The practical implementation of the Quick Fixes 2020 is currently the number 1 VAT topic for most companies and their tax advisors. The fact that a draft of the German law already exists for this is certainly beneficial. However, there are a number of detailed questions that make implementation difficult. It is therefore helpful that the EU has published draft Explanatory Notes following discussions in the VAT Expert Group and the Group on the future of VAT. These are not binding. However, it is to be hoped, that the Member States and their tax administrations will follow these guidelines.
In this context, we would also like to draw your attention to our series of seminars on quick fixes, in which we address the various issues in detail. There are still places available for Frankfurt and Hamburg.
PORTUGAL postpones requirement of certified invoicing software +++ LITHUANIA implements Reverse Charge for mobile phones +++ NORWAY implements SAF-T +++ UK postpones Reverse Charge for construction services +++ POLAND publishes White List of taxable persons and postpones replacement of VAT return by SAF-T +++ CROATIA reduces VAT rate for hospitality and standard VAT rate +++ JAPAN reduces standard VAT rate +++ SAUDI-ARABIA waives obligation of fiscal representative for non-residents +++ CZECH REPUBLIC plans implementation of a general Reverse Charge
The Federal Ministry of Finance has suggested changing the German VAT regulations as regards VAT groups (Federal Ministry of Finance, key issue paper of 14 March 2019). One significant proposed innovation is that the legal consequences of group taxation will only occur after the group members have submitted a joint application. By means of these and other innovations, there is finally the prospect of more legal certainty for the taxpayers concerned. It is therefore to be hoped that the German legislator will soon implement the Federal Ministry of Finance’s proposal.
The ECJ’s decision in baumgarten sports & more GmbH (see KMLZ VAT Newsletter 52/2018) served to provide the German Federal Fiscal Court with guidelines on the incurrence of VAT in payment by instalment transactions. The case concerned a professional football player agency. Nevertheless, the decision impacts on almost all businesses where payments by instalment agreements play a role. With the now published decision, the German Federal Fiscal Court follows the requirements set up by the ECJ. For taxable persons, recommendations for action concerning national practice can be drawn from this decision.
In a decision subsequent to the ECJ decision A & G Fahrschul-Akademie (C-449/17), the Federal Fiscal Court ruled that driving lessons are not exempt from VAT (Az: V R 7/19). In so doing, the Court confirmed, for the very first time, its acceptance of the narrower definition of “tuition”. Although the decision itself is not surprising, the restricted interpretation will have far-reaching consequences for those educational services which have, “traditionally”, been exempt from VAT. The judgement corresponds to the legal reorganization of educational services planned for 01.01.2021 and is thus important for all suppliers.
The Federal Ministry of Finance recently published the German Tax Accounting Standards (GoBD) (please see KMLZ Newsletter No. 33/2019). These new principles also provide basic instructions as regards the requirements for internal control, which play a key role in tax compliance.
On July 11, 2019 the German Federal Ministry of Finance published the final version of the revised Circular on the principles for the orderly keeping and retention of books, records and documents in electronic form and for data access. The revision has become necessary in order to update the Circular, which has now been valid for almost 5 years, to reflect technical developments and to eliminate the resulting legal uncertainties. In particular, there are simplifications in the area of digitisation of documents and conversion of electronic documents as well as the keeping of electronic records abroad. At the same time, the importance of procedural documentation is being brought further into focus.
What is the extent of the direct and immediate link, which must exist between an input supply and a taxed output supply, in order for a taxpayer to be entitled to input VAT deduction from the input supply? The German Federal Fiscal Court had the opportunity to comment on this question - following on from the ECJ’s case law in Iberdrola and Sveda. However, it decided to flip the matter over Luxembourg and - in addition to two further questions - refer the question regarding the link to the ECJ (Ref.: XI R 28/17). Even if the Federal Fiscal Court has not committed itself, this referral can be seen as a positive sign that it may, in the future, be prepared to broaden the concept of what it considers to be a direct and immediate link. This opens up new sources of input VAT for taxpayers – especially in the case of infrastructure construction works.
PORTUGAL obliges to register in central register of beneficial owners and extends deadline for application of certified invoicing software +++ HUNGARY allows input VAT deduction before registration +++ CHILE stops introduction of digital tax +++ GREECE plans real-time reporting of invoices +++ AUSTRIA plans tax on digital advertising revenues and postpones introduction of margin scheme on B2B travel services +++ POLAND publishes new draft law on split payment and postpones introduction of new SAF-T +++ SLOVAKIA reduces VAT rate for accommodation services
After criticism from the associations, the Federal Ministry of Finance has, by the publication of its letter of 18.06.2019, once again, amended section 8.1 of the German VAT Circular as regards the zero-rating of the supply of goods and services for sea-going vessels and aircrafts. The question as to whether the vehicle already exists and whether the zero-rating applies will no longer be a question of launching the vehicle, but of acceptance by the customer. The Federal Ministry of Finance had only introduced the launching date as the decisive date for the existence of a sea-going vessel into the German VAT Circular in its letter of 05.09.2018.