European VAT News February 2018

As of 1 January 2018, interest free loans under the export VAT scheme will be cancelled. Existing loans had to be fully repaid by 15 January 2018.

Finland

For VAT registered businesses, effective as from 1 January 2018, import VAT is reported and paid to the Finnish tax authorities via the VAT return, self-accounted and, where deductible, deducted the VAT amount simultaneously.

France

The Administrative Supreme Court has ruled that the French tax authorities may not rely on the time limit provided in Article 15 of Directive 2008/9/EC for VAT refunds, i.e. 30 September of the following calendar year, as such limit was not transposed into French legislation. Therefore, in the specific case, the refund application of the input VAT paid in France in 2011 submitted on 1 October 2012 via the electronic portal was not deemed to be an ‘out of time’ filing .

Greece

A press release of the Ministry of Finance announced that the reduced VAT rates will continue to apply to the following islands of the third group: Lesbos, Chios, Samos, Kos and Leros until 30 June 2018. However, these rates ceased to apply to the other islands of the third group from 1 January 2018.

Italy

The Italian tax authorities announced last year the introduction of VAT measures, effective as of 6 December 2017, namely:

1. The Communication of issued and received invoices may be filed on a semi-annual basis;
2. The non-application of penalties for incorrect filing of data in the mentioned communication related to 2017 ́s first semester if the correct information is submitted by 28 February 2018 and
3. The extension of the split payment mechanism to all companies controlled by the Public Administration, as well as to listed companies on the Italian Stock Exchange which are identified for VAT purposes.

Latvia

As of 1 January 2018, the reverse charge will apply to all construction services and supplies of construction products. In addition, two special reverse charge procedures will be included in the VAT Act, one for supplies of metal products and another one for supplies of electronic appliances and devices.

Lithuania

Amendments to tax law, entering into force on 1 January 2018, are mainly:
– The reduced rate of 9% will apply to accommodation services until 31 December 2022, and will continue to apply to thermal energy and hot water supplied to residential premises, as well as for the thermal energy consumed for the heating of that water.
– The reduced rate of 5% will apply to supplies of non-reimbursed prescription drugs without any minimum package value established.

Malta

Amendments introduced into the VAT Act in order to align it with the VAT Directive regarding the treatment of vouchers. The amendments included the definition of the concepts of single- purpose voucher and multi-purpose voucher and their respective treatment for VAT purposes.

Netherlands

From 1 January 2018 the corrections to VAT declarations must be submitted electronically.

Norway

The Norwegian tax authorities have confirmed that the planned implementation of a mandatory SAF-T file will be further delayed until 1 January 2020.

The SAF-T file was introduced on a voluntary basis in the country from January 2017 and is a way for the tax authorities to exchange VAT data with businesses in a more secure, accurate and efficient way.

These files are already in use in several EU countries including Poland, Portugal, Austria, Luxembourg, France and Lithuania.

Poland

As of 1 July 2018, there is an optional split payment mechanism for recipients, which entitles taxable persons receiving an invoice with VAT amount to pay the net invoice amount into a standard bank account and the VAT amount to the VAT account.

Some advantages were set up for taxable persons that choose to use the Split payment mechanism.

Portugal

From 1 March 2018, Portugal will extend its current reverse charge mechanism on imports to include all goods imported into the country. Previously this was restricted to certain goods mentioned in the Portuguese VAT legislation.

This will allow any VAT registered businesses to apply to the Portuguese tax authorities for authorisation to use this reverse charge. Once accepted, it will remove the requirement to pay import VAT when goods are cleared into the country, instead the VAT will be deferred to the importing businesses’ VAT return.

It is hoped that this will result in savings on shipping costs and bank charges for the company importing the goods, as well as improve their cash flow as they will no longer have to wait for import VAT to be refunded by the Portuguese tax authorities.

Switzerland

Effective as of 1 January 2018, the following VAT measures will come into force:
1. Foreign-based providers with global turnover, carried out in Switzerland and abroad, exceeding 100,000 CHF will be VAT liable for any turnover generated in Switzerland and therefore be required to register in this territory for VAT purposes.
2. Reduced VAT rate of 2.5% to be applied to newspapers, magazines and e-books.

UK

The UK tax authority (HMRC) recently released draft regulations and VAT notices that relate to the April 2019 launch of the “Making Tax Digital” legislation. A pilot of the programme for taxpayers, agents and software providers is also scheduled to begin from April 2018.

As stated in our previous article, when introduced businesses with a turnover greater than the VAT registration threshold of £85,000 will be required to use the system to provide summary tax data directly to the tax office electronically. This data will then be used to automatically generate tax records, instead of manually calculating and filing a VAT return.

Once implemented the new system will also synchronise VAT reporting requirements with income tax and corporation tax obligations.

The above information was kindly provided by:

• Fiscal Solutions (UK), www.fiscalsolutions.co.uk; contact: [email protected]
• KMLZ (Germany), contact: [email protected]
• VAT Systems (France), www.vatsystems.eu; contact: [email protected]