VATupdate Newsletter Week 3 2026

WEIGHTLESS

It was a week packed with VAT news again. Here is a quick overview of some highlights:

The most notable development was the ECJ Advocate-General’s (AG) opinion on whether TP-adjustments affect VAT in ECJ case C-603/24 (Stellantis Portugal). The AG suggests that retrospectively agreed pricing adjustments do not, in themselves, constitute a separate VAT-taxable service when they merely adjust the price of earlier goods supplies.
The European Commission reported that the EU VAT compliance gap widened in 2023, prompting renewed calls for digital reporting and VAT data-analysis tools across Member States. This feeds directly into the VAT in the Digital Age (ViDA) agenda, with real-time reporting and enhanced data exchange taking centre stage.
The UAE published significant VAT changes effective from 2026, including new compliance rules, adjustments to scope, and alignment with emerging digital reporting frameworks.
Brazil advanced its historic tax reform by enacting the second law for the dual VAT (CBS/IBS) and launching an automated split-payment VAT system.
China finalised and published the 2026 VAT Law implementation rules, including updates on rates, scope, sourcing rules, and export VAT policy.
And finally, various VAT rate changes were announced across Europe, including the Netherlands, Czech Republic, Belgium, and Germany.

Many of these rate updates seem to target food-related items. Policymakers appear increasingly keen on nudging consumers toward healthier eating by taxing unhealthy foods more heavily. A polite way of addressing what many people prefer not to discuss: rising average body weight. It’s one of those topics that, like politics and religion, you’re not really supposed to bring up at parties.

But we’re doing it anyhow, as here’s a thought I couldn’t shake recently: If these new weight-loss medications are really so effective, shouldn’t airlines be thrilled?

In theory, lighter passengers mean lower aircraft weight. Lower weight means less fuel consumption. Less fuel means lower operating costs. Lower operating costs could mean cheaper tickets.

The amusing part is that while no airline has (yet!) dared to link fare pricing to your personal BMI, many industries price things by weight all the time: cargo, freight, parcels, and, of course, the sacred 23-kg suitcase allowance that never changes.

And this is where VAT comes back into the conversation, like someone returning to the gym after a long break.

VAT systems love weight. They love measurements, quantities, values, and neatly defined categories.

What they do not love is ambiguity.

Which is unfortunate, because human weight is about as ambiguous as it gets. Lose 2 kg one week, gain 3 the next (thank you, weekend brunch). Fuel prices rise and fall, and airline pricing strategies are about as predictable as January gym attendance.

VAT, however, stays steady. Or at least it pretends to.

If airline ticket prices did fall because we all collectively slimmed down, VAT revenue on air tickets would fall too. But then again, most international passenger flights are exempt from VAT anyway. So even if everyone in the EU suddenly became 10 kg lighter overnight, the EU VAT Directive would simply shrug and say:

“Nice job. Still zero-rated.”

Things might get more interesting with the weight-loss medication itself. Those products likely fall under the category of pharmaceutical supplies, and depending on the country they may be:

taxed at a reduced VAT rate,
taxed at the standard rate, or
(in some cases) exempt when supplied on prescription.

So, the very thing that could hypothetically make your holiday flights cheaper is itself a VAT-relevant product. The more people use these medications, the more VAT revenue governments collect on them. Which might just offset the theoretical loss in VAT from cheaper airline tickets.

A kind of fiscal seesaw: lighter passengers, heavier VAT receipts.

In the end, perhaps it’s comforting that VAT doesn’t judge weight gain or loss. It simply asks one question: “Is there a taxable transaction?”

Everything else, such as calorie counts, ticket weights, New Year’s resolutions, is just turbulence in the background.

If you have any comments, questions, or ideas that you want to share with us, please send us an email at [email protected] or leave a comment under the posts of this newsletter on LinkedIn.