Now VAT’s What I Call Customs Clearance

Jo Cloherty, senior commercial manager at Customs Support Group, asks ‘Will simplicity be the stand-out feature of 2025 European VAT changes?’

It is no secret that complex geopolitical challenges and economic uncertainties over international tariffs have made 2025 a challenging year for exporting businesses. However, new VAT developments are emerging on this side of the Atlantic and may offer an opportunity for businesses to bounce back.

New rules of engagement around simplifying complex post-Brexit rules governing VAT registration and payments for UK goods entering the EU have started to be rolled out. Under the EU’s Customs Reform Priorities, it will be easier for UK businesses to register and pay VAT without the need for a complex and costly cross-border paper chase.

The reality of Brexit has meant that VAT systems inevitably had to develop independently of each other. The EU’s modernising legislation around VAT in a Digital Age (ViDA) came into force in April and is perhaps the beginning of a new regulatory process which will reduce the burden on supply chain and tax teams.

Member states will now be allowed to report and invoice electronically through a single EU VAT registration, which also has positive longer-term implications for UK businesses trading into Europe.

ViDA is comprised of three key pillars aimed at simplifying VAT processes – digital reporting, e-invoicing and single VAT registration, which will be introduced in stages between now and 2035.

Over the next few years, it will also reform pre-existing ‘call off stock’ arrangements for return items by extending the use of a new One Stop Shop (OSS) process, a single VAT registration that will potentially enable ecommerce sellers to remove foreign VAT registrations and associated costs.

The OSS allows for declaring and paying VAT for all EU members through one electronic portal, to avoid states needing multiple VAT registrations. Under the new rules, UK businesses will be able to register in one EU jurisdiction to take advantage of the changes across the European bloc –simplifying the process and reducing a timely and costly tax administrative burden.

Other changes including the place of supply charges – where VAT payment is delayed and only imposed at the point and time of arrival – as well as the domestic reverse charges, where the supply chain buyer is responsible for the VAT rather than the seller. These too look to streamline the situation for UK businesses.

Under the current arrangement, a UK business selling both retail and wholesale into various European countries would have to register for VAT in each territory its products touch. However, under the ViDA arrangements, movement of goods into multiple territories are all covered within the OSS, meaning it will no longer be burdened by domestic VAT paperwork as its goods move across European borders.

Things will become even easier beyond 2028, when the full weight of e-invoicing and digital reporting gains traction.
As for the here and now, UK businesses exporting to the EU should look at their own systems to make sure they correctly identify the right VAT treatment for each transaction. Although simplifying the arrangements for a smoother taxation journey, the new rules do require attention to detail. There are still compliance bumps in the road which UK businesses should look out for.

Optimising customs procedures, including the thorny issue of taxation compliance, helps businesses meet delivery deadlines, boosting customer trust, loyalty, cost-efficiency and legal compliance while enhancing logistics and partnerships.

Such changes have been signposted for several years, so there should be no surprises, but supply chains can be dynamic and need to flex with business demand. VAT awareness and compliance needs to work in the same way.

We have been advising businesses for a long time about ensuring they understand the new arrangements. Change is not a bad thing, and the new VAT arrangements are potentially positive game changers to be welcomed, rather than viewed as business blockers.