The draft bill regarding COVID-19 tax measures has been approved by the Austrian parliament. Such bill prolongs the…
The draft bill regarding COVID-19 tax measures has been approved by the Austrian parliament. Such bill prolongs the application of the already existing measures to support taxpayers during the COVID-19 pandemic and provides other amendments to tax laws, such as the introduction of an interest deduction limitation rule to enter into force on 1 January 2021 for interest on loans for long-term public infrastructure projects and the application of the reduced VAT rate of 10% for certain feminine hygiene products.
The Belgium Tax Authorities have recently announced that the import VAT exemption applicable to medical supplies of goods required to combat the pandemic will be extended until 30 April 2021.
Bulgaria has recently implemented new rules regarding certain VAT obligations for supplies of services and regarding distance sales of goods. Under such new rules, it is foreseen that for the period between 1 December 2020 and 31 December 2021, take-away food provided by restaurants will be subject to a 9% reduced VAT rate and that the provision of insurance and re-insurance services, including related services provided by insurance brokers and agents, is exempt from VAT.
COVID-19 Crisis: Bulgaria Introduces a Temporary 0% VAT Rate for COVID-19 Vaccines
A 0% VAT rate for COVID-19 vaccines has been introduced in the national legislation and it will be applicable from 1 January 2021 until 31 December 2022.
Tax Administration Publishes Updated Version of the VAT Act
An updated version of the VAT Act containing recent changes has been published in December 2020 by the National Revenue Agency.
Croatia has transposed into national legislation the Directive (EU) 2019/1995, concerning the EU VAT obligations regarding distance sales of goods. In this context, taxpayers, operators of electronic interfaces will be responsible for collecting and remitting VAT for sales of goods by taxpayers established outside of the European Union to consumers within the European Union from July.
In addition, Croatia has announced the abolition of the VAT exemption for small parcels, with a value of less than EUR 22, imported into the European Union.
The above measures will become effective on 1 July 2021.
The Cypriot tax authorities have recently clarified that it is only possible to pay in instalments the VAT liabilities regarding which the initial payment extension has been granted until 10 November 2020 and regarding the quarterly or monthly VAT returns which ended in one of the following periods: 29 February 2020, 31 March 2020, 30 April 2020, 31 May 2020 and 30 June 2020.
In this context, the total VAT liabilities for these periods must be settled in six equal instalments by the 10th day of each month, in order to avoid additional tax and interest.
The Ministry of Finance has extended the deferral of deadlines for complying with certain tax obligations. In this context, taxpayers whose main activity was affected by the government restrictions in the period from 1 June 2020 and 30 September 2020 may benefit from a deferral of the VAT payments, on condition that the deferred payments will be settled at the latest on 16 August 2021.
In this sense, a waiver of late-payment interest will apply to the VAT payments for September to December 2020 and January to March 2021 or the corresponding quarterly payments.
The Supreme Administrative Court provided clarifications regarding the VAT treatment of transactions between main establishments and branches, which are established in another Member State and that are part of the same VAT group.
In the particular case, a French company carrying on financial intermediary activities, did not apply VAT in the recharge of cost invoices issued to its branches established in other Member States. On assessment, the French tax administration decreased the applicable pro rata deduction at the level of the French company, being of the opinion that the internal transactions at issue were outside the scope of VAT and taking into account the exempt activities of the branches involved.
In this context, the Supreme Administrative Court decided that the above operations must be attributed as being between two separate taxable persons, applying the interpretation of the EUCJ in Skandia America Corporation (Case C-7/13).
The Greek government announced that the VAT payment related to the VAT due on the October and November 2020 VAT returns, may be suspended until 30 April 2021, for companies that fulfil certain conditions, such as have been financially affected as per their Activity Code Numbers.
The Law implementing the EU VAT e-commerce package has been published in Hungary and, among other measures it is foreseen the abolition of the current import VAT exemption for goods in small consignments of a value of up to EUR 22 and the extension of the one-stop-shop system in order to facilitate the new VAT payment obligations.
The Law will apply as from 1 July 2021 and it will be possible to register to the one-stop-shop system in Hungary as from 1 April 2021.
It has been recently announced by the Irish government a reduction, from 175 EUR to 75 EUR, of the threshold to apply the VAT Retail Export Scheme for VAT refunds on goods bought in the European Union and exported overseas.
It has been further clarified that the VAT Retail Export Scheme cannot be applied between Ireland and Northern Ireland, insofar as the EU VAT rules on goods apply to Northern Ireland under the Ireland-Northern Ireland protocol.
VAT E-Commerce Rules
It has been recently published by the Revenue the Tax and Duty Manual VAT eCommerce Rules – 1 July 2021, which provides an overview of the amendments made on the VAT Directive relating to the VAT eCommerce rules that will become effective as from 1 July 2021. Among other changes, it is foreseen the abolition of the current VAT exemption for goods in small consignments of a value of up to EUR 22.
In addition, a new Import One Stop Shop scheme (IOSS) will be introduced to simplify the importation of low value goods into the European Union – i.e., goods imported into the European Union from a third country in consignments that do not exceed an intrinsic value of EUR 150. Where the IOSS is used, the supplier will charge VAT to the customer at the time of the supply and the goods will not be subject to VAT at the time of importation; and where the IOSS is not used, a second simplification mechanism will be available for imports. Import VAT will be collected from customers by the customs declarant (e.g., postal operator, courier firm, etc.) which will make payment to the customs authorities via a monthly payment.
According to the recent clarifications issued by the Italy tax authorities on Ruling Answers No. 372/2020 and No. 375/2020, the following financial services are exempt from VAT:
- Financial consulting services combined with services of receipt and transmission of relevant orders, which are considered as one single supply; and
- Supply of banking back-office services.
COVID-19 crisis: Zero-Rated Supplies of Goods
The Italian Tax Authorities have recently provided some clarifications regarding the zero-rated supplies of goods necessary for the containment of the Covid-19 pandemic.
The tax authorities also provided detailed explanations on the definitions of qualifying goods and stated that liquid soaps exclusively having a cosmetic use cannot benefit from this regime.
In addition, the Italian tax authorities confirmed that ancillary supplies are also zero rated and informed that as from 1 January 2021 the super-reduced VAT rate of 5% will apply to supplies of qualifying goods, which are considered as necessary for the control and management of this pandemic.
The Council of the European Union has extended until 31 December 2024, the authorization provided to Malta to apply the VAT registration threshold of 20 000 EUR.
The emergency payment deferral regime, which allows a 3-month deferral for payment of qualifying taxes, has been extended until 1 January 2021. A portal to submit the deferral requests has been opened and any request made by 1 October 2020 by other means, will be handled under the emergency deferral regime.
The list of goods which are temporarily free from import duties and exempt from VAT upon import is valid until 30 April 2021.
The Slovenian government has granted the above extension by Ordinance, which has entered into force on 31 October 2020.
EFTA Surveillance Authority authorized Norway to continue to apply the VAT exemption on electric zero-emission vehicles. This authorization is valid until 31 December 2022.