European VAT News April 2018

On 9 November 2017, the Bulgarian tax authorities clarified that supplies via a consignment stock are considered as having been executed directly upon the transfer of the goods to the stock. The withdrawal at a later time is no longer relevant. This also applies if the parties agreed to a transfer of ownership at the time of the removal, at the time of invoicing or at the expiry of a maximum storage period.

Czech Republic

From January 2019 the Czech Republic are proposing to amend their VAT legislation. Some of the changes include:

• The adoption of the new EU VAT rules for the treatment of single and multi-purpose vouchers – Please click here for our previous article explaining the new VAT treatments.

• Non-resident suppliers of e-services not having to charge Czech VAT or produce Czech compliant invoices if their sales to consumers are below an annual €10,000 threshold.

Cyprus

The Cypriot Tax administration has issued two Circulars clarifying the application of VAT.

1. a)  Real Estate. The first is on the sale of non-developed building land and on leasing/renting operations on commercial immovable property, following the implementation of the amendment to the VAT Law in this regard, effective since 2nd January 2018.

2. b)  Circular released targeting input VAT treatment on holding Companies

The Cypriot tax administration provided clarifications regarding the concept of economic activities for holding companies and the deductible VAT, targeting specifically the right to deduct VAT of expenses incurred related with the management of subsidiaries.

Regarding the determination of the direct or indirect participation in the subsidiaries management, no criteria was provided and the tax authorities mentioned that it needs to be determined on a case- by-case analysis. For these purposes may be used as indicators, for example, the existence of common directors or board minutes showing the process of decision-making.

Finland

The Finnish tax administration published an amended guidance on the VAT liability of real estate, further highlighting the following measures:

France

The interest rate applicable to tax arrears (and to refunds of tax credits – subject to time limits), as laid down in article 1727 of the French tax code, has been reduced from 0.4 % to 0.2 % per month (i.e. 2.4 % per annum). The new rate applies from 1 January 2018.

Introduction of new time allocation rules for the leasing of immovable property; Including a new definition of real estate as to comply with the VAT definition of property in the EU;
Clarification on the concept of storage services subject to the general VAT rate; and Clarifications on the requirements to be within the concept of joint office rentals, to which the VAT exemption should be applied.

Greece

The Greek tax authority published a Circular stating that taxpayers are required to file 2018 Intrastat reports for intra-community transactions of goods, notably when:

• in 2017 the respective arrivals and dispatches exceeded the 2018 thresholds; or
• during 2018, the correspondent arrivals and dispatches of goods exceeds the thresholds.

Hungary

Effective as of July 1st 2018, the “real time VAT reporting” scheme will require taxpayers to report electronically, in a standard file format to the National Tax and Customs Authority, either immediately or within 24 hours, specific data relating to invoices.

Italy

As of 1 January 2019, all companies registered in Italy are obliged to invoice electronically. Furthermore, the invoices have to be submitted via a special portal of the Italian tax authorities. This applies to invoices to taxable persons as well as invoices to private individuals. Invoices regarding cross-border supplies of goods or services to recipients who are not established in Italy are not subject to the new regulations.

As of 01.07.2018, the new regulations are already applicable to supplies of fuels and to all supplies of goods and services to public bodies.
Moreover, Italy has eased regulations regarding input VAT deduction. Usually input VAT has to be deducted at the same time the output VAT on the underlying transaction is due. E.g. input VAT amounts of 2017 have to be claimed, at the latest, in the annual VAT return for 2017, which is due on 30 April 2018. However, the Italian tax authority has now clarified that input VAT from invoices issued in 2017, may also be deducted in 2018, if the customer receives the invoice in 2018 and if the invoice is included in 2018’s VAT purchase-ledger.

Malta

The European Commission has authorized Malta to increase its registration threshold up to EUR 20 000, as of January 1st 2018.

Poland

Effective as from 1st January 2018, the threshold to qualify as small taxpayers for VAT purposes is PLN 5 176 million (EUR 1.2 million) of annual turnover, including VAT, and, in particular to agents or commissionaires, is PLN 194 000 (EUR 45 000).

Portugal

From 1 March 2018, Portugal has extended 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 business 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 and 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.

Spain

The Tax and Customs control plan, recently published in the Spanish Official Gazette, emphasizes a strategy to further tighten the control on certain VAT schemes, notably:

• On VAT frauds within intra-EU operations (in particular in the automotive industry);  Registrations of Intra-community operators; and
• Importations from Asia of textiles and consumer goods.

Sweden

a) Place of supply of services – proof

The Swedish tax administration published a Guidance clarifying who is liable to bear proof with respect to the place of supply of services.

b) Guidance about landlord’s supplies of electricity, gas and water

The Swedish Tax authority published a Guidance to clarify the VAT framework of supplies of electricity, gas and water made by a landlord to its tenant, which under certain conditions may also benefit from the VAT exemption applicable to the lease of property.

c) Guidance on EU supplies and exports

The Swedish tax agency has released guidance on necessary evidence to be collected by the supplier in order to be able to benefit from the VAT exemption in certain transactions, such as Exports and Intra-Community supplies.

UK

Within the scope of the project “Making Tax Digital“ (which at this stage relates only to VAT), the British tax authorities (HMRC) require companies to electronically archive information concerning all transactions as of 1 April 2019. Subsequently, electronic records are to be transferred to HMRC, via a particular interface, together with the relevant VAT return.

Although, Brexit is scheduled to take place on 29 March 2019 11pm GMT), in accordance with article 50 sec 2 and 3 of the Treaty of Lisbon, recently, both the EU and the UK have agreed upon a subsequent transitional period of 21 months. Therefore, the UK will at least be part of the European VAT system and the Customs Union until the end of 2020. Thus, companies VAT registered in the UK should have enough time to deal with the technical requirements of the project “Making Tax Digital“, in order to be able to connect their systems on 1 April 2019.

The above information was kindly provided by:

• Fiscal Solutions (UK), www.fiscalsolutions.co.uk; contact: [email protected]  KLMZ (Germany), https://www.kmlz.de; contact: [email protected]
• VAT Systems (France), www.vatsystems.eu; contact: [email protected]