On September 2015, Sea Chefs Cruise Services GmbH, a company established in Germany, applied to the French tax authorities for a VAT refund from 2014. In this context, the French tax authorities requested additional information, which was not provided within the time frame foreseen in article 20(2) of Directive 2008/9 (applicable to refund requests by taxable persons not established in the Member State of refund but established in another Member State), i.e. one month. For this reason, the French tax authorities denied the refund.

The Advocate General concluded however that Article 20(2) of Directive 2008/9, must be interpreted as meaning that it does not create a mandatory time limit, non-compliance with which results in the automatic forfeiture of the right to a refund of VAT from a Member State. A taxable person may thus regularise its VAT refund application by adducing evidence in the context of an appeal pursuant to article 23 of that directive.

The Public Revenue Authority published E.2002 clarifying that, effective from 1 January 2019 the super-reduced VAT rate of 6% applies to tickets of theatrical performances, as well as to concert tickets. Furthermore, the super-reduced rate applies only to tickets of concerts in which no other service is provided.

According to the notice published on 10 January 2019, the input VAT incurred, before 2019, on the rental of immovable property can be deducted as from 1 January 2019, if it could not be deducted until this date.

The Law no. 71/2018, applicable on 1 January 2019, transposed to the Portuguese legislation Council Directive 2016/1065 regarding the VAT Treatment of vouchers. The subsequent issued Ruling no. 30208 provides guidance on the meaning of the new concepts and the applicable provisions concerning the taxable event and taxable amount.

With the aim of simplifying and unifying VAT rules to ease the future introduction of a definitive VAT system, the Council reached an agreement on the amended regulations to be adopted on 1 January 2020, namely:

1. Call-off-stock: a simplification rule will apply, allowing the supplier to report an intra community supply and the customer an intra community acquisition. However, certain requirements will have to be fulfilled.
2. VAT ID number: a valid VAT identification number will be a required element for the exemption on intra community supplies. In addition, the correct reporting of this transaction on the VAT return will also be a requirement for the exemption to apply.
3. Chain transactions: chain transactions consist in successive supplies of goods, where only one cross-border transport movement occurs. In this context, in case the transport is performed by the intermediary operator in the chain, a presumption will be introduced to ascribe the transport and consequently the intracommunity supply, to the first transaction, unless the intermediary operator communicates to the first taxable person the VAT number of the state in which the transport begins. In this case, the transport will be ascribed to the second supply.
4. Proof on IC supply: a common framework will be established regarding the supporting documents to prove the VAT exemption of an intra community supply of goods. The proof should consist of two independent documents, such as a signed CMR in combination with an insurance policy for the respective supply of goods.

The Italian Tax Authorities issued clarifications on the VAT treatment of supplies of goods and services related to immovable property. In this context, in the case of ancillary services related to immovable property, in which some of the services are mandatory and others are only optional, the Italian tax authorities clarified that both are considered as being ancillary to the main supply, and therefore both are taxable where the property is situated.

Any invoice issued from a non-approved and undeclared electronic mechanism will be covered by the new wording of the procedural violation and the fine for the violation amounts to EUR 500. The previous wording of the provision referred only to "an electronic mechanism".

Circular 1230 introduces a new application form for VAT refund for taxable persons established outside of the EU. This document also introduces an explanatory memorandum with guidance about how to fill the form.

The United Kingdom could leave effectively the European Union on 29th of March 2019.

In the absence of an agreement between the EU Member States and the UK, the refund procedure in effect today might no longer be valid and the EU companies might no longer be able to transmit the claims through their own country’s portal. After this date the EU companies might have to submit the claims directly to the UK authorities, in accordance with their terms and conditions. In this situation, the deadline to file a claim might no longer be the 30th of September 2019. Thus, if your company wishes to file a reimbursement claim for expenses incurred in the UK for 2018, we recommend to proceed with the submission before 28/02/2019.

In order to prevent VAT fraud, the Council has agreed with the proposal that will allow, until 30 June 2022, Member States that present 25% of VAT gap due to carousel fraud to introduce the generalised reverse charge mechanism on domestic supplies of goods and services above a threshold of 17 500 EUR per transaction.

Among other requirements, these Member States will have to establish appropriate electronic reporting obligations on all taxable persons, specifically to those whom the reverse charge mechanism will apply.

The new Annual VAT Return form and corresponding instructions were approved on Protocol No. 10659/2019.

Ruling Answer No. 60/2018 was published and clarified that transfer pricing adjustments may be subject to VAT when the following conditions are met:

• There is a consideration;

• The specific supply of goods or services to which the consideration refers to is identified; and

• There is a direct link between the consideration and the supply of goods.

Ruling Answer No. 69/2018 was published, clarifying that transfers of emission allowance qualify as supplies of intangible rights and constitute supplies of services under article 3(2)(2) of the Italian VAT Law and therefore, are subject to the standard VAT rate of 22% and to the reverse charge mechanism provided by article 17(6) of the Italian VAT Law.

The Council Directive 2016/1065/EU, on the treatment of vouchers has been implemented and entered into force on 1 January 2019.

The Legislative Decree No. 141 entered into force on 29 December 2018, implementing the Council Directive 2016/1065/EU, on the treatment of vouchers, for vouchers issued after 31 December 2018.

The most important changes of the Slovenian VAT Act are summarized below:

• The Council Directive 2016/1065/EU, on the treatment of vouchers was implemented and is applicable as of 1 January 2019;

• In case of transactions with immovable property, the submission of the statement to opt for taxation is no longer necessary. Applicable from 1 December 2018, a taxable person must, upon request of the tax office, prove the existence of a written agreement on the taxation of the transaction with immovable property concluded before the transaction.

• Effective from 1 January 2019, in case a supplier doesn’t exceed the annual threshold of 10 000 EUR of provision of telecommunication services, broadcasting services and electronically supplied services, he may opt to keep his Member State of establishment the place of supply;

• From 1 January 2019, the interest rate in case of applying the Articles 88.b and 88.c is 3 % per year. If after the late submission of the VAT return the tax office establishes that the conditions for self-disclosure are not fulfilled, the return will be rejected in the part referring to interest, and the interest will be calculated according to the delay interest rate from the Tax Procedure Act.

The application of the reduced VAT regime to the islands of Lesbos, Chios, Samos, Kos and Leros has been extended until 30 June 2019.

The VAT grouping regime is effective from 1 January 2019 to taxable persons that opted for it until 15 November 2018.

In this context, Circular No. 19/E provides further clarifications on the application of this regime, including the conditions and procedure that must be followed in order to apply for it. It also contains clarifications of the effects of the regime with respect to transactions carried out between members of the same VAT group and between a member and third parties, and also provides an explanation on the role and duties of the representative of the VAT group.

Ruling Answer No. 69/2018 was published, clarifying that transfers of emission allowance qualify as supplies of intangible rights and constitute supplies of services under article 3(2)(2) of the Italian VAT Law and therefore, are subjected to the standard VAT rate of 22% and to the reverse charge mechanism provided by article 17(6) of the Italian VAT Law.

The Council Directive 2017/2455, on the VAT rules of eCommerce had been implemented via the amendment of the Value-Added Tax Consolidation Act 2010.

Effective as of 1 January 2019, the amount of excise duty applied on beer will, in fact, be 2,99 EUR, per hectolitre.

The Treasury issued the Value Added Tax (Supplies of Electronic, Telecommunication and Broadcasting Services) Order 2018 which amends the Value Added Tax Act 1996 and introduces the following changes, which are effective from 1 January 2019:

• The VAT-registered businesses that are not established in the Isle of Man or in the European Union and that make supplies of digital services to customers in the European Union are allowed to join the VAT Mini One Stop Shop (MOSS);

• The companies, whose sales of digital services across the European Union do not exceed a threshold of 8 818 GBP in the current and preceding year, may apply the VAT rules of their home country, instead of those of the country where their customers are located.

The Public Revenue Authority provided clarifications on the recording and issuance of invoices in other currencies than euros, stating that although companies’ accounts will be kept in euros, the amounts stated in the invoices can be in any official currency, provided that the VAT is expressed in euros.

Through the Law Principle No. 10/2018, the Italian Tax Authorities clarified that, in the context of a transaction where the goods are first delivered from Italy (Member State “A”) to a taxable person in another Member State (Member State “B”) for processing these goods, before being delivered to their purchaser’s final destination (Member State “C”), this transaction is qualified as an intra community delivery from Member State “A” to Member State “C” if:

• The purchaser is registered for VAT purposes in the Member State “B” (where the processing takes place);

• The goods have, as final destination, the Member State “C” (where the customer is established) and not the Member State “B” (where they are processed); and

• The transfer of ownership of the goods takes place in the Member State “C”.

Effective from 1 January 2019, the threshold to qualify as a small taxpayer is 5 135 000 PLN (1 200 000 EUR) of annual turnover, including VAT. However, for agents and commissionaires, this threshold is 193 000 PLN (45 000 EUR).

Due to delays in the legislative process, the bill integrating the VAT Directive on VAT obligations for supplies of services and distance sales of goods (Directive 2017/2455) and the VAT Directive on the treatment of vouchers (Directive 2016/1065) will only enter into force later in 2019. Nonetheless, the General Tax Directorate confirmed that these Directives will have direct effect in the Czech Republic.

Circular No. 20/E was published and it clarifies that supplies of drafting contracts related to shows in theatres, concerts, circus and other itinerant shows are subject to a reduced VAT rate of 10%.

Two acts have been signed by the President, which became effective on 1 January 2019:

• Official Gazette No. 2392/2018 - The 23%, 5% and 8% VAT rates will continue to be applied.

• Official Gazette No. 2433/2018 – implementation of the Voucher Directive.

Council Implementing Decision (EU) 2018/2077 of 20 December 2018 has granted Belgium an authorization to continue to exempt from VAT those taxable persons whose annual turnover is no higher than EUR 25 000. The authorization has been granted until 31 December 2021.

The Upper Tribunal reviewed the case of VAT exempt payment charges for card handling services carried out by an intermediary. The Upper Tribunal explained that the Business Brief, issued by the HMRC, was clear and unambiguous and gave rise to a legitimate expectation of VAT exemption of those charges and for this reason it would be an abuse of power for HMRC to assess VAT on the relevant supplies.

Council Implementing Decision (EU) 2018/2060 of 20 December 2018 has granted Germany an authorization to continue applying the derogation of the articles 168 and 168a of the EU VAT Directive, allowing for this reason Germany to exclude the right to deduct the input VAT incurred in the purchase of business goods and services which are more than 90% used for non-business purposes. The extension of the derogation has been granted until 31 December 2021.