The UK Autumn Budget was announced on 22nd November 2018.
All the latest stories from the world of international and cross-border VAT.
Further to our earlier story and in line with what the EU commission announced in its VAT action plan on 7th April 2016, (to combat fraud on taxation, especially in the e-commerce sector and have better cooperation with Non-EU countries) a new proposal between the European Union and the Kingdom of Norway was published on 26th October 2017.
The Agreement covers administrative cooperation in the field of VAT between the tax administrations of the EU Member States and Norway. It will facilitate cooperation between Tax Authorities which will be legally allowed to share data and instruments to combat fraud and assist on recovery cases.
The Dutch Tax Authorities are looking to narrow the scope of medicines which are subject to the 6% reduced VAT rate.
The qualification as “medicine” in respect of the VAT treatment to apply depends on whether a product is presented to consumers as “medicine”.
In this context, products like toothpastes that contain sodium fluoride as well as sunscreens with UVA and UVB filters have previously been ruled by the Dutch Supreme Court to be “medicine” for the purpose of the 6% reduced VAT rate. As a result, it is likely the Dutch VAT rules will be redrawn to limit the scope of products which can apply the reduced rate of VAT.
The recently published Dutch coalition agreement has set out that there will be an increase the reduced VAT rate from 6% to 9%.
The reduced VAT rate applies to, among other products and services, food and non-alcoholic drinks, medicines, books, newspapers and magazines, agricultural and horticultural seeds. It is expected that this increase will have effect from January 2019.
As mentioned in our earlier story, HMRC have been making a concerted effort to combat fraudulent activities and VAT loss linked to the e-commerce market.
Subsequently, the government announced that it would introduce the Fulfilment House Due Diligence Scheme (FHDDS). This new measure, which is part of 2017 Finance Bill, will try to tackle the issue of goods being imported into the EU followed by a sale to customers in the UK but without VAT being declared on that sale.
Further to the publication on the 6th of July 2017, regarding the introduction by France of an anti-VAT fraud software, the French tax authorities have decided to amend this requirement in order to simplify it.
This amendment will be the subject of a new legislation which will be published by the end of the year.
Part of the Portuguese 2018 budget presented to the Assembly on 13 October 2017 included an amendment to the retail export scheme, also known as “Tax Free Shopping.”
The VAT retail export scheme allows non-EU travellers (or EU emigrants) departing from the EU a refund of VAT charged on certain goods bought while visiting Portugal.
The amendment mentioned in the budget was that from 1st of January 2018 the threshold to qualify for this exemption will be reduced from EUR 75 to EUR 50.
Its anticipated that the Norwegian Tax Authorities will be introducing SAF-T reporting for VAT registered businesses with effect from 1st January 2018.
This requirement will apply to any business with more than NOK 5 million in turnover or which has more than 600 documents. Additionally, if a business has their bookkeeping information available electronically then there will also be a requirement to submit SAF-T, even if that business is below the threshold.
The European Commission has published information on a new set of reforms to the current EU VAT framework, with the aim of tackling tax evasion and reducing friction for businesses that trade cross border.
The current VAT system was designed and implemented alongside the creation of the EU Single Market, with the view of introducing a harmonised VAT framework that was supposed to address the free movement of goods and services by:
On 12th October 2017, the Norwegian government presented its proposals for the 2018 budget announcing an increase of the super reduced rate from 10% to 12%.
The super reduced rate applies to cultural services, i.e. cinema admission, museum admission and hotel accommodation, and public transport. If the proposal is finalised then the increase would come into effect from 1st January 2018.