AUSTRIA simplifies burden of proof for intra-Community triangular supplies +++ BELGIUM is to abolish advance payments if quarterly VAT returns are filed +++ FRANCE may raise its standard VAT rate +++ HUNGARY is chang-ing its mandatory invoice requirements +++ ITALY is implementing quarterly VAT returns and is postponing an increase to its VAT rate +++ NORWAY is implementing the reverse charge mechanism for import VAT +++ POLAND is implementing automatic deregistration and further penalties +++ ROMANIA to lower standard VAT rate +++ SPAIN is expanding electronic reporting obligations +++
The fiscal authorities have worked on the application bulletin regarding the revision of sec. 2b German VAT Act for nearly one year. Although the German Ministry of Finance follows the previous case law of the German Federal Fiscal Court, the fiscal authorities are visibly attempting to lessen the significant effects of the resulting changes. This has culminated in the taxable person having to know what he does according to the “principles of administrative legality”. Even if the public sector still has five more years to adjust, it remains a lot of work. Corporations of public law are now in the main focus of taxation.
In the EU Commission’s view, the existing rules for e-commerce are too complex and are therefore to be simplified. It proposes abolishing the threshold for distance sales and to instead extend the scope of the application of the Mini-One-Stop-Shop. Accompanying amendments applying to distance sales from third countries to the EU are planned, including VAT exemption for imports up to the value of EUR 150. Meanwhile, VAT exemption for the importation of small consignments (EUR 22), is to be abolished. Furthermore, simplifications for both distance sales and electronically rendered supplies of services are to be implemented, particularly a minimis threshold. Last but not least, the reduced VAT rate should be applicable for the supply of e-books.
Some legislative amendments, which primarily apply to the formal law but will also impact on VAT, will enter into force by the turn of the year. The threshold for invoices for small amounts will be increased from EUR 150 to EUR 200. A shortened retention period of delivery notes is also planned. Whether the latter will be implemented is not yet clear, due to the reluctance of the German Federal Council. The deadline for filing annual VAT returns will be extended until 31 July of the following year, for tax consulted businesses, until the end of February of the second following year. Accompanying this, penalties for late filing will be tightened
BULGARIA demands security deposit for fuel supplies +++ FRANCE eliminates prefinancing of import VAT +++ ITALY plans voluntary self-disclosure and offers invoices to be issued by the authorities +++ THE NETHERLANDS plans simplification on VAT refunds due to bad debt +++ POLAND requires security deposit for VAT registrations +++ ROMANIA reduces standard tax rate +++ SLOVAKIA pays interest input VAT refunds +++ CZECH REPUBLIC regulates input VAT correction in the case of insolvency +++ HUNGARY grants EKAER simplification for AEO
The German Federal Fiscal Court has recently decided that a US American operator of online communities is subject to VAT in Germany. The plaintiff’s services were partially rendered by staff members. Nevertheless, the Federal Fiscal Court regarded plaintiff’s services as being rendered electronically. This decision should catch every entrepreneur’s attention. They should examine whether they render electronically supplied services. If yes, the services could be subject to VAT abroad.
On 15 September 2016 the ECJ published two fundamental judgments. As a result, the German fiscal authorities, as well as the tax courts, now need to rethink many cases. The previous formalism associated with the issuing of invoices will be considerably reduced in the future. The requirement to pay interest as a result of formal invoice errors will become a thing of the past. Companies, that were denied VAT deduction in the past, due to formal invoice errors, now have the chance to reclaim the interest paid. However, these judgments do not mean a carte blanche approach to invoices. Rather, they will assist in containing the excessive formalism. It may take some time before an official reaction from the fiscal authorities is forthcoming. However, taxpayers should immediately seize the opportunities afforded them by the judgments.
From time to time, taxable persons find themselves accused of being involved in VAT carousels. The tax court in Baden-Wuerttemberg recently granted a suspension of enforcement to such a taxable person. If there is VAT fraud in a supply chain, denying the input VAT deduction for every purchase in the chain is more than the principle of neutrality requires. Furthermore, the suspension was granted, as the enforcement of the VAT assessments would have resulted in significant financial hardship for the Applicant.
The Federal Fiscal Court has recently amended its case law regarding VAT groups and has decided that a partnership may be a controlled company. The heads of unit regarding VAT have discussed the judgments and the results have now been published by the Upper Tax Authority Frankfurt/Main. Fundamentally, the decisions are unlikely to be generally applicable. Right now, the tax authorities only recognize a GmbH & Co. KG, which is completely controlled by a person, as a part of a VAT group.