Country and European Union News August 2026

27 August 2026

Luxembourg introduces bill for mandatory B2B e-invoicing 

Luxembourg has submitted a bill to introduce mandatory electronic invoicing for domestic B2B transactions between businesses established in Luxembourg. The proposal would extend the country’s existing public-sector e-invoicing framework to supplies of goods and services taxable in Luxembourg.

Under the new regime, invoices would need to be issued, transmitted and received in a structured format that enables automatic processing and complies with the relevant European standard. PDFs, Word documents, scans and image files would not qualify as electronic invoices. Businesses would also be required to exchange invoices through a common, interoperable and secure delivery network.

The mandate would be introduced in stages:

• 1 January 2028 – All businesses must be able to receive electronic invoices.
• 1 July 2028 – The requirement to issue electronic invoices would apply to businesses that exceed at least two of the following three thresholds: a balance-sheet total of EUR 7.5 million, annual turnover of EUR 15 million, or 50 employees.
• 1 January 2029 – All other businesses must be able to issue electronic invoices. 

As the bill remains subject to the legislative process, businesses established in Luxembourg should monitor its progress and begin assessing whether their invoicing systems will be ready for the proposed requirements.

EU releases technical rules for new transfer of own goods VAT Scheme 

The European Commission has published detailed technical rules for a new “Transfer of Own Goods” scheme, which will be introduced as part of the EU’s VAT in the Digital Age reforms from 1 July 2028.

The new optional scheme is intended to reduce the number of VAT registrations required when businesses move their own goods between EU Member States. This will be particularly relevant to non-resident companies holding stock in several EU countries, including e-commerce sellers using fulfilment centres, manufacturers transferring goods between facilities and businesses operating regional distribution networks.

Under the current rules, moving a business’s own goods from one EU country to another is normally treated as an intra-Community supply in the country of departure and an intra-Community acquisition in the destination country. As a result, the business may need to register and submit VAT returns in the destination country even though no sale has taken place.

From 1 July 2028, eligible businesses will be able to report qualifying transfers through a single Member State of identification under the new scheme. The corresponding intra-Community acquisition in the destination Member State will be exempt from VAT, potentially removing the need for local VAT registrations maintained solely to report movements of the business’s own goods. The scheme will be optional but, once selected, it will generally apply to all qualifying transfers made by the business.

The new scheme will not necessarily remove every overseas VAT registration. A business may still require a local registration if it undertakes other transactions in that Member State that cannot be reported through the Transfer of Own Goods scheme or another OSS simplification. Intrastat reporting requirements will also continue to apply to the physical movement of goods.

EU publishes operational framework for ViDA Single VAT Registration 

The European Commission has published a regulation establishing the administrative and technical framework required to operate the Single VAT Registration pillar of the EU’s VAT in the Digital Age reforms.

The Single VAT Registration reforms are intended to reduce the number of countries in which businesses must obtain separate VAT registrations. This should be particularly beneficial for non-resident companies selling goods or holding and transferring stock across several EU Member States. The reforms include an expansion of the One Stop Shop, a broader mandatory reverse-charge mechanism for certain supplies made by non-established businesses, and a new special scheme for transfers of a business’s own goods.

The changes will apply in two stages:

• From 1 January 2027, updated registration requirements and changes supporting the initial expansion of the Union One Stop Shop will take effect.
• From 1 July 2028, the main operational changes will apply, including revised electronic VAT returns and the new Transfer of Own Goods scheme.

For non-resident companies, the reforms could significantly reduce the need for multiple local VAT registrations. However, they will not remove every registration requirement, as a business may still need to register locally where it carries out transactions that cannot be reported through the One Stop Shop, the Transfer of Own Goods scheme or the expanded reverse-charge arrangements.

France consults on reduced VAT Rate for audiobooks 

The French tax authorities have opened a consultation concerning the VAT treatment of audiobooks.

The revised guidance follows a Conseil d’État (France’s highest administrative court) judgment from 16 July 2026 concerning children’s audiobook devices containing pre-loaded stories. The court found that the device primarily served as a medium for supplying literary content and could therefore qualify for France’s reduced 5.5% VAT rate, rather than the standard 20% rate.

This development is relevant to publishers, retailers and non-resident businesses selling audiobooks or combined content-and-device products in France. The revised guidance may be relied upon during the consultation, which closes on 30 September 2026.

Azerbaijan introduces mandatory VAT registration for foreign digital service providers 

From 23 August 2026, non-resident businesses supplying electronic services to customers who are not registered with the Azerbaijani tax authorities must register for VAT where their relevant calendar-year turnover exceeds the Azerbaijani manat equivalent of USD 10,000 (currently approximately AZN 17,000). Registration must be completed electronically within 30 days of exceeding the threshold, while businesses below the threshold may register voluntarily.

Registered suppliers must account for Azerbaijan’s standard 18% VAT rate on qualifying supplies. The rules cover electronically delivered services such as software, e-books, music, audiovisual content, online gaming and advertising.

Where a non-resident supplier is not registered, the existing withholding mechanism may continue to apply, under which VAT is collected from the customer’s payment by an Azerbaijani bank or payment service provider. However, this does not remove the supplier’s obligation to register for VAT once the mandatory threshold has been exceeded.

Failure to register may expose the supplier to penalties and other compliance consequences under Azerbaijani tax law.