All the latest stories from the world of international and cross-border VAT.
As outlined during the UK’s recent budget, HMRC are currently holding a consultation for comments on their plan to remove the use and enjoyment provisions that currently apply to telecommunication services for private consumers.
At the moment, if a UK consumer uses or enjoys a telecommunication service outside of the EU then that supply is not subject to UK VAT. This is because the “use and enjoyment” rules deem the supply to be outside the scope of UK VAT. Under the UK’s proposed new legislation though from 1 August 2017, that supply will become subject to UK VAT.
The EU’s Economic and Monetary Affairs Committee has voted by a majority of 48 to 1 (with 2 abstentions) to back an EU Commission proposal for e-books to be subject to the reduced rate of VAT.
As mentioned in our previous news article, supplies of physical books may be subject to the reduced rate of VAT (including a zero rate in some countries, like the UK) but the standard rate applies to e-books. The EU’s rapporteur Tom Vandenkendelaere stated after the vote that:
Following the introduction in 2015 of credit notes as a means of correcting certain types of transactions, the Greek Government has issued several clarifications on the matter in a circular letter published recently.
The circular letter issued by the government states that credit notes can be issued in relation to transactions prior to 2015 but only if they do not exceed the statute of limitation time limit (5 years).
The Brazilian supreme court recently confirmed a decision to remove taxes including VAT on supplies of e-books and e-readers.
While e-books are taxed at a standard VAT rate in the country, physical books are exempted (i.e. not subject to VAT) so there is a discrepancy much like in the EU. A trial began in September 2016 to discuss whether e-books should receive the same treatment as paper books.
In February 2017, we announced that Estonia had requested an authorisation to raise its VAT registration threshold from EUR 18,000 to EUR 40,000.
Following up to the request, the Council of the European Union has given the go ahead to Estonia’s government to increase its VAT registration threshold for small business to EUR 40,000 in turnover.
The French VAT legislation requires taxable persons that have the obligation to register for VAT but are neither established nor have a fixed establishment in the European Union to appoint a fiscal representative.
However, countries that have concluded mutual assistance agreements aimed at recovering tax claims with France are included on a “white list” meaning that taxable persons established in these countries are not required to appoint a fiscal representative should they be required to register for VAT in France.
During the presentation of its fiscal plan for 2018 – 2020, Iceland has announced its intention to reduce the standard VAT rate from 24% to 22,5% with effect from 1 January 2019.
The measure is part of a broader plan presented by the Minister of Finance and Economic Affairs aimed at boosting investments in infrastructure and simplifying the countries tax system.
After a publication from the Italian tax authorities on 26/03/2017, it has been now confirmed that a new quarterly VAT return (Comunicazione IVA trimestrale) must be submitted in 2017 with first deadline on 31/05/2017.
Everyone must submit this new return with the only difference that quarterly filers must submit only one form for the quarter, when monthly filers will have to submit three forms referring to each month of the quarter. This new return will include the following information:
The UK spring budget has seen the Chancellor announce new measures for tackling VAT avoidance and evasion, together with an increase in the registration and deregistration thresholds.
One of the measures is in regards to the removal of the use and enjoyment provisions for business to consumer mobile phone services. The rationale for this change is that it will resolve the inconsistency where UK VAT is applied to mobile phone use by UK residents when in the EU, but not when outside the EU. Instead, UK VAT will apply to all charges for the services. It will also ensure mobile phone companies cannot use the inconsistency to avoid UK VAT and bring UK VAT rules into line with the internationally agreed approach. Further details on this should be published shortly.
The Belgian Minister of Finance, Johan Van Overtveldt, has announced that taxpayers currently making quarterly prepayments for Value Added Tax (VAT) will no longer need to do so from 1 April 2017.
Instead, there will be a requirement for one prepayment for the 4th quarter due on 20th December which is equal to the VAT paid in the 3rd quarter.