VAT and B2G Reporting Newsletter: December 2017

Brian Elswick
January 4, 2018

International News

EU Council Approves Overhaul of VAT System

The Council of the European Union has adopted a legislative package that will substantially modify Europe’s VAT law from 2019. This package – consisting of a Directive and two Regulations – represents the first step towards enacting the European Commission’s 2016 Action Plan on VAT, which was written to reform and modernize the “transitional” VAT system. The legislative package has four main components:

  • › simplification measures for intra-Community sales of electronic services, effective from January 1, 2019;
  • › extension of the “one-stop shop” scheme, currently in place for e-services, to cross-border sales of goods (both within the EU and from third countries) starting in 2021;
  • › elimination of the VAT exemption for imports of goods in small consignments of negligible value, as of January 1, 2021;
  • › rules for enhanced administration cooperation between Member States to facilitate the implementation of the “one-stop shop” extension, effective January 1, 2021.

Although the Council has approved the overall goal and timeline of the package, it awaits a separate and more detailed proposal from the Commission on the implementation of the 2021 provisions.


European Commission Seeks Permanent Minimum VAT Rate

The European Commission has proposed a Council Directive that would make permanent a minimum standard VAT rate of 15% for all Member States. The 15% minimum rate currently exists as a “transitional” measure, though it has been extended six times since its enactment in 1992.

If approved, the permanent 15% minimum rate of VAT would take effect on January 1, 2018.


Country-by-Country News

Croatia Increasing VAT Registration Threshold Effective January 1, 2018

The Croatian Parliament has published in the Official Gazette 115/16, changes to Croatia’s VAT Act that are effective January 1, 2018. Among these changes is an increase in the threshold amount over which businesses are required to register for VAT in Croatia. As of January 1, the amount will increase to HRK 300,000.00. Any businesses who have a taxable turnover greater than this amount will be required to register for VAT in Croatia. The official publication of this change can be seen in the Croatian Federal Gazette, here. In addition, the Ministry of Finance has published an announcement summarizing all upcoming changes to the VAT Regulations, here.


Spain Issues the 2018 SII Filing Deadline Calculator

Spain’s tax administration (the AEAT) has announced the release of the SII 2018 deadline calculator. This tool is designed to help calculate the exact date by which each SII report should be submitted to the AEAT. Determining the exact day of the deadline can be confusing under the current system when factoring in weekends and other Spanish holidays. This tool will ensure that these dates are not taken into account when calculating the deadline, and will also help to clarify any possible confusion arising from the fact that starting January 1, 2018, the deadline for reporting inbound and outbound invoice transactions will be reduced from 8 days to 4 days.

The tool can be found here.


New Query Functionalities for the SII

The AEAT has announced that new functionality has been added to the SII, which will allow users to review invoices from specific clients and suppliers. The invoice information can be viewed individually by client or supplier, or can be sorted in groups.

The AEAT has also announced new functionality that has been incorporated into the Web query of the ledgers of issued and received invoices: users will now have access to a summary of displayed data, and unlimited export of the reported records will be allowed.

A snapshot of the new functionality can be seen here.


Italy Appears Set to Delay VAT Increases Until 2019

On December 4th, 2017, Italy’s parliament adopted Law Decree no. 148, by way of Law no. 174. Under Article 5 of Law Decree no. 148, the current VAT rate of 10% would be increased to 11.14% effective January 1, 2018. However, the 2018 Italian budget bill currently provides for the reduced VAT rate to be 10% in 2018 and 11.5% in 2019, and for the standard VAT rate to remain at 22% in 2018 and increase to 24.2% in 2019. The 2018 Italian budget bill has been approved by both houses of Parliament: the Senate and Chamber of Deputies. The bill must now be promulgated by the President of the Italy. While the president may opt to resend the law to Parliament for a new review, it appears likely that the President will promulgate it. After promulgation, the law will be published in the Official Gazette of the Italian Republic before going into effect. Thus, Italy’s 2018 budget bill will override the previous reduced VAT rate increase of 10% to 11.14%, and will delay an increase in the standard and reduced VAT rates until January 1, 2019.

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Brian Elswick

Brian Elswick is the Marketing Programs Manager for Sales & Use Tax, Business-to-Government Reporting, and VAT.
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