EU VAT: Key Aspects and Prospects of Taxation

In 2024 European tax authorities collected more than €1.2 trillion in Value Added Tax, which is nearly 7% of the EU’s GDP.

Yet annual budget losses due to errors and non-compliance with VAT rules in the EU exceed €90 billion.

Why do even experienced international companies face risks and fines despite automation and external support? How will the VAT system for businesses in Europe change and how can they prepare for the new 2025 requirements?

If you run a startup, scale an e-commerce business, or build complex B2B chains, this article will help you understand the nuances of VAT obligations for companies, avoid critical mistakes, and build a strategy aligned with VAT harmonization and regulatory digitalization trends.

At COREDO we deal daily with cases where even a small inaccuracy in choosing the country of registration or an incorrect assessment of VAT for non-residents leads to account blocks, additional tax assessments, and reputational risks.

I’ll explain how the COREDO team addresses these issues and why a sound approach to VAT for startups in the EU, B2B/B2C and e-commerce is the key to sustainable development in the European market.

Read to the end — you’ll get not only practical recommendations but also a strategic view of the future of VAT for international companies.

VAT registration and threshold in the EU 2025

Illustration for the section «VAT registration and threshold in the EU 2025» in the article «EU VAT key aspects and prospects»

VAT registration and threshold in the EU 2025 is an important aspect of operations for any business conducting activities in the European market. In 2025 EU countries updated the requirements and threshold values for mandatory VAT registration, which significantly affects the launch and development of entrepreneurial projects in different jurisdictions. Below we will examine in detail the current VAT registration thresholds by country and the latest changes that should be considered when planning business in Europe.

Let’s move on to reviewing the current VAT registration threshold values in different EU countries to understand the specifics and differences at the local level.

VAT registration thresholds by country

In 2025 new minimum thresholds for the VAT registration threshold 2025 come into effect for most EU countries. This significantly affects the strategy for entering the European market, especially for non-residents and companies operating under distance selling models.

Country	VAT registration threshold 2025	Features/Comments
Germany	€22,000	Residents only
France	€85,000 (goods) / €37,500 (services)	Split by type of activity
Greece	No threshold	Mandatory registration
Czech Republic	CZK 2,000,000 (~€80,000)	Residents only
Estonia	€40,000	For all companies
Cyprus	€15,600	For all companies
United Kingdom (for non-residents)	£0	Mandatory registration when making supplies into the country

In COREDO’s practice we often encounter the question: is it possible to optimize the structure to avoid premature registration? For example, for e-commerce storing goods in warehouses in multiple EU countries it is important to consider not only local thresholds but also distance selling threshold rules and cross-border VAT.

VAT registration for non-residents – requirements

For companies without a legal presence in the EU, the VAT registration procedure becomes more complex. In some countries (for example, France, Germany, Italy) appointment of a VAT fiscal representative is required: a local tax agent responsible for interacting with tax authorities and timely fulfillment of VAT obligations for the companies.

A solution developed by COREDO for a SaaS company from Singapore avoided account blocks thanks to timely registration via a fiscal representative in Germany and automation of filing under the new ViDA rules.

Key VAT registration triggers for non-residents include:

Storing goods in EU warehouses (Fulfillment by Amazon, 3PL)
Providing digital services B2C
Distance selling exceeding the €10,000 threshold (OSS/IOSS)
Participation in marketplace oversight (when the platform becomes the tax agent)

OSS or IOSS, which to choose for reporting?

Since 2021 the OSS (One Stop Shop) and IOSS (Import One Stop Shop) systems have been in effect for distance selling and digital services. This allows using a single VAT registration for all EU countries and filing unified reporting. Still, the choice of scheme depends on the business structure, type of goods/services and the country of storage.

COREDO’s practice confirms: for marketplace sellers and SaaS companies the OSS significantly reduces administrative burden, but requires precise setup of accounting systems and integration with tax authorities’ data sharing platforms. For imports of goods valued up to €150: using IOSS is optimal.

VAT: new requirements and risks

Illustration for the section «VAT: new requirements and risks» in the article «EU VAT key aspects and prospects»

Strategic risks of non-compliance with VAT in the EU are not only fines and account blockage, but also loss of scaling opportunities, restrictions on marketplace access, and reputational costs.

In 2025 control over VAT for e-commerce and digital services is being tightened, and the list of mandatory data for reporting and storage is expanding.

VAT for SaaS and digital services

From 2025 the definition of digital services and virtual goods becomes broader: regulation covers not only classic SaaS but also AI-driven tools, NFTs, and digital subscriptions. Implementation of ViDA requires companies to automate the calculation of VAT rates by place of consumption (place of supply), as well as integration with national registers for client verification.

The COREDO team implemented a project for an AI platform providing services in 12 EU countries: automation of VAT compliance reduced manual operations by 80% and eliminated errors in determining VAT obligations for the companies.

VAT for marketplace sellers and distance selling

From 2025 responsibility for VAT payment for marketplace sellers partially falls on platforms (marketplace oversight), but this does not relieve sellers of the need to maintain records,

store documents and monitor compliance with the distance selling threshold. For sellers using warehouses in several countries, it is important to track movements of goods and register in new jurisdictions in a timely manner.

In one COREDO case for international e-commerce we implemented a system to monitor VAT registration triggers, which helped avoid fines and automate OSS reporting.

VAT for B2B and B2C: features and risks

For B2B transactions in the EU, the reverse charge mechanism applies: the tax liability is shifted to the buyer, but only with correct documentation and verification of the customer’s status. Errors in determining the place of supply or late registration lead to risks of additional assessments and VAT audit.

For companies providing services with installation/assembly (installation/assembly supplies), it is important to consider the new 2025 rules: the place of taxation is determined by the place where the work is performed, not by the supplier’s registration.

ViDA and automation of VAT reporting

Illustration for the section 'ViDA and automation of VAT reporting' in the article 'EU VAT key aspects and perspectives'

In 2025 the VAT reporting scheme ViDA comes into force, a single digital reporting standard that changes the approach to interaction with tax authorities, expands the list of mandatory data and requires integration with national systems.

OSS and ViDA scheme, step-by-step guide

Determination of the scope of operations: all supplies of goods and services between EU countries are analyzed.
Choosing the OSS/IOSS scheme: registration in one EU country, submission of a single declaration for all countries.
Integration with ViDA: automation of real-time data transmission, storage of digital documents.
Control of VAT rates and place of supply: automated calculation of rates and determination of the country of taxation.
Filing reports: monthly or quarterly, depending on turnover and business type.

The implementation of these processes at COREDO enabled an international digital services platform to reduce VAT administration costs by 30% and increase transparency for tax authorities.

Document requirements for VAT in 2025

ViDA introduces new standards for storing VAT documents: all primary documents, invoices, payment confirmations and correspondence with clients must be stored digitally for at least 10 years, be available for tax authorities data sharing and be protected from unauthorized access.

Violation of these rules is a direct path to VAT penalties and a tax audit.

Tools for automating VAT compliance

Modern solutions for VAT automation include:

AI-driven tools for calculating VAT rates and controlling VAT obligations for companies in different EU countries
Integration with marketplace and e-commerce platforms
Modules for automatic generation and storage of VAT reporting
Systems for monitoring VAT registration triggers and distance selling

COREDO’s experience shows: investments in automating VAT compliance pay off within 12–18 months due to reduced administrative burden and minimized risks.

VAT rates in EU countries

Illustration for the section 'VAT rates in EU countries' in the article 'EU VAT key aspects and perspectives'

Differences in VAT rates across EU countries create additional challenges for international companies, especially when supplying goods and services to multiple jurisdictions.

VAT rates in EU countries – comparison table

Country	Standard VAT rate	Reduced VAT rate	Notes
Germany	19%	7%	Food, books
France	20%	5.5% / 10%	Food, transport
Czech Republic	21%	15% / 10%	Medicines, books
Estonia	20%	9%	Medical services
Cyprus	19%	5% / 9%	Tourism, transport
Slovakia	20%	10%	Food, medicines

In COREDO cases for companies storing goods in warehouses in different EU countries, we recommend using automated systems for calculating VAT rates to avoid invoicing errors and correctly apply reduced rates.

Choosing a country for VAT registration in the EU

The choice of jurisdiction depends on:

Location of the warehouse (VAT for storing goods in warehouses in the EU)
Countries where the main customers are concentrated
Requirements for appointing a fiscal representative for non-residents
Peculiarities of taxation of certain sectors (for example, VAT for supplies of electricity, gas, heating and cooling)

COREDO’s solution for an international startup: registration in Estonia using OSS to optimize VAT reporting and minimize administrative burden.

EU VAT and changes from 2025

Illustration for the section 'EU VAT and changes from 2025' in the article 'EU VAT key aspects and perspectives'

The year 2025 will be a turning point for EU VAT: digitalization of reporting, expanded regulation of new sectors and tighter control over international companies.

ViDA: VAT changes for business

The VAT reporting scheme ViDA introduces:

Mandatory electronic reporting for all companies operating in the EU
An expanded definition of digital services and virtual goods
New requirements for client identification and data retention
Integration with marketplace oversight and automatic data exchange between tax authorities

Implementing ViDA in COREDO cases allowed clients to prepare in advance for the new standards and avoid fines for late submission of VAT declarations.

New requirements for marketplace sellers and SaaS

Marketplace sellers are required to integrate their systems with tax authorities data sharing platforms, monitor VAT compliance for SaaS and AI-driven services, and ensure transparency of supply chains (supply chain compliance) for B2B and B2C.

COREDO implemented a comprehensive solution for a life sciences company that enabled integration of VAT reporting processes with ERP systems and minimized administrative burden.

StrategicRisks in the technology business

For technology companies and startups in the EU, the key risks remain:

Increase in administrative burden (administrative burden)
Tightening of VAT audit and control over VAT obligations for companies
The need for constant monitoring of changes in VAT harmonization and national legislation

At the same time, a sound VAT compliance strategy opens up new opportunities for international expansion and optimization of the tax burden.

Key recommendations for businesses

Key recommendations for businesses help prepare in advance for changes in tax regulation and minimize risks for the company in 2025. With the update of VAT rules, registration and compliance become an integral part of stable operations and long-term business growth.

VAT registration and compliance in 2025

Conduct an audit of the business model and determine the VAT registration threshold 2025 for all countries of presence.
Choose the optimal OSS or IOSS scheme for distance selling and digital services.
Appoint a VAT fiscal representative where required for non-residents.
Implement automated systems for monitoring VAT obligations and VAT reporting.

Errors and risks when working with VAT

Regularly update knowledge on national and pan-European changes in VAT for business in Europe.
Use automation to control filing deadlines and store VAT documents.
Conduct an internal VAT audit at least once a year.
Implement best practices for supply chain compliance for international supply chains.

Metrics for assessing VAT compliance

VAT reporting processing time (before and after automation)
Number of errors/corrections in VAT returns
ROI from implementing AI-driven tools for VAT automation
Level of administrative burden on the team

EU VAT: changes in 2025

What are the main changes in the VAT registration threshold 2025?

Thresholds are being unified, but national specifics remain. For distance selling, there is a single €10,000 threshold for OSS.

What are OSS and IOSS, and when to use them? OSS – for B2C sales of goods and services in the EU, IOSS: for imports of goods up to €150. They allow a single VAT registration and the submission of a unified report.

What are the VAT compliance requirements for SaaS and digital services? It is necessary to automate the calculation of VAT rates by place of consumption, store digital documents, and integrate with ViDA.

Which EU countries require a VAT fiscal representative for non-residents? France, Germany, Italy, Spain and a number of others. Requirements are regularly updated.

What to do in case of errors in VAT reporting? Submit corrections in a timely manner, keep all documents and correspond with tax authorities through a fiscal representative.

The future of VAT in the EU: what businesses should consider

In 2025, EU VAT becomes not just a tax obligation but a strategic tool for international business. Comprehensive support, process automation and a deep understanding of the new ViDA standards make it possible not only to minimize compliance risk but also to create competitive advantages for companies focused on international development.

COREDO’s experience confirms: timely adaptation to changes, investment in technologies and partnership with experts are the key to sustainable growth and successful scaling of business in Europe, Asia and the CIS.