EU Member States begin to end the state of emergency for COVID-19 and remove business VAT measures.
Governments in Member States are ending the state of emergency for COVID-19, and in turn, removing tax measures and exemptions put in place to assist businesses through this global pandemic.
COVID-19 and VAT Measures
During this unprecedented time, industries and workforces came to a standstill as EU Member States introduced lockdown measures. Governments set about helping businesses through the COVID-19 crisis with tax measures and exemptions ensuring that they kept afloat. These measures included, amongst other support:
- Delaying VAT payments; and
- Postponed VAT filing deadlines.
Both deferral measures applied either automatically or through an application process. Typically for the EU, there was no uniform approach taken by Member States. As a result, this created a myriad of information and processes to understand. We tracked the continuous updating of these measures here.
As we start to come out of lockdown measures and the economy starts to pick up, businesses need to:
- Set-up previously cancelled direct debits to avoid late payment penalties; and
- Include deferred VAT payments in your cash-flow forecast.
Businesses need to remember to set-up direct debits they cancelled when applying VAT deferrals across the EU. For example, the UK Government allowed all VAT registered businesses to defer VAT payments due between 20 March 2020 and 30 June 2020 up until 31 March 2021. In doing so, businesses cancelled any direct debits in place. Therefore, it is important to reinstate this before the next VAT payment is due. Otherwise a late payment could be subject to penalties.
Furthermore, whilst businesses continue to make their on-going VAT payments across the EU, they should also be factoring in deferred VAT payments into their cash-flow forecast. Businesses need to make these deferred payments on time to prevent any late payment penalties and interest. Tax authorities may not necessarily issue reminders for these payments. So, it will be the responsibility of the VAT registered business to ensure they make the payment on time.
How We Can Help
We provided a brief summary of tax authorities COVID-19 VAT business measures here. However, this information alone should not be replied upon. It will be responsibility of your business to track any deadlines and ensure VAT payments are made on time.