Vat News - Juli 2018
EU Member States
The Court of Appeal has ruled that it is not possible to claim the input VAT paid, without an invoice showing the VAT rate and the amount of VAT, even when the tax payer provides HMRC with additional information to support the amounts of VAT paid.
HMRC has updated its policy on cost sharing groups with respect to VAT, excluding insurance and financial services and other activities foreseen on the Article 135 of the VAT Directive, from the VAT exemption.
This exemption can only be applied to members within the same Member State and may furthermore be applied when the transfer pricing rules require an uplift.
The Spanish Budget Law has been published on 4 July 2018, introducing the following measures relating to VAT, to be effective as from 1 January 2019:
- The place of supply for telecommunications, broadcasting or electronically supplied services to a non-taxable person, will generally be where that person is established, has his permanent address or usually resides;
- The VAT exemption on supplies of services by certain entities (unions, groupings, autonomous entities) will be subject to the condition that the exempt activity does not include, insurance, copyright, financial, or certain immovable related activities.
The Slovakian tax administration has announced that entities performing distance sales from Slovenia are required to include these in their Intrastat declarations as dispatches of goods. In the case of sales made to Slovenia customers (private individuals), if they exceed 35,000 EUR, the supplier needs to charge Slovenian VAT and include the sales as arrivals in the Intrastat declaration.
Effective from 1 January 2018, importers are obliged to file a VAT return, even if no VAT is due.
The reduced VAT rate on Lesbos, Chios, Samos, Kos and Leros continues to apply until 31 December 2018.
The National Tax Tribunal has decided that VAT must be charged as from the first time that it is clear that the company will exceed the threshold of 50,000.00 DKK.
The Swedish Supreme Administrative Court has held that services provided by a Danish fixed establishment (FE) to its Swedish parent company are taxable in Sweden (the Member State of the customer).
This decision is based on the following grounds:
1. the activities carried out by the Danish FE should be regarded as part of the Danish VAT Group, of which the FE forms part;
2. the Swedish Company is viewed as an independent taxable person in relation to the Danish VAT group.
As from 9 June 2018, the new rules for periodic VAT returns are effective. These rules include new periodic VAT returns as well as instructions for completion.
The tax administration has released Circular no. 265-1, clarifying that VAT deduction on goods and services, when used for both economic and non-economic purposes, are only partially deductible. This rule also applies to entities that are partially subject to VAT, regarding supplies that are used for non-economic activities.
On 2 July 2018, the Italian Tax Agency clarified that the e-invoicing requirements are not applicable to foreign entities that have a VAT registration in Italy, but are not established therein.
Circular 13/E states that the national rule on electronic invoicing must be interpreted in a manner consistent with the Council Implementing Decision (EU) 2018/593 of 16 April 2018, as well as with the VAT directive and the principles of proportionality and fiscal neutrality.
Only entities that are established in Italy will be obliged to issue electronic invoices as from 1 January 2019. Furthermore, established entities may send electronic invoices to foreign entities with a VAT registration in Italy, provided that they can obtain a paper invoice upon request.
17/07/2018 European Union - Latvia: European Court of Justice Case, C-154/17 – Interpretation of the “second-hand goods” concept
The ECJ has held that the “second-hand goods” concept does apply to used goods containing precious metals or precious stones if those goods are no longer capable of performing their initial function and have retained only the functionalities inherent in those metals and stones.
10/07/2018 European Union - United Kingdom: European Court of Justice, Case C-544/16 – Online auctions; grant of credits to users
The ECJ has held that:
• The issue of credits which allow an operator’s client to bid in the auctions that it organizes, are a supply of services for consideration. The consideration is the amount paid in return for the credits.
• The value of the credits used in order to bid is not included in the consideration received by the taxable person in return for the supplies of goods that it makes for the benefit of users who won an auction organised by it, or users who purchased a product using the ‘buy now’ or ‘earned discount’ features.
• The courts of a Member State have the power or the obligation to request a preliminary ruling to the Court, when they find that the same transaction has been treated differently in another Member State.
10/07/2018 European Union - France: European Court of Justice, Case C-320/17 – Holding company and the involvement in management of the subsidiary: letting of buildings
ECJ has ruled that the letting of a building by a holding company to its subsidiary is related to the “involvement in the management” of that subsidiary and for that reason must be considered as an economic activity. The VAT incurred with the acquisition of the shares in that subsidiary can be deducted if the supply:
1. is made on a continuing basis;
2. Is carried out for consideration;
3. Is taxed and
4. there is a direct link between the service and the consideration. Expenditure relating to the acquisition of shareholdings in subsidiaries incurred by a holding company which involves itself in the subsidiaries’ management which carries out an economic activity by letting them a building, must be regarded as belonging to its general expenditure and the related VAT should be fully deductible.
The ECJ has ruled that if the tax authorities establish that a transaction linked to a specific invoice has not actually occurred, the right to deduct input VAT may be denied.
The European Union has permanently adopted a minimum standard VAT rate of 15%.
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