law in Property Leasing Structures
- The involvement of a leasing company for construction of a building as property developer and rented out to a bank solely to obtain input VAT recovery on construction costs may constitute an abusive practice.
- In such cases, the tax authorities may deny the VAT benefit under the abuse-of-law provisions of the Austrian Fiscal Code (Supreme Administrative Court, 30.01.2026, Ra 2023/13/0002).
The Use of VAT ID triggers Acquisition VAT for Farmers
- By using an Austrian VAT ID for intra-Community purchases, a flat-rate farmer waives the EUR 11,000 acquisition threshold.
- As a result, Austrian acquisition VAT applies from the first purchase, regardless of the value of the acquisition or any private use (Federal Finance Court, 16.03.2026, RV/7103267/2019).
VAT Exemption Denied for Under-Invoiced Exports
- The VAT exemption for export supplies is denied in cases where the supplier knew or should have known that the transaction was connected to VAT fraud in the country of importation.
- Deliberately understating the value of goods in customs documents constitutes participation in tax evasion and results in the denial of the VAT exemption (Federal Finance Court, 16.03.2026, RV/1100322/2021).

Bulgaria

PLANNED AMENDMENTS TO THE VAT ACT

Zero VAT rate
- The draft bill proposes zero VAT rate to be applied upon food and beverages from the basic consumer basket such as bread, milk, dairy products, basic meats and poultry. The draft bill is to be voted in the General Assembly and, if adopted, would enter into force simultaneously with the 2026 State Budget Act. (Link)
Increase of the threshold for mandatory VAT registration
- Draft bill proposes an increase of the threshold for mandatory VAT registration for Micro and Small Businesses from EUR 51 130 to EUR 85 000. If adopted, the new threshold will enter into force on 1 January 2027. The draft bill is to be voted in the National Assembly. (Link)

Croatia

AMENDMENTS TO THE VAT ACT/FISCAL CODE

Reduced VAT Rate Extended for Energy Supplies
- The 5 % VAT rate for supplies of natural gas, heating from thermal stations (including related fees), and firewood, pellets, briquettes, and wood chips has been extended until 31 March 2027 (Official Gazette NN 32/2026 (Link)).
Floating VAT for Energy Products
- The Croatian Government may temporarily adjust the VAT rate applicable to excise-duty energy products (e.g. fuels) in response to market disruptions or other exceptional circumstances.
- Any reduced rate set under this mechanism may not be lower than 15 % (Link).

TAX AUTHORITIES’ PRACTICE

Fiscalisation of Foreign-Currency E-Invoices
- All invoice and payment data reported through the fiscalisation system must be expressed in EUR, with foreign-currency amounts converted using the Croatian National Bank’s applicable middle exchange rate (Link).
Fiscalisation of B2B Cash-on-Delivery Transactions
- B2B cash-on-delivery transactions are treated as cash payments, allowing taxpayers to issue a fiscalised invoice instead of an e-invoice, provided that the payment is reported as cash and the customer’s VAT ID (OIB) is included (Link).
Clarification of the VAT scheme for travel services
- The special VAT scheme for travel agents applies only where travel services include accommodation, transport, or other services procured from third parties.
- Where accommodation is provided on the supplier’s own account, such as by a hotel, the special scheme does not apply, and the standard VAT rules remain applicable (Link).

Czech Republic

TAX AUTHORITIES’ PRACTICE

Timing of VAT Deductions
- The Czech tax authority has issued official information in response to the Judgment of the General Court T-689/24 I. S. A. (due to ongoing review procedure by the ECJ):
  - Input VAT may only be deducted once the taxpayer holds a valid invoice, even if the taxable event occurred in an earlier tax period.
  - Taxable persons should continue to claim VAT deductions in accordance with Section 73 of the Czech VAT Act (Link).

AMENDMENTS TO THE VAT ACT/FISCAL CODE

As of 1 January 2027
- The EET 2.0 system (electronic records of sales) is expected to introduce fully online sales reporting with simplified compliance requirements and free software for small businesses.
- Proposed VAT changes include a 12 % rate for non-alcoholic beverages served in restaurants, a reduction of the bad-debt VAT refund period from six to three months, and the abolition of the VAT deduction cap for selected passenger cars (Link).

CASE LAW

Recipient liability for unpaid VAT
- While the supplier’s intention not to pay VAT may be inferred from later events, a guarantor’s knowledge must be assessed solely based on information available at the time of the taxable supply (Link).
VAT on Advance Payments
- VAT becomes due on advance payments where the essential characteristics of the future supply are already known, even if the supply remains uncertain (Link).

Germany

TAX AUTHORITIES’ PRACTICE

Non-Economic Use: Input VAT Correction Instead of Deemed Supply
- Increased non-economic use of assets is no longer treated as a deemed supply but results in an adjustment of the input VAT deduction.
- The new approach also applies to VAT groups and to all open cases, with the previous treatment remaining available until 31 December 2026 (Letter of the German Federal Ministry of Finance 01.04.2026, III C 2 – S 7105/00035/008/056 (Link) and III C 2 – S 7316/00022/007/023 (Link)).

CASE LAW

Domestic Liaison Office Not Treated as Recipient of Services
- Services provided for the benefit of a foreign parent company are taxable at the parent companies established abroad, meaning that no German VAT applies even if the service is ordered by a German liaison office of the foreign parent company (Federal Fiscal Court of Germany 04.12.2025, V R 37/23 (Link)).

Hungary

TAX AUTHORITIES’ PRACTICE

NAV Guidance on 5 % VAT for Storage Rooms
- New NAV (= National Tax and Customs Administration) guidance clarifies that storage rooms, and in certain cases parking spaces, sold together with qualifying residential property, may also benefit from the reduced 5 % VAT rate. This addresses an issue that had not been expressly regulated since the introduction of the 5 % VAT regime for new residential properties in 2016. (Link)
As of 1 January 2027: Transition to M2M eVAT reporting
- The Hungarian National Tax and Customs Administration has published the interface specification for version 2.0 of the M2M (machine-to-machine) data structure for the eVAT system. This publication signals that the eVAT system is expected to be introduced on 1 January 2027, with the previously used form-based system (ANYK) likely to remain applicable only in limited cases. (Link)

PLANNED AMENDMENTS TO THE VAT ACT

Planned (unknown deadline): Measures to reduce the VAT rate and to exempt certain goods
- The new government is planning to reduce the VAT rate on “healthy foods” and firewood from 27 % to 5 % and to exempt for prescription medicines. (General media information)

Poland

AMENDMENTS TO THE VAT ACT/FISCAL CODE

Since 1 April 2026
- The obligation to issue and receive invoices via KSeF applies to all entrepreneurs and local government units, except for the smallest taxpayers benefiting from transitional rules (Link).
Tax Ordinance and Fiscal Penal Code Amendments
- The amendments simplify Mandatory Disclosure Rules (MDR) reporting obligations.
- The suspension of limitation periods upon the initiation of fiscal penal proceedings will be abolished, while a new suspension ground will be introduced for tax avoidance proceedings (Link).
- The above amendment was vetoed by the President and is pending reconsideration by the Parliament (Sejm).
Temporary VAT Reduction on Fuel
- Between 30 March and 30 June 2026, motor fuels were subject to a reduced VAT rate of 8 %. Reduced excise duty rates on motor fuels also applied until 15 June 2026. The VAT rate on petrol and diesel has been temporarily reduced from 23 % to 8 % (Link).
As of 8 July 2026
- Expanded powers of the Polish Labour Inspectorate (PIP) to reclassify B2B arrangements as employment relationships which may result in VAT challenges, including the denial of input VAT deductions and reassessments of prior tax periods (Link).

CASE LAW

CJEU Review of VAT Deduction Judgment
- The General Court ruled that Polish rules making the right to deduct VAT conditional on receipt of an invoice are incompatible with EU law.
- On 26 March 2026, the judgment became subject to an extraordinary review procedure before the CJEU, which will assess its consistency with existing EU case law (Link).

Serbia

AMENDMENT TO THE VAT ACT/FISCAL CODE

Since 1 April 2026
- Return of goods: The return of goods on any grounds no longer constitutes a new supply but rather results in an adjustment/reduction of the tax base for the original supply. (VAT Act “Official Gazette of the Republic of Serbia”, No. 84/2004, 86/2004 – corr., 61/2005, … 138/2022, 94/2024 and 109/2025)

AMENDMENTS TO THE VAT RULEBOOK

Since 1 April 2026
- Advance Invoicing: An advance invoice is required when an advance payment is received, even if the VAT payer is not liable for VAT. However, it may only be issued after the payment is received. If the advance payment and supply occur on the same day, only a final invoice is needed. (VAT Rulebook “Official Gazette of the Republic of Serbia”, No. 37/2021, 107/2024 and 30/2026)
- Adjustments of the tax base: VAT reductions and input tax adjustments must be made in the relevant tax period if conditions are met before filing the return, and in any case by the tenth day of the following month. Adjustments are also allowed based on cancelled invoices or other VAT Rulebook documents. (VAT Rulebook “Official Gazette of the Republic of Serbia”, No. 37/2021…107/2024 and 30/2026)
- Internal Invoicing: Internal invoices are issued via the SEF system and are considered issued once the “Individual VAT Record – Internal Invoice” is marked as “recorded”. The general deadline is the twelfth day of the following month, but to deduct input VAT in the same period, they must be prepared by the VAT return filing date and no later than the tenth day of the following month. (VAT Rulebook “Official Gazette of the Republic of Serbia”, No. 37/2021, 107/2024 and 30/2026)

Slovenia

AMENDMENTS TO THE VAT ACT/FISCAL CODE

The Act on Intervention Measures for the Development of Slovenia, which included several planned VAT measures, has been formally suspended due to proceedings pending before the Constitutional Court of the Republic of Slovenia.
The suspended measures included:
- the introduction of a 5 % VAT rate for certain essential food products, gluten-free foods, fertilisers and seeds;
- a temporary reduction of the VAT rate from 22 % to 9.5 % for certain energy products (electricity, natural gas, district heating and firewood), originally planned to apply from 1 July 2026 to 31 March 2027.
Until the Constitutional Court issues its final decision, the existing VAT legislation remains fully applicable, and the proposed VAT changes have not entered into force. (Link)