In its judgment in the legal case Morgan Stanley (C-165/17), the ECJ commented on the calculation of the deductible proportion from general costs. The decision is interesting for reasons beyond the financial services sector, as the ECJ makes generally applicable statements. It concerns the deductible proportion of an establishment rendering taxable output transactions in a Member State; this establishment also uses input supplies for internal supplies to its principal establishment located in another Member State. The principal establishment itself renders taxed and VAT-exempt output transactions.
On 4 December 2018, the ECOFIN adopted the so-called Quick Fixes, to operate as of 1 January 2020. The regulations on chain transactions are one central and long-awaited component thereof. However, the new Art. 36a EU VAT Directive only concerns itself with chain transactions within the EU and further restricts itself to cases in which an intermediate party orders the transport. There are no regulations on chain transactions with third countries or regarding cases where the first supplier or the last recipient orders the transport. In any event, companies must now use the time remaining until the end of the year to adapt their processes to the new regulations.
On 4 December 2018, the ECOFIN adopted the so-called Quick Fixes, to operate as of 1 January 2020. These also include an EU-wide simplification rule for consignment stock cases. Standardisation and simplification are of course to be welcomed. However, it should be noted that the recent case law of the Federal Fiscal Court remains applicable. In addition, entrepreneurs must consider how the various requirements can be fulfilled in practice on a permanent basis. Alternatively, they will have to consider whether and how to actively deselect the application of the simplification rule in order to avoid inconsistencies.
Since 4 December 2018, the Member States have been free to apply the reduced VAT rate to e-books. In our opinion, applying the reduced VAT rate should now be considered mandatory. E-book suppliers would, in particular, benefit. If they have agreed upon gross prices with their customers, the reduced VAT rate increases their margin. Taxable persons, such as libraries, universities or other public institutions, which are often not entitled to input VAT deduction for the purchase of electronic publications from abroad but have to pay VAT (reverse charge scheme), would also benefit. However, the changed legal situation can pose new VAT challenges e.g. in instances where the various contents of databases are to be treated differently.
On 4 December 2018, the ECOFIN adopted the so-called Quick Fixes, to oper-ate as of 1 January 2020. In the KMLZ Newsletter 01/2019, we introduced the new regulations for intra-Community supplies. This newsletter follows on from the changes to the documentary evidence that will also come into force on 1 January 2020. In future, sec 45a para 1 of the Council Implementing Regula-tion will contain a presumption rule in favour of the taxable person. The respec-tive tax authorities may rebut the presumption. In principle, the new regulation applies uniformly and directly throughout the EU.
On 4 December 2018, the ECOFIN adopted the so-called Quick Fixes, to operate as of 1 January 2020. The Quick Fix on intra-Community supplies of goods sees the purchaser’s VAT-ID-No. of another Member State than the Member State of departure as being a mandatory requirement for zero-rating. This will also apply to intra-Community transfers of goods, which are deemed to be supplies of goods. However, the VAT Directive does not stipulate input VAT deduction from intra-Community transfers of goods subject to VAT. Therefore, many business transactions, entered into in accordance with Art. 17 para 2 of the VAT Directive, which are usually outside the scope of VAT, are now threat-ened with a definitive VAT burden, if the requirements of the Article can no longer be met.
Some people might use their free time over Christmas and the turn of the year to go to the mountains or perhaps book their next summer holiday. The man on the street will not worry about the VAT. However, those interested in VAT might ask themselves whether their travel agency charges them VAT at the standard rate or at the reduced rate, or whether the margin scheme applies. In any case, the ECJ recently dealt with these and other exciting issues concerning the travel industry in the legal case Alpenchalets Resort and Skarpa Travel.
Until now, the BGH had held the view that input VAT amounts must, in general, not be taken into account when assessing VAT evasions due to the so-called “prohibition of compensation”. Since balancing was thus not permitted, the perpetrator’s claim for reimbursement against the tax office, on the basis of justified input VAT claims, could not eliminate the offence of tax evasion. The BGH has now abandoned the across-the-board application of this case law in favour of a balancing of input VAT and value-added tax, in certain cases.
The British Treasury’s “Making Tax Digital“ project introduces the digital filing of VAT returns. In future, VAT returns will have to be prepared without any manual work and will only be capable of being transmitted via a particular interface. The requirements will be tightened in three waves between April 2019 and April 2020. Taxable persons not established in the UK will be affected as from October 2019 and should now prepare accordingly. KMLZ offers a VAT returns filing service via software with a digital API. This API enables the digital data flow specifications to be fulfilled.
The current ECJ judgment in the legal case baumgarten sports & more GmbH is a welcome relief for taxable persons as regards transactions involving payment by instalments (ECJ, judgment of 29.11.2018 – C-548/17). Even if taxable persons are subject to taxation based on agreed consideration, they will, in the future, be able to avoid having to pay VAT en bloc to the tax office at the time the (first) supply is rendered. Therefore, under certain conditions, the supplying taxable person will no longer have to pre-finance VAT in the case of such transactions.