Indirect tax: no longer just about compliance

We spoke to Eline Polak, partner Indirect Tax at Forvis Mazars, about the key developments and what organisations should be doing right now. Within Forvis Mazars, she leads a team that brings together VAT and customs expertise under the banner of international trade tax. Not every firm chooses this integrated approach, but according to Polak, it is precisely by guiding clients holistically through international transaction flows that the connection between tax, legal and logistics emerges. “We see that organisations increasingly need an integrated approach,” says Polak. “VAT, customs and international trade are, in practice, closely linked.”

ViDA is driving a fundamental shift in VAT compliance

One of the most far reaching developments in the European VAT landscape is VAT in the Digital Age (ViDA). The package was formally adopted by the European Union in 2025 and will be rolled out in phases through 2035. The reform touches multiple parts of the VAT system, including digital reporting obligations, e-invoicing, the platform economy and single VAT registration. “ViDA is not a technical change at the edges of the system,” says Polak. “It is a fundamental modernisation of how VAT is reported across Europe.” For companies, this means VAT processes are becoming increasingly real time and data driven. 

Member states will implement national e-invoicing requirements, and intra-Community B2B transactions will ultimately fall under a single European digital reporting model. According to Polak, this calls for a different approach to VAT compliance. “Companies need to assess now whether their ERP systems, invoicing flows and data quality are ready for the new compliance chapter. Anyone who waits until the formal application date has risks of a costly and complex implementation. The practical first step is to map out what are the e-invoicing requirements per country also based on the company’s business activities, supply chain and system landscape, and from there build a practical readiness roadmap and implementation plan.”

“E-invoicing is not simply a different way of sending invoices,” says Polak. “It touches finance, tax and IT all at once. The quality of the source data directly determines whether VAT reporting is correct.” On top of that, many organisations face not only the European ViDA rules but also a wide range of different national obligations being introduced at country level. In the coming years, this will create a complex implementation agenda in which international uniformity and local requirements either come together or collide.

For more information, Polak points to Forvis Mazars’s ViDA: e-invoicing regulations hub, which provides country-by-country insight into legislation and implementation across the EU.

Case law is bringing transfer pricing, VAT and customs closer together

A second key theme is the interplay between transfer pricing and VAT. Recent European case law shows that transfer pricing adjustments do not automatically fall outside the scope of VAT. In each case, it must be assessed whether there is an identifiable supply made for consideration, or merely a price adjustment with no independent VAT consequences.
The body of case law is growing fast. Cases including Arcomet Towercranes, Högkullen, Stellantis Portugal S.A. and the UK case JPMorgan Chase Bank N.A. illustrate how courts are approaching these questions.

According to Polak, European case law confirms that a transfer pricing adjustment intended to achieve a predetermined profit margin does not automatically qualify as consideration for a separate supply. 

“For a long time, the practice treated transfer pricing and VAT as two separate worlds,” she says. “That approach is becoming increasingly indefensible now that case law explicitly looks at contractual relationships, economic reality, and whether payments genuinely constitute consideration for a supply of goods or services.”

For internationally operating companies, this means intercompany agreements, transfer pricing mechanisms and supporting documentation need to be assessed not only from a direct tax perspective, but also from a VAT perspective. This is particularly true for periodic adjustments, service fees and profit adjustments, which require careful analysis. Polak notes that similar discussions have been going on related to customs valuation issues concerning goods flows between different customs regions. “There too, it has long been clear that these topics cannot be viewed in isolation. Organisations would do well to review the tax documentation surrounding intercompany transactions holistically. The question is not only whether the transfer pricing outcome is defensible, but also what VAT and customs consequences are tied to it.”

For more information, she points to the publications Tariffs Got You Down? Aligning Customs Valuations & Transfer Prices and Customs and International Trade.

New European customs legislation focuses on data and central control

Changes in the customs field are equally significant. The reform of European customs legislation, on which political agreement was reached in 2026, marks the shift from a declaration driven system to a more centralised, data driven customs environment.

A key element of this is the arrival of an EU Customs Data Hub, combined with stronger central control over risk analysis and oversight. “For companies, this is far more than a legal change,” says Polak. “It affects the organisation of all data relating to supply chains, the availability of that data, and how responsibilities are allocated across the chain.”

The move towards a single European data infrastructure fits, in her view, into a broader trend in which customs authorities want oversight that is faster, more consistent and more data driven. At the same time, companies need to be increasingly able to substantiate flows of their goods, classifications, valuation methods and origin information. “Customs compliance is shifting from a declaration issue to a strategic data and governance issue. Companies that get their processes in order now will be better prepared for a new supervisory reality and will be rewarded with the safeguards that come with being a trusted and compliant trader.”

CBAM, EUDR and export control are widening the playing field

Alongside the customs law reforms, companies are facing a broader wave of regulation in which customs, sustainability and geopolitics converge.

CBAM (Carbon Border Adjustment Mechanism) is a clear example. From 2026, the definitive application phase begins, bringing new obligations for importers of certain carbon intensive goods regarding authorisation, emissions data and, ultimately, certificates.

At the same time, the EUDR (European Deforestation Regulation) and tightened export control rules mean organisations need to know not only what they import or export, but also under what conditions goods were produced, where raw materials come from, and whether shipments are affected by sanctions and security regulations. 

“The classic image of customs as purely tariff classification and import duties is outdated,” says Polak. “Customs increasingly sits at the intersection of sustainability, trade compliance, legal and risk management.” For organisations, this means customs and trade compliance can no longer sit solely within logistics or tax. Collaboration between tax, legal, procurement, sustainability and logistics operations is becoming increasingly important. “Companies need to build an integrated picture of their international goods flows and the associated risks. Only then can they anticipate, in good time, obligations relating to CBAM, EUDR or export restrictions.”

From tax specialism to chain broad transformation

Looking across all these developments, Polak sees one clear common thread: indirect taxes are becoming ever more closely linked with the operational core of organisations. VAT, customs and trade compliance are no longer specialist fields that are assessed only afterwards, but topics that need to be considered in upfront: in system design, contracting, supply chain decisions and governance.

“The organisations leading the way are not necessarily the ones with the largest tax departments,” Polak states. “They are the organisations that translate tax developments into processes, data and responsibilities within the business in a timely way.” This requires more than just knowledge of laws and regulations, she says. It demands an integrated view of technology, processes and international trade flows.

“Organisations that approach indirect tax purely as a compliance obligation risk being essentially reactive,” she concludes. “Organisations that take a strategic approach to these developments can turn regulatory pressure into competitive advantage: they manage their risks while also making their supply chain more robust and future proof.”

With specialist knowledge in VAT, customs and international trade, Forvis Mazars supports organisations in translating complex regulation into workable solutions. By combining tax expertise with attention to processes, data and international supply chains, Forvis Mazars helps companies prepare for an indirect tax environment that is changing at high speed.