European Union Overview
Welcome to the Sovos Compliance monthly analysis of important news and insights about value-added-tax. You’ll find headlines and highlights of our analysis, with links to the complete articles on our blog. We invite your feedback on this new format. Please send your comments to email@example.com. You can read these articles in their entirety on our blog.
Publication of Draft Improvements to Cross-Border VAT Rules
On October 7, 2016, the European Council published a set of draft conclusions regarding potential improvements to current VAT rules on cross-border transactions. The Council stated the overriding goal of a simpler, more efficient, more robust, and fraud-proof VAT system, and offered specific conclusions in four areas...
Extension of Polish Derogation on Mixed Use of Motor Vehicles
Poland to limit the right to deduct VAT to 50% on the purchase, acquisition, importation, hire, or leasing of certain motor vehicles that are not entirely used for business purposes.
Requirements for Exemption on Intra-Community Transfers
The CJEU has recently held that for purposes of obtaining an exemption on Intra-Community transfers of goods, the provision of a VAT identification number from the Member State of destination is a formal rather than a substantive requirement.
Supplies of Blood Plasma for Manufacturing Purposes
On October 5, 2016, the CJEU issued a judgment in a case involving the scope of a VAT exemption for supplies of human blood. The CJEU considered two questions: first, whether blood plasma qualified as “human blood” under the definition in Article 132(1)(d); and secondly, whether human blood could be exempted when supplied for manufacturing purposes.
VAT on Concealed Goods
A Bulgarian trader was accused of receiving and selling goods without collecting and remitting VAT. Several vendors had issued invoices for tobacco and food products that were not recorded in the trader’s accounts or present in its warehouse. The Bulgarian authorities presumed that these goods had been resold to unknown third-parties.
Here is a country-by-country summary of VAT news from European countries. You can read these articles in their entirety on our blog.
The Parliament of the Czech Republic is currently considering a bill that would introduce a number of amendments to the Czech VAT Act (Law 235/2004 Coll.) beginning on January 1, 2017. In an interview given to Bloomberg BNA on October 12, Deputy Minister Schillerova stated that EET would help increase revenue collection from the hospitality sector, currently the fourth largest “shadow economy” in the country.
The Danish Tax Administration (SKAT) has published three recent Tax Board rulings involving VAT exemption claims. In the first ruling, the Tax Board upheld an exemption for the importation of bilingual magazines from a third country.
The French Parliament approved a change to the VAT treatment of petrol, which will allow companies to reclaim an increasingly large percentage of VAT over the next five years. Prime Minister Manuel Valls and Agriculture Minister Stephane Le Foll unveiled an assistance plan designed to boost France’s slumping agricultural sector.
The Greek government has decided to reduce the threshold for exempt sales made in Greece to foreigners traveling abroad.
The newly announced 2017 budget includes several provisions related to indirect taxation. Notably, the Finance Minister confirmed that the reduced 9% VAT rate applied to the tourism and hospitality industry will be retained.
The Italian tax administration (Agenzia Entrate) has issued Resolution No 72/E, which states that transactions made using virtual currencies, such as bitcoins and other similar electronic tender, should be given the same treatment as transactions involving bank notes or other standard currencies.
The Luxembourg government presented a draft budget to the Luxembourg Parliament on October 12, 2016. One provision concerns the VAT threshold for small enterprises. Under the proposed budget, the threshold to qualify as a small enterprise will be increased from the current €25,000 to €30,000.
The Dutch Tax Administration has recently issued statements on the application of the 6% reduced VAT rate to two separate types of products: “quick-wrap film” and hemp seeds.
On October 17, 2016, the government claimed that registered sales of fuel increased by 14%, representing a significant improvement for a nation in which approximately 20% of diesel sales were estimated to be illegal.
The Polish government intends to eliminate the option of filing quarterly VAT returns for all taxpayers whose total revenue exceeds €1,200,000.
The Romanian Curtea de Apel Bucureşti, the high court, has referred to the Court of Justice of the European Union (ECJ) a question on whether a local reverse charge mechanism applying to land transactions is applicable when the transactions have taken place prior to a party’s VAT registration.
The Parliament of the Slovak Republic is currently debating several proposed amendments to the national tax code, which, if passed, would take effect on January 1, 2017. Included in the amendments is a proposal mandating that the government make interest payments on VAT refunds that are postponed for more than six months due to a tax inspection. The interest payments would be calculated for each extra day outside of the six-month period.
The Spanish Tax Administration has clarified that the only entities exempt from filing the Annual VAT return 390 are those entities under the simplified regime and those dedicated exclusively to the rental of real properties in urban areas.
In Sweden, digital media is currently taxed at the standard 25% rate, whereas print media is taxable only at Sweden’s super-reduced 6% rate. However, there is rising political will, as articulated by Swedish Moderate MPs, to reduce the rate on digital services to mirror the rate levied on print publications.
HM Revenue and Customs (HMRC) has opened a consultation on possible penalties for businesses participating in VAT fraud. While noting that the vast majority of businesses will be unaffected, HMRC proclaims a need for combatting organized VAT fraud, which presents a significant drain on public revenue.
News from Outside the European Union
You can read these articles in their entirety on our blog.
The Norwegian government has published its proposed 2017 fiscal budget, where it lays out a proposal of a new 5% excise tax on wage costs in the financial sector, while leaving in place the 25% corporate tax rate.
New reforms will eliminate the VAT exemption for low-value imported goods when supplied by companies with worldwide revenues of CHF 100,000 or more. Foreign businesses above the threshold will have to import the low-value goods themselves and register for VAT in Switzerland. The government expects that approximately 30,000 foreign businesses will need to register for VAT under the new scheme.