Key takeaways
- In Europe, major reforms are on the horizon: in the Czech Republic, a broad-package VAT programme for 2026 has been proposed, while in France, mandatory thresholds for VAT registration will rise from January 1, 2026.
- In Portugal, a new VAT-group regime (Law No. 62/2025) has been passed, enabling eligible entities to form a single VAT taxpayer from July 2026.
- In the U.S., the Washington (state) Department of Revenue confirms that from October 1, 2025, a range of services (including advertising, IT, and staffing) are newly subject to retail sales tax — businesses should assess service contracts and invoicing accordingly.
Key VAT and sales tax developments across the U.S. and Europe this November. Stay compliant with the latest rule changes.
United States
Washington State expands tax base for services
The Washington State changes via ESSB 5814 bring several important shifts for service providers:
- Services newly subject to retail sales tax now include: advertising services (both digital and non-digital), IT consulting/training/support, custom website development, live presentations (in-person or online), security/investigation services, temporary staffing services, and customization of software.
- The law clarifies that telehealth and telemedicine services are excluded from the retail sales tax base under the new regime.
- Businesses providing affected services should review invoices, contract terms, and sourcing (where the service is used) as of October 1, 2025. Interim guidance has been issued by the state’s department of revenue.
- While specific local rate changes for Q4 2025 appear minimal in the state as a whole, businesses should maintain vigilance as the expanded tax base creates new potential filing and collection obligations.
Europe
Portugal: VAT group regime established under Law No. 62/2025
The Portuguese Parliament has enacted Law No. 62/2025, which creates a VAT grouping regime for entities under common control in Portugal.
- Scope & eligibility: The law defines which entities (under common control) can form a VAT group.
- Election and declaration: The parent company must submit a declaration to elect into the VAT group; the election becomes effective for the tax period in which it is filed.
- Individual VAT calculation & group filing: Members continue to calculate VAT separately and submit periodic returns (within rules), but the parent company is responsible for the group-level return and payment of the total VAT liability.
- Termination/exclusion: The law sets out conditions for exclusion or termination of group status.
- Effective date: The law entered into force on publication, and the regime will apply for tax periods beginning on or after July 1, 2026.
France: VAT registration thresholds rising from January 2026
In France, Parliament has approved increases to the mandatory VAT registration thresholds, effective January 1, 2026.
The new thresholds will be:
- Goods & accommodation services: €93,500 (up from €85,000 in 2025)
- Services: €41,250 (up from €37,500)
- Separate legal/consultancy services: €55,000 (up from €50,000)
- Non-profit organisations threshold raised to €80,011.
Czech Republic: 2026 VAT reform proposals
The new Czech government has published a draft tax programme which includes a VAT reform package, intended for 2026 implementation.
Headline proposals include:
- A substantial increase in the domestic VAT registration threshold (from the current CZK 2 million) for small businesses.
- Faster bad‐debt relief: The waiting period before a supplier can adjust output VAT on unpaid invoices would fall from six months to three months.
- Rate alignment for catering services: A single 12% VAT rate for catering services and the supply of non‐alcoholic beverages, removing mixed‐supply complications.
- Introduction of a 0 % VAT rate on prescription medicines.
Frequently asked questions
What major VAT changes are coming in Europe?
From 2026, several reforms take effect: France is increasing VAT registration thresholds, Portugal is introducing a new VAT-group regime, and the Czech Republic is proposing a broad VAT reform package that includes higher registration thresholds, quicker bad-debt relief, and new rates for catering and medicines.
How will Washington State’s new rules affect service providers?
From October 1, 2025, many services — including advertising, IT, staffing, and website development — become subject to Washington’s retail sales tax. Businesses offering these services should review contracts, invoicing, and sourcing rules to remain compliant.
When do the newly announced changes take effect?
Most changes take effect in 2026: Portugal’s VAT-group regime begins July 1, 2026, and France’s higher thresholds apply from January 1, 2026. Washington State’s expanded tax base for services is now in effect, having started on October 1, 2025.
