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VAT Newsletter Q3 – 2026

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Table of Contents Chapter 01

Local News Chapter 02

Local Court Decisions Chapter 03

EU News Chapter 04

CJEU Decision Latest Selection Update

VAT Newsletter – Q3 – 2026

Chapter 01

Local News Malta Tax and Customs Administration News Guidelines on Applications for Monthly Tax Periods in Accordance with regulation 4(1) of S.L.406.02. On 27 July 2026, the Commissioner for Tax and Customs (CfTC) published a Guideline on applications to change from quarterly to monthly tax periods under regulation 4(1) of S.L. 406.02. Approval requires that the applicant's input tax credit is likely to exceed its output tax in each of the four consecutive tax periods following the application. This condition is deemed satisfied where such an excess arose in each of the four preceding periods. That excess must also collectively exceed €50,000, and at least 90% of the aggregate taxable value of supplies must consist of exempt-with-credit supplies and/or supplies whose place of supply is outside Malta which confer a right to deduct. The applicant must be compliant with all taxes. Applications may only relate to future tax periods and remain subject to the CfTC's discretion. Where these conditions cease to be met, the CfTC may immediately revert the person to quarterly periods, and a subsequent application may be refused. READ MORE

Guidelines on Issuing a Fiscal Receipt using a Fiscal Cash Register as an Article 11 Exempt SME On 13 July 2026, the Commissioner for Tax and Customs (CfTC) published Guidelines on fiscal receipts issued through a fiscal cash register by article 11 registered persons (exempt SMEs). Although their supplies are exempt without credit, such persons must issue fiscal receipts for all B2B and B2C supplies made in Malta, except Part Two Fifth Schedule exempt supplies other than item 16(1). Interpreting item 13(2)(a)(iv), the Guidelines require article 11 supplies to be marked "E" or "Exempt", with the receipt clearly stating that no VAT is charged or payable. Under item 13(2)(a)(x), the CfTC further directs that "EXP" must precede the VAT registration number on such fiscal cash register receipts.

VAT Newsletter – Q3 – 2026

Legal Notices No Legal Notices with regards to Value Added Tax legislation were published during this calendar quarter.

Acts No Acts with regards to Value Added Tax legislation were published during this calendar quarter.

Chapter 02

Local Court Decisions Administrative Review Tribunal No judgements were issued by the Administrative Review Tribunal in terms of VAT during the past quarter.

VAT Newsletter – Q3 – 2026

Civil Court, First Hall Il-Kummissarju tat-Taxxi u d-Dwana vs Datcroft Games Limited 1303/2024MH – Decided on the 29th of July 2026 In this judgement, the Civil Court, First Hall considered an application filed by the Commissioner for Tax and Customs ("CfTC") on 28 November 2024. The CfTC asked for a foreign instrument to be registered as an executive title under Council Directive 2010/24/EU on mutual assistance for the recovery of claims relating to taxes, duties and other measures, as implemented by Legal Notice 153 of 2012. The Latvian competent authority had identified Datcroft Games Limited, a Maltese company, as owing €3,862.13 in VAT, and the CfTC also claimed interest under Maltese law from the date of service. After several unsuccessful attempts, the company was served by affixing and publication, and it did not contest the claim. Having examined the documents and heard testimony that the full amount was still due, the Court ordered the annexed documents to be registered, so that they constitute an executive title. READ MORE

Other judgement: Best Breed Limited (C76855) vs L-Avukat tal-Istat u Il-Kummissarju tat-Taxxi u Dwana – 356/2024 – Decided on the 14th of July 2026

Court of Appeal (Inferior and Superior Jurisdiction) No judgements were issued by the Court of Appeal in either its superior or inferior jurisdiction, in terms of VAT during the past quarter.

VAT Newsletter – Q3 – 2026

Court of Magistrates (Criminal Judicature) Local cases decided by the Court of Magistrates in its Criminal Judicature capacity related to cases involving the importation of contraband cigarettes which attracted VAT implications together with Customs implications. Other judgements: Il-Pulizija vs James Azzopardi – 1938/24 – Decided on the 13th of July 2026 Il-Pulizija vs Paul Farrugia u Sandro Agius – 1941/24 – Decided on the 28th of July 2026

VAT Newsletter – Q3 – 2026

Chapter 03

EU News EU VAT rules for e-commerce, 5 years on: More than €125b in VAT revenue On 3 September 2026, the European Commission (DG TAXUD) reported on its latest annual review of the VAT e-commerce package, five years after its entry into force on 1 July 2021. According to the Commission, Member States have collected more than €125 billion in VAT through the Union OSS, non-Union OSS and Import OSS ("IOSS") schemes since July 2021, including more than €38 billion in 2025 alone (up 17% year-on-year). By the end of 2025, there were over 193,000 registrations under the schemes. The Commission expects the phased implementation of the ViDA package, adopted in 2025, to build on these results by extending the OSS and introducing a special scheme for transfers of own goods. READ MORE

The European Commission launches public consultation on VAT and the Circular Economy On 10 September 2026, the European Commission (DG TAXUD) launched an eightweek public consultation, as part of the upcoming Circular Economy Act, on aligning VAT rules with the circular and low-emission economy. It focuses on the VAT treatment of second-hand goods, the destruction of viable goods, and VAT deduction on business passenger cars. Together with an evaluation and impact assessment expected to conclude in early 2027, it will inform a proposal to amend the VAT Directive. Stakeholders are encouraged to participate by 4 November 2026. READ MORE

VAT Newsletter – Q3 – 2026

VAT Committee Meetings The minutes for the 128th meeting of the VAT Committee, held on 17 November 2025, were issued on 23 July 2026 (Working Paper No 1120). On payments made when a customer ends a contract for the continuous supply of goods early, the Commission services considered these to be consideration for a supply of goods. Most delegations disagreed where termination occurs before any goods are supplied, treating the payment as consideration for services. Draft guidelines will reflect the majority view. On refund thresholds under Articles 16 and 17 of the VAT Refund Directive, the Commission services considered that the €50 threshold applies to all claims covering the remainder of the calendar year, up to twelve months, rather than €400 for periods over three months. Six of the nine delegations that spoke agreed, and draft guidelines will follow. Other topics remain open: Reduced rates for Cyprus's "Build to Rent" housing, where the Commission raised concerns; IT services supplied in exchange for personal data, where views were divided; Digital reporting of the VAT rate and amount on intra-Community transactions under ViDA, where a zero-value approach was broadly supported, subject to amending the VAT Directive; and Arcomet Towercranes (C-726/23), which confirmed that transfer pricing payments can be subject to VAT, with possible guidelines to follow.

VAT Newsletter – Q3 – 2026

VAT Expert Group Meetings / Group on the Future of VAT Meetings The 43rd meeting of the VAT Expert Group ("VEG") was held jointly with the Group on the Future of VAT ("GFV") on 25 June 2026, as recorded in minutes dated 8 July 2026 (GFV No 160 / VEG No 139). The meeting discussed the final report of the Study on the taxation of the financial sector, launched in summer 2024 and due for publication on 30 June 2026. The study puts forward three building blocks: modernising and simplifying the current VAT rules, reducing non-deductible VAT for the financial sector, and revisiting the VAT exemption for financial services together with harmonising sectoral taxes. Participants agreed on the need to update the exemption definitions for the digital era, raised competitiveness concerns for fintechs and start-ups, and called for a review of the option to tax and more consistent VAT grouping practices. The meeting also discussed the final report of the Study on the challenges of VAT beyond ViDA, which focused on simplification, digitalisation and the consistency of VAT rules with the circular economy. Participants discussed cross-border VAT refunds and automation, the risk of duplicating ViDA requirements, the cash flow impact of split payment, the treatment of second-hand goods, and exemptions and hidden VAT. The Commission confirmed that the study is not a proposal, but that it will help shape future options, particularly on the circular economy. Participants welcomed the second draft Explanatory Notes on the Platform Economy as an improvement. They sought further refinement on the legal basis for the underlying supplier's obligations, the burden of validating VAT numbers across 27 Member States, the scope of Article 46a, chain transactions involving more than one platform, and the distinction between Articles 28 and 28a. On the third draft Explanatory Notes on e-invoicing and Digital Reporting Requirements ("DRR"), participants raised VAT groups, the rectification of invoices, interoperability, sensitive goods and dual-currency reporting. Written comments on both sets of notes were due by 31 July 2026. The next joint GFV/VEG meeting will be held online on 19 November 2026 to finalise the Explanatory Notes, which are due to be published in 2027. Read more on GFV Meeting

Read more on VEG Meeting

Chapter 04

CJEU Decision Latest Selection Update T-366/25 - D.B. v Dyrektor Krajowej Informacji Skarbowej – 9th September 2026 D.B. carried on an undertaking under the name "Przedsiębiorstwo B." and intended to donate the whole of it to her two daughters, A.K. and P.K., each receiving a half share. D.B. would retain no assets of the undertaking and would cease trading immediately afterwards. A.K. and P.K. already ran a separate undertaking as a general partnership and planned to incorporate undertaking B. into it, continuing its activities in a substantially unchanged form. D.B. asked the Director of National Tax Information for a ruling on whether the donation fell outside the scope of VAT under Article 6(1) of the Polish VAT Law, which transposes Article 19 of Council Directive 2006/112/EC ("VAT Directive"). In a ruling of 26 June 2020, the tax authority held that the subject of the transfer was not undertaking B. itself but a share in its various components, which would not allow an economic activity to be pursued independently. The Provincial Administrative Court, Poznań dismissed D.B.'s appeal on 30 March 2021. On a further appeal on a point of law, the Supreme Administrative Court referred a question to the Court of Justice, which transmitted it to the General Court under Article 50b of its Statute. The question referred was, in essence, whether a transfer of a totality of assets within the meaning of Article 19 of the VAT Directive also occurs where a taxable person transfers, without consideration, a half share of a totality of assets to each of two individuals who are not taxable persons, and who intend to contribute those shares immediately in kind to a business partnership of which they are partners. The General Court first examined whether the transactions could be classified as a single transaction, recalling that each transaction is normally distinct and independent. It noted that each daughter would be the sole owner of her half share and free to decide whether to transfer it to the partnership. The later transfer was neither conditional on the donation nor simultaneous with it. Subject to verification by the referring court, the transactions were therefore not so closely linked as to form a single, indivisible economic transaction.

VAT Newsletter – Q3 – 2026

On the substance, the Court recalled that Article 19 aims to facilitate transfers of undertakings, and that two conditions must be met. First, the elements transferred must together constitute an undertaking or part of one capable of carrying on an independent economic activity. Second, the transferee must intend to operate the business rather than liquidate it. As the transactions were distinct, the first condition had to be assessed for each daughter individually. A half share was not an autonomous unit with which either daughter could separately carry on an independent economic activity, so the first condition was not met and the second did not need to be examined. The General Court held that the first paragraph of Article 19 of the VAT Directive must be interpreted as meaning that the transfer, without consideration, of an undertaking to two natural persons, each receiving a half share, who intend to make an immediate contribution in kind of those shares to a company carrying on an economic activity, of which they are partners, does not constitute a transfer of a totality of assets or part thereof within the meaning of that provision. The intended contribution was irrelevant, and the final assessment of the facts rests with the Polish court. READ MORE

DISCLAIMER While every effort was made to ensure that the content of this newsletter is accurate and reflects the current position at law and in practice, we do not accept any responsibility for any damage which may result from a change in the law or from a different interpretation or application of the local law by the authorities or the local courts. The information contained in the newsletter is intended to serve solely as guidance and any content of a legal nature therein does not constitute, and should not be interpreted as constituting legal advice. Consulting your tax practitioner is recommended in case you wish to take any decision connected to content of this newsletter. Should you require further information on the above please contact Brandon Gatt on brandon@zampapartners.com.

VAT Newsletter Q3 – 2026

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