News from Accountancy Europe May 2018

European Commission

Commission launches updated VAT MOSS portal - 19 April 2018

The European Commission has launched an updated Mini-One Stop Shop (MOSS) portal for VAT purposes. The new MOSS portal provides comprehensive and easily accessible information on VAT rates for telecom, broadcasting and eservices, and explains how the MOSS can be used to declare and pay VAT on such services.

European Parliament

European Parliament Plenary endorses minimum EU VAT rate - 19 April 2018

The European Parliament Plenary has voted in favour of the Commission’s proposal to maintain the obligation to respect a 15% minimum standard VAT rate. The European Parliament has no say on the matter and may only submit its non-binding opinion.

European Parliament draft report on CTP published - 23 April 2018

The MEP Roberts Zile (ECR/LAT) has published his draft report on the Certified Taxable Person (CTP). His report will form the Europeans Parliament’s non-binding opinion on the Commission proposal.

In his report, Mr. Zile welcomes the Commission’s proposal to strengthen cooperation between member states in the fight against VAT fraud. However, he also believes that the Commission proposal needs to strike a better balance between requests for and analysing of information on the one hand, and data protection and privacy on the other.
He has, therefore, proposed several amendments that seek to define more clearly the operating boundaries of Eurofisc as well as the processing and use of information by the authorities. References to relevant data protection legislation have been inserted.

Similarly, Mr. Zile aims to strike a better balance between the interests and responsibilities of the requesting and the requested tax authorities. He believes that with his amendments, the rights of the requested authorities are now better served. Furthermore, he proposes a more simplified mechanism on how the member states deal with outstanding VAT liabilities. In the same breath, he has also deleted provisions relating to certified taxable person.

In terms of next steps, the ECON Committee is currently scheduled to vote on the draft report on 19 June. A Plenary vote, in turn, is anticipated for 2 July.

Link: http://www.europarl.europa.eu/sides/getDoc.do?type=COMPARL&reference=PE- 619.275&format=PDF& la ngua ge= EN &seco nd Re f=01

ECON Committee holds public hearing on definitive VAT system - 24 April 2018

The ECON Committee of the European Parliament has held a public hearing with stakeholders on the definitive VAT system, and the Commission’s VAT reform agenda more broadly.

The stakeholder speakers at the event were:

  • Maria Elena Scoppio, Head of Unit, Indirect Taxation and Tax Administration, European Commission
  • Professor Rita de la Feria, Professor of Tax Law, School of Law, University of Leeds
  • Ine Lejeune, Partner, Tax Policy, Law Square
  • Kristian Koktvedgaard, Chair of BusinessEurope's VAT Policy Group, Business Europe
  • Gerhard Huemer, Director for Economic and Fiscal Policy, UEAPME

At the hearing, the speakers strongly criticised the Commission’s proposed re the harmonisation of VAT rates as well as the concept of the certified taxable person (CTP).

Rita de la Feria fears that liberalising VAT rates would lead to VAT competition between member states. Ine Lejeune, for her part, doubted to what degree the CTP concept would deter and prevent VAT fraud. Instead, it might even incite more fraud, she fears. Kristian Koktvedgaard, for his part, maintains that the lack of trust between member states is the key obstacle in the fight against VAT fraud.

Link: http://www.europarl.europa.eu/cmsdata/141581/180409%20-%20Hearing%20VAT- %20draft%20progra mme.pdf

Court of Justice of the EU - Rulings

C‐532/16: Limitation of the right to deduct input tax - 11 April 2018

The First Chamber of the CJEU has ruled that:

  • Article 184 of the VAT Directive establishes that the obligation to adjust undue VAT deductions set down in that article also applies to cases where the initial deduction could not be made lawfully because the transaction giving rise to that deduction was exempt from VAT
  • By contrast, Articles 187-189 of the Directive mean that the mechanism for the adjustment of undue VAT deductions provided for in those articles is not applicable in cases where the initial VAT deduction was unjustified as it concerned a VAT-exempt transaction relating to the supply of land
  • Article 186 means that, in cases where the initial deduction of VAT could not be made lawfully, it is for the member states to determine the date on which the obligation to adjust the undue VAT deduction arises and the time period for which that adjustment must be made, in accordance with the principles of EU law, in particular the principles of legal certainty and legitimate expectations. It is for the national court to determine whether, in cases such as that at issue in the main proceedings, those principles have been respected

Link: http://cur ia.e uropa.e u/ j ur is/doc ume nt /doc ume nt.j s f? te xt= &doc id=200945 &pa geI nde x=0 &doc la ng =EN &mode=req&dir= &occ= firs t&par t=1& c id=456320

C‐8/17: Right to deduct VAT - 12 April 2018

The Seventh Chamber of the CJEU has ruled that Articles 63, 167, 168, 178 to 180, 182 and 219 of the VAT Directive, and the principle of fiscal neutrality, preclude legislation of a member state pursuant to which following a tax adjustment, additional VAT was paid to the state and was the subject of documents rectifying the initial invoices several years after the supply of the goods in question, the right to deduct VAT is to be refused on the ground that the period laid down by that legislation for the exercise of that right started to run from the date of issue of those initial invoices and had expired.

Link: http://cur ia.e uropa.e u/ j ur is/doc ume nt /doc ume nt.j s f? te xt= &doc id=200962 &pa geI nde x=0 &doc la ng =EN &mode=req&dir= &occ= firs t&par t=1& c id=639022

C-302/17: tax on the value of sold or unused greenhouse gas emission allowances - 12 April 2018

The Sixth Chamber of the CJEU has ruled against national legislation which taxes at 80% of their value, greenhouse gas emission allowances allocated free of charge which have been sold or not used by the undertakings subject to the greenhouse gas emission trading scheme.

Link: http://cur ia.e uropa.e u/ j ur is/doc ume nt /doc ume nt.j s f? te xt= &doc id=200968 &pa geI nde x=0 &doc la ng =en&mode=req&d ir=&oc c= first &par t=1&c id=636534

C-233 to C-237/16: Regional taxes in Spain on large retail establishments - 26 April 2018

The First Chamber of the CJEU has provided a ruling for five cases concerning the legality of regional taxes in Spain. In the cases, a national association of large distribution companies challenged the lawfulness of the regional taxes in Spain. CJEU has now decided that neither freedom of establishment nor the law on State aid preclude taxes on large retail establishments, such as the ones in the case raised. See here for a helpful explanation of what the ruling entails and what the Court’s decision and reasoning were.

Link: https://curia.europa.eu/jcms/upload/docs/application/pdf/2018-04/cp180057en.pdf

C-81/17: Deduction of input tax - 26 April 2018

The Ninth Chamber of CJEU has ruled that Articles 167, 168, 179, 180 and 182 of the VAT Directive and the principles of effectiveness, fiscal neutrality and proportionality preclude national legislation which, by way of derogation from the five-year limitation period imposed by national law for the correction of VAT returns, prevents a taxable person from making a correction in order to claim his right of deduction on the sole ground that that correction relates to a period that has already been the subject of a tax inspection.

Link: http://cur ia.e uropa.e u/ j ur is/doc ume nt /doc ume nt.j s f? te xt= &doc id=201488 &pa geI nde x=0 &doc la ng =en&mode=req&d ir=&oc c= first &p ar t=1

C‐580/16: VAT identification across borders - 19 April 2018

The Fourth Chamber of CJEU has ruled that:

  • Article 141(c) of the VAT Directive must be interpreted as meaning that the requirement laid down in that provision is met where the taxable person is resident and identified for VAT purposes in the member state from which goods are dispatched or transported, but that that taxable person uses the VAT identification number of another member state for that specific intra-Community acquisition
  • Articles 42 and 265 of the VAT Directive, read in conjunction with Article 263, must be interpreted as precluding the tax authorities of a member state from applying the first paragraph of Article 41 of the VAT Directive solely on the ground that, in the context of an intra-Community acquisition, made for the purposes of a subsequent supply in the territory of a member state, the recapitulative statement, referred to in Article 265 of the VAT Directive was not submitted in good time by the taxable person identified for VAT purposes in that member state.

Link: http://cur ia.e uropa.e u/ j ur is/doc ume nt /doc ume nt.j s f? te xt= &doc id=2012 65 &pa geI nde x=0 &doc la ng =en&mode=req&d ir=&oc c= first &par t=1

International

Digital tax initiatives continue to appear around the world - 29 March/4 April 2018

As digital tax negotiations in the EU are starting (see article above), third jurisdictions across the world are moving ahead with their own plans for the taxation of the digital economy.

Indeed, at the turn of 2018 alone, four jurisdictions - Turkey, Saudi Arabia, the UAE, and Belarus - all introduced new VAT rules aimed at non-resident digital service suppliers.

Apparently, the overall number of jurisdictions currently working on such plans globally exceeds 50. Taxamo has published a helpful overview of some of these initiatives.

For example, in Quebec the local government recently revealed its digital sales tax plans. Under these plans, non-resident suppliers of digital services to Quebec-based consumers will have to register, collect, and remit Quebec Sales Tax (QST) to Quebec’s tax authorities. The measure would become applicable from 1 January 2019.

Turkey, in turn, has decided to extend VAT to non-resident digital service suppliers. Under these rules, international digital service suppliers are liable for VAT on supplies to their consumers in Turkey. The new rules came into effect on 1 January 2018.

Link: https://www.taxamo.com/insights/turkey-vat-digital-services/?ut m_so urce= Ta xa mo+ B lo g+S ub scr ip t io n& ut m_ca mp a ign=321a6d22c9 -EMAIL_C AMP AIGN _2018_01_04& ut m_ med ium=e ma il& ut m_te r m=0_c f2402e fdc - 321a6d22c9- 305315961

MEP Questions & Answers

Scope of VAT application Reverse charging between consortia and consortium members - 5 April 2018

The European Commission has replied to a question asked by the MEP Pina Picierno (S&D/ITA) with regard to VAT reverse charging between consortia and consortium members.

In her question, Ms. Picierno refers to a request for VAT derogation by Italy, which would allow for applying reverse charging between consortia and consortium members, where the consortia are successful tenderers for contracts offered by public bodies, to whom they will issue split payment invoices. However, the derogation is not still in place since the Commission has not yet issued a proposal on it. All member states need to agree if one of them requests a special derogation from the VAT Directive. She asks the Commission when it plans to publish the derogation.

In his reply, Commissioner Moscovici confirms that the Commission has received the request for a derogation from Italy. The Commission is in the process of assessing the request, and has invited Italy to provide additional information in order to justify, in particular, that the envisaged derogation is necessary to fight fraud or to simplify VAT collection.

Link: http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2018- 000852&langua ge= EN

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Disclaimer:  The information contained in the present page is general and does not constitute legal advice. Before taking any decision or action on the above information you should take the appropriate professional advice.