EY VAT News week to 16 October 2017

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1 Click here to view online EY VAT News week to 16 October 2017 Welcome to the latest edition of EY VAT News, which provides a roundup of indirect tax developments. If you would like to discuss any of the articles in more detail, please speak with your usual EY indirect tax contact or one of the people below. If you have any feedback or comments on EY VAT News, please contact Ian Pountney. Previous editions of EY VAT News can be found here. In this edition: Brexit European Union and United Kingdom engage with World Trade Organisation members on certain issues arising from the UK's withdrawal from the EU European Union (Withdrawal) Bill Court of Justice of the European Union Opinion: Arrangements with creditor results in a requirement to reduce recoverable VAT Judgment: VAT can be adjusted on termination of a lease due to a breach of contract Calendar update Referrals Supreme Court Latest appeal updates Associated Newspapers Limited Upper Tribunal VAT on legal fees incurred in the course of defending a company director is not recoverable VAT recovery denied due to insufficient evidence of a taxable supply First-tier Tribunal Agent is entitled to recover VAT paid in error on imported goods HMRC Material VAT: apply for Simplified Import VAT Accounting (SIVA1) updated Customs Information Paper 23(2017): questionnaire CCG1a Soft Drinks Industry Levy: Draft legislation - Consultation EY Global Tax Alerts Ireland - Budget 2018

2 Cyprus Supreme Court imposes custodial sentence for Directors VAT liability Uruguay Accountability Law enacted UAE Large taxpayers to register for VAT by 31 October 2017 Belgium Introduction of option to charge VAT on real estate Germany Amendments to the VAT position for call-off stock Italy Simplification for Intrastat returns European Council Member states confirm the creation of a European Public Prosecutors Office Brexit European Union and United Kingdom engage with World Trade Organisation members on certain issues arising from the UK's withdrawal from the EU On 11 October 2017, The European Union and the United Kingdom sent a joint letter to all members of the World Trade Organisation (WTO), setting out their intended approach to certain WTO issues arising from the UK's withdrawal from the EU. The letter is the result of a dialogue that the EU has been engaging in with the UK over the past months, covering WTO issues such as trade in goods, services and government procurement. The dialogue, which is outlined in European Council guidelines and the Council's negotiating directives, aims at ensuring that the UK honours its share of the international commitments it has contracted into in the WTO during its EU membership, and at organising an orderly withdrawal in this respect. It marks the start of a cooperative and transparent engagement by the EU and the UK with all members of the WTO. When the UK leaves the EU, it will have its own separate schedules of commitments. Among other things, these schedules indicate the maximum tariff rates that can be applied to each specific type of imported product and the quantities of each product that can be imported duty-free or with a duty discount, known as tariff-rate quotas (TRQs). It is therefore necessary to address both the EU's and the UK's commitments regarding these quotas. The letter states that both sides intend to follow a common approach regarding existing EU TRQs and intend to apportion these quotas to reflect current trade flows in order to ensure that, after the UK's withdrawal from the EU, WTO members maintain exactly the same level of access as they enjoy now. The EU and UK will also follow a common approach regarding the ceilings on domestic subsidies for agriculture. This is without prejudice to the position the EU might take on other traderelated matters. Comments: The BBC has reported that seven nations, including the US and Canada, have already made it clear that they think the plans detailed in the letter will put them at a disadvantage. Whilst their objections to the specific proposals on tariff rate quotas doesn t mean that they will be unwilling to do deals, it is a reminder that they can be expected to negotiate vigorously to promote their own national interests. For further information please contact Andy Bradford European Union (Withdrawal) Bill The House of Lords Delegated Powers and Regulatory Reform Committee has published its first report on the European Union (Withdrawal) Bill, drawing attention to the excessively wide law-making powers the Bill gives to Ministers and recommending that Ministers should not have an unfettered discretion over whether wide-ranging secondary legislation should be subject to the full scrutiny of the affirmative procedure or the less robust negative procedure.

3 The Committee also found that: The Bill gives Ministers excessively wide legislative powers beyond what is necessary to ensure UK law works properly when the UK leaves the EU The Bill contains unacceptably wide Henry VIII powers, including allowing the Government to amend the Bill itself by statutory instrument Ministers should not have the power to impose taxation by statutory instrument, and in no circumstances should fees and charges be levied by tertiary legislation Whatever powers the Government decides to transfer to the devolved institutions in Scotland, Wales and Northern Ireland, this should be done by means of separate Bills. Issues of such constitutional importance should not be left to secondary legislation For further information please contact Andy Bradford Court of Justice of the European Union Opinion: Arrangements with creditor results in a requirement to reduce recoverable VAT C-396/16 T-2 On 12 October 2017, the Court of Justice of the European Union (CJEU) delivered the opinion of Advocate General Saugmandsgaard Øe (AG) in this Slovenian referral, asking various questions concerning whether arrangements with creditors, which have been approved by judicial decree, result in a requirement to adjust the amount of input VAT to be deducted. T-2 (insolvent) is a company established in Slovenia which supplies electronic communication equipment and services. Under a procedure aimed at alleviating the liabilities of insolvent debtors, T-2 entered into an approved arrangement under which it was required to pay its creditors an amount corresponding to 44% of its debts. At the request of the tax authorities, T-2 provided a list of its suppliers invoices which fell within the terms of the arrangement and on which it had previously recovered the VAT. The tax authorities concluded that T-2 must make an adjustment so as to reduce by 56% the VAT initially deducted on these supplies. Referring the case to the CJEU, In essence the national court questioned whether the transposition into national law of Articles 184 and 185 of the VAT Directive, allows the tax authority to demand an adjustment to VAT previously deducted where the taxable person has benefited from a reduction in its liabilities to its creditors. The AG has opined that where the taxable amount has been adjusted by the creditor pursuant to Article 90(1), which is for the national courts to determine, it follows that a reduction in the liabilities of an insolvent debtor resulting from an agreement with the creditor, constitutes a change in the factors used to determine the amount of VAT to be deducted. The tax authorities are entitled to demand a reduction to the recoverable VAT if and to the extent that the arrangement with the creditor entails a reduction in the taxable amount for VAT purposes. Comments: We await to see whether the CJEU follows the AG s opinion, in the meantime any business entering into an arrangement or agreement to reduce the value of a taxable supply, should ensure appropriate VAT accounting. Judgment: VAT can be adjusted on termination of a lease due to a breach of contract C-404/16 Lombard Ingatlan Lízing On 12 October 2017, the Court of Justice of the European Union (CJEU) released its decision in this Hungarian referral asking whether refusal of payment under Article 90(1) of the VAT Directive, includes circumstances where a lessor has terminated an agreement as a result of a breach of contract by the lessee, and whether the taxable amount due may be reduced, even if national legislation derogates from this provision.

4 Lombard Ingatlan Lizing (Lombard), entered into separate lease agreements for various immovable assets and on the date of making the assets available, accounted for VAT on the full value of the agreements. Subsequently, due to the lessee failing to make payment, Lombard terminated the lease agreements, recovered the assets and issued amending invoices reducing the VAT payable to the tax authorities. The tax authorities denied the adjustment to the taxable value, and corresponding VAT reduction, contending that national law derogates from Article 90(1) and the non-payment by the lessee constituted a non-payment per Article 90(2) which, by virtue of the derogation, provides for the exclusion of the adjustment to the taxable amount. The national Court referred the case to the CJEU to consider whether the terms used in Article 90(1) must be interpreted as including the case where the lessor has terminated a contract and can no longer seek payment and whether non-payment within the meaning of Article 90(2) includes the situation where payment cannot be made due to the contract being terminated. The CJEU held that the contract was terminated by Lombard and as a result Lombard took possession of the assets and was no longer able to seek payment against the agreements. Since the arrangement constitutes a permanent reduction in the consideration to be received, it cannot be categorised as a non-payment but rather a cancelation or refusal within the meaning of Article 90(1) - consequently allowing for an adjustment to the taxable amount. Whilst Article 90(2) allows member states to derogate from Article 90(1), it does so only in circumstances of total or partial non-payment ; not in circumstances of cancelation or refusal and where the assets are removed, as in the present case. Comments: Businesses involved in the leasing of assets, where an adjustment to the taxable value has not been made or has been refused in similar circumstances, may wish to consider the implications of the Courts decision in order to determine whether there is an opportunity to make a claim. More generally, as with C-396/16 T-2, the case is a useful reminder of the requirement to consider appropriate VAT accounting where there is a reduction in the value of a taxable supply. Calendar update Thursday 19 October 2017 Judgment - C-101/16 Paper Consult A Romanian referral, continuing a long-running theme of referrals from Eastern European EU Member States, concerning the right of input tax deduction in respect of transactions considered by the tax authorities to be suspicious, in the presence of irregular conduct on the part of the supplier (specifically, on this occasion, where the supplier has been declared inactive by the tax authorities). Judgment - C-303/16 Solar Electric Martinique - A French referral asking whether the sale and installation of photovoltaic panels and solar water heaters on buildings, with a view to supplying electricity or hot water to buildings, constitutes a single transaction that may be characterised as works of construction. Monday 23 October 2017 Hearing - C-500/16 Caterpillar Financial Services A Polish referral asking whether, following the interpretation of the CJEU in its judgment of 17 January 2013 in C-224/11, BGŻ Leasing sp. z o.o, the principles of effectiveness, sincere cooperation and equivalence expressed in Article 4(3) of the Treaty on European Union, or any other principle laid down in EU law, preclude national legislation or a national practice which precludes the refund of an overpayment resulting from the collection of VAT contrary to EU law where, as a result of the action of the national authorities, an individual was unable to exercise his or her rights until after the limitation period for the VAT liability had expired? Thursday 26 October 2017 Opinion - C-533/16 Volkswagen - A Slovakian referral asking whether Directive 2008/9/EC (VAT refunds to taxable persons not established in the member state of refund but established in another member state) and the right to a VAT refund must be interpreted as requiring the satisfaction of two conditions; The supply of goods or services and the inclusion of VAT on the invoice by the supplier? Is it possible for a taxable person who has not been charged VAT on an invoice to claim a VAT refund? Is it in accordance with the principle of proportionality or VAT fiscal neutrality for the time-limit for the tax refund to be calculated from a point at which not all the substantive conditions required to exercise the right to a tax refund were satisfied? Judgment - C-90/16 The English Bridge Union A UK referral from the Upper Tribunal asking, in the context of the VAT exemption for services closely linked to sport within Article 132(1)(m) of the VAT Directive, whether the activity must have a

5 significant physical element of performance or whether a game, such as contract bridge, with a predominantly mental element of performance, falls within the meaning of a sport (in other words, whether contract bridge is a sport for VAT purposes). Judgment - C-534/16 BB Construct A Slovakian referral asking whether the objective of Article 273 of the VAT Directive is to be interpreted as allowing the tax authorities to require the payment of a tax deposit, up to the value of EUR 500,000, in circumstances where the Director of the business is also a Director in another business with outstanding tax liabilities? Thursday 9 November 2017 Judgment - C-552/16 Wind Inovation 1 - A Bulgarian referral asking whether the second paragraph of Article 176 of the VAT Directive precludes an amendment to national law which provides for compulsory VAT deregistration of a business by reason of liquidation and the loss of the liquidator s right to decide whether the business should continue to be registered until its removal from the companies register? The referral also asks whether Article 176 precludes compulsory VAT deregistration where the business meets all conditions for compulsory re-registration for VAT, the business is party to current contracts and states that it has not ceased business and is carrying on an economic activity? If compulsory VAT deregistration is permissible under what circumstance can input tax be deducted on assets taxed upon deregistration? Judgment - C-499/16 AZ - A Polish referral asking whether national law which determines the VAT rate applicable to pastry goods and cakes based solely on the criterion of the use-by date and the best-before date, infringes the principle of VAT neutrality and the prohibition of unequal treatment? Referrals The CJEU website shows the following new referrals: A Danish referral - C-502/17 C&D Foods Acquisition asking whether Article 168 of the VAT Directive allows a holding company to deduct VAT, in full, on due diligence costs before an envisaged, but not completed, sale of shares in a subsidiary to which the holding company supplies management and IT services? The referral also asks whether the answer is affected where the price of the management and IT services is a fixed amount corresponding to the holding company s expenditure on employee salaries plus 10% mark-up and whether a right of deduction exists if the consultancy costs are regarded as general costs? An Estonian referral - C-475/17 Viking Motors and Others asking whether Article 401 of the VAT Directive precludes a national tax which applies generally and is proportionate to the price, but which, pursuant to the relevant provisions, is to be levied only at the stage of the sale of goods or services to a consumer, with the result that the final tax burden rests ultimately with the consumer, and which compromises the operation of the common system of VAT and distorts competition? A French referral - C-460/17 Valeriane asking whether the provisions of Article 17 of the Sixth VAT Directive (Article 168 of the VAT Directive) mean that in order to refuse a taxable persons right to deduct VAT on invoices corresponding to goods or services which the tax authorities establish have not actually been supplied, it is necessary to examine whether it has been established that the taxable person knew, or ought to have known, that the transactions were connected with VAT fraud? A French referral - C-459/17 SGI asking whether the provisions of Article 17 of the Sixth VAT Directive (Article 168 of the VAT Directive) mean that in order to refuse a taxable persons right to deduct VAT on invoices corresponding to goods or services which the tax authorities establish have not actually been supplied, it is necessary to examine whether it has been established that the taxable person knew, or ought to have known, that the transactions were connected with VAT fraud? Supreme Court Latest appeal updates Associated Newspapers Limited As previously reported, the Supreme Court has now confirmed that it has refused both HMRC s and Associated Newspapers Limited s (ANL) applications for permission to appeal the Court of Appeal's judgment. Permission to appeal has been refused

6 on the grounds that the applications do not raise arguable points of law of general public importance which ought to be considered at this time. This case concerns the VAT treatment of high street retailer vouchers given away to participants in ANL s sales promotion schemes. The Court of Appeal held, allowing ANL s appeal in part, that the free of charge supply of vouchers should not be subject to output tax and that input tax should be recoverable on vouchers purchased from intermediaries. However, allowing HMRC s appeal in part, the Court further held that there was no VAT incurred on vouchers issued directly by retailers and hence any notional VAT could not be recovered as input tax. This means that the Court of Appeal s decision is now final and businesses should consider the VAT treatment of any vouchers given away free of charge to customers, where this is done for a business purpose. For further information please contact Joanna Crookshank or Bryn Reynolds. Upper Tribunal VAT on legal fees incurred in the course of defending a company director is not recoverable HMRC v Praesto Consulting UK Limited The Upper Tribunal (UT) has released its decision in this appeal considering whether VAT was recoverable by Praesto Consulting UK Ltd (Praesto) on legal fees, which it paid, in relation to the defence of civil proceedings brought against a Director of Praesto. The invoices were addressed to the Director. The First-tier Tribunal (FTT) had allowed Praesto s appeal on the basis that if the legal supplies had not been supplied to defend the Director, Praesto was at serious risk of having to account for the profits of its past and future taxable activities. The FTT also considered that it was possible to argue that the legal services provided, limited any potential further liability arising from its taxable activities. On this basis, the FTT was satisfied that the legal supplies received had a direct and immediate link with Praesto s taxable business activities and the VAT incurred on these fees was therefore deductible. The UT has set aside the FTT s decision on the basis that it erred in law in distinguishing the facts of this case from those in the European Court decision of Becker. The UT held that at no stage, did the FTT make a finding that Praesto was entitled to the legal services or contractually obliged to pay for them. The fact that Praesto might benefit from the successful defence of the claim against the Director or, at a later stage, might become a party to the proceedings was not sufficient to support a conclusion that it had a contractual entitlement to the legal services in relation to the litigation against the Director. The UT also held that the fact that the invoices were addressed to the Director further supported the fact that Praesto was not a party to the litigation. On this basis, the UT held that there was no direct and immediate link between the supply of legal services and Praesto s taxable supplies or Praesto s taxable activity as a whole. Further, the fact that the legal fees would not have been incurred if Praesto had not undertaken its taxable activities was not in itself sufficient to support the conclusion that there was a direct and immediate link between the supply of legal services and the taxable activities of Praesto as a whole. On this basis, the UT held that VAT was not recoverable on the legal costs of defending the Director. Comment: In making its decision, the UT did not take into account the FTT decision in the P&O case on the basis that Becker, as a European decision takes precedent and further, that there were distinguishable facts in the P&O case. Businesses which have incurred similar costs may wish to review contracts and invoices to ensure that they reflect the economic reality of the supplies received and that any VAT incurred on costs has been recovered appropriately. VAT recovery denied due to insufficient evidence of a taxable supply Conor Robinson v HMRC The Upper Tribunal (UT) has released its decision in this appeal considering whether HMRC was entitled to disallow the recovery of VAT in the absence of evidence of the receipt of a taxable supply. Conor Robinson (CR), a road haulier, sought to reclaim VAT said to have been incurred by him on the purchase of fuel from Old Mill Services Ltd (Old Mill). HMRC had disallowed the claims on the basis that the invoices produced by CR to support the claims were not valid VAT invoices, a number of which were dated after the date on which Old Mill had been dissolved.

7 Dismissing the appeal, the First-tier Tribunal (FTT) held that none of the invoices relied on were valid VAT invoices due to various defects. Whilst it accepted that supplies of fuel had taken place, it had not been persuaded that the fuel had been supplied by Old Mill. On the balance of probabilities CR had not satisfied the FTT that there was alternative documentary evidence to the invoices, no evidence of receipt of a taxable supply from Old Mill and no evidence of payment to Old Mill. CR appealed the FTT decision on the grounds that it had made an error of law. CR contended that the legislative provisions, HMRC s policy and underlying case law requires there to be an examination simply of whether a taxable supply was made to CR. The question that the FTT should have determined was whether there was evidence of a supply to CR and payment for such a supply. He did not have to show that the supplies had originated from Old Mill or that payments had been made to Old Mill. There was a finding of fact by the FTT that the supplies took place and were paid for. Dismissing this latest appeal, the UT held that in its decision, the FTT had made a finding that there was no evidence of payment for the supplies of fuel. Consequently the appeal must fail as it is clear that CR could not satisfy the burden upon him to demonstrate that the six month statutory time limit for payment of a supply had been met, regardless of who the actual supplier was. Even if the FTT had erred in focusing on the identity of the supplier rather than on the question as to whether there had been a taxable supply, on the basis of the evidence before it, the FTT would inevitably have had to conclude that it had not been satisfied on the question of payment. The UT also concluded that even if CR was able to overcome the problem of lack of evidence of payment, HMRC would still need to be satisfied that the supply was made by a taxable person. Old Mill was clearly not a taxable person as it was dissolved at the relevant time. There was no evidence that the fuel supplied was chargeable to VAT and accordingly no basis on which VAT could have been claimed. Comment: This case demonstrates the importance of holding the appropriate documentary and accounting evidence to support VAT recovery. Businesses should review their process regarding VAT recovery regularly so as to ensure they are able to rebut any challenge. First-tier Tribunal Agent is entitled to recover VAT paid in error on imported goods TC Hemisphere Freight Services Ltd The First-tier Tribunal (FTT) has released its decision in this appeal concerning the recovery of VAT paid in error on imported goods. Hemisphere Freight Services Ltd (HFS), as agent for A-Sure Technology Co Ltd (A-Sure), imported goods into the UK and completed the required Customs Entry. Due to the use of an incorrect exchange rate, HFS requested a refund of the duty and VAT paid at import, submitting a C285 to effect the repayment. HMRC repaid the duty but refused to make payment of the VAT, advising that the VAT paid at import should be included as input tax on the importer s (A-Sure) VAT return, supported by the VAT C79. HMRC went onto explain that any money owing to HFS should be settled through A-Sure as a normal commercial transaction. At the request of HMRC, HFS received a disclaimer from A-Sure that it would not be recovering the VAT charged through its VAT return, however HMRC maintained its position to not repay the VAT charged. HFS challenged the decision, asking why a disclaimer had been requested if repayment of the VAT was still to be refused, it also pointed out that A-Sure had ceased to trade in the UK and that there was little prospect of receiving settlement of the VAT charged and that HMRC had been unjustly enriched. HMRC maintained its case that as the importer, A-Sure should reclaim the VAT on its VAT return and that this is the position as set out in both Public Notice and Customs Information Papers. VAT is only repaid to freight forwards and other agents where importers go into liquidation and as HFS had entered into a commercial contract with A-Sure its recourse is with it. The FTT considered that HFS had a legitimate argument in so much as that HMRC s conduct could be considered to infringe the principle of effectiveness. HMRC had enriched itself in that it had accepted that VAT was overpaid and should be refunded, but was not prepared to give proper effect to its obligation to refund it. It offered to allow A-Sure to treat the overpaid

8 VAT as input tax, but A-Sure had disclaimed it and due to ceasing to trade in the UK it was extremely unlikely to wish to go through the hoops, even if it was still able to, of reclaiming the amount overpaid. HMRC refused to repay HFS even though A- Sure had asked it to do so. The FTT asked itself whether the outcome is correct in law, as, if there is an effective remedy in law, there is little point in examining the CJEU effectiveness principle. The FTT directed that HMRC should answer a number of questions regarding its practice and its legal foundation. Following the FTT granting an extension to HMRC to provide its answers to the questions, HMRC informed the FTT that it no longer intended to defend the appeal and that it would not file any further submissions. As a result of HMRC s withdrawal the appeal was allowed and the FTT went onto to explain the position in law, as it holds it to be. The FTT considered that HMRC was wrong to hold that the normal VAT system applies to the charge to VAT on imports. Also, HMRC had confused a repayment of VAT paid in error with credit for input tax, the two being wholly separate. HFS does have a remedy, the repayment of the VAT it wrongly paid. Due to there being an effective remedy the FTT did not consider whether HMRC s policy contravened the principle of effectiveness, however its provisional view was that it would and that this could explain HMRC s withdrawal. Comment: An interesting case which challenges HMRC s approach to VAT recovery on imports through agents. Whilst in the normal course of events VAT on imports washes through the C79 process, with importers recovering the VAT charged, the FTT decision provides a potential remedy for those agents and freight forwarders who, through circumstances beyond their control, face a VAT cost. For further information please contact Gerard Koevoets HMRC Material VAT: apply for Simplified Import VAT Accounting (SIVA1) updated VAT: apply for Simplified Import VAT Accounting (SIVA1) - The SIVA1 form has been redesigned based on user feedback. Customs Information Paper 23(2017): questionnaire CCG1a Customs Information Paper 23(2017): questionnaire CCG1a - This Customs Information Paper provides a link to the Customs Comprehensive Guarantee (CCG) questionnaire which is now available. The questionnaire should be completed for those applying for a CCG and not an AEO or those looking for a reduction or waiver for potential debts. Soft Drinks Industry Levy: Draft legislation - Consultation As announced at Budget 2016, the Soft Drinks Industry Levy will be introduced from April This new levy will apply to the production and importation of soft drinks containing added sugar. Following a public consultation in summer 2016, primary legislation introducing the levy was approved by parliament in the Finance Act To complete the legislative framework for the levy, two statutory instruments are required. This technical consultation seeks comments on both of these draft statutory instruments: The Soft Drinks Industry Levy Regulations 2017 sets out in detail the scope and operation of the levy The Soft Drinks Industry Levy (Enforcement) Regulations 2017 will provide HMRC with specific enforcement and compliance powers This consultation closes on 8 December 2017 and responses should be sent to indirecttax.projectteam@hmrc.gsi.gov.uk. EY Global Tax Alerts

9 Ireland On 10 October 2017, the Irish Minister for Finance presented the 2018 Budget. Indirect tax measures include: Tax on sugar-sweetened drinks A capped fund of 5m will be made available to compensate charities for VAT incurred on costs. The refund schedule will be introduced in 2019 to refund charities a portion of VAT incurred in 2018 The Minister announced an increase of 50c per packet of 20 cigarettes (bringing the price of the most popular brands up to 12) Vehicle registration tax relief for hybrid vehicles to continue The Minister intends to carry out a review of carbon tax In an unusual move the Minister singled out VAT on sunbed services proposing to increase the VAT rate from 13.5% to 23%. Cyprus The Supreme Court of Cyprus has ruled that Directors bear personal criminal liability for a company s failure to comply with provisions of the VAT Law and has now ordered the imprisonment of two Directors. Uruguay - Uruguay s Executive Power has signed the accountability bill into law. The law will apply as of 1 January Certain tax-related provisions were modified during Parliament s discussion of the bill, from an indirect tax point of view these include: Income derived from mediation and intermediation services supplied through the internet, technological platforms, computer applications or other similar means will be considered as Uruguayan-sourced income and, therefore, will be subject to VAT when both parties are located in Uruguay Services provided directly through the internet, technological platforms, computer applications or other similar means will be considered as entirely rendered in the Uruguayan territory, provided the services are used in Uruguay The law will impose a two to eight-year prison sentence for tax fraud when invoices or other equivalent documents used for documenting transactions were, totally or partially, ideologically or materially false For taxpayers located in Uruguay and abroad, goods located in free ports and free trade zones will not be included in the taxable base for net wealth tax UAE - The United Arab Emirates (UAE) Federal Tax Authority (FTA) has announced that large taxpayers, defined as businesses with an annual turnover exceeding AED150 million (US$40.8 million), must register for UAE VAT by 31 October In addition, businesses with annual turnover in excess of AED10 million (US$2.7 million) must register for VAT by 30 November Businesses failing to register for VAT by their respective deadlines may be subject to late registration penalties. The VAT registration portal is now open on the FTA s website and therefore, businesses required to be VAT-registered in the UAE should register for VAT as soon as possible and within their respective deadlines based on their annual turnover. Given the imminence of the VAT implementation date in the UAE, all businesses should have assessed whether they are required to be registered for UAE VAT and where appropriate, should have significantly progressed their implementation activities. If not, immediate steps to prepare for the implementation should be taken as a matter of urgency to ensure VATcompliance from 1 January Belgium - With effect from 1 January 2018, Belgium is expected to introduce a measure that will allow landlords to opt to apply VAT on the rental of new commercial real estate. Germany - The German Federal Ministry of Finance has published a decree concerning VAT on call-off stock in Germany. Under the condition that the customer of the goods is known and definite when the shipment begins, it will no longer be necessary for the foreign supplier to register for German VAT. According to the decree, known and definite requires that the goods either have already been paid for, or that there is a binding order for the goods. Furthermore, the customer must have unlimited access to the goods. Foreign companies that have registered in Germany should review their situation, as it may be possible to terminate such registration, thus reducing compliance costs.

10 Italy - The Italian Tax Authorities have published Decision n /2017, regarding Simplifications to the mandatory information related to Intrastat communications. The Italian Tax Authorities have approved a number of simplification measures which are effective from 1 January Our alert summarises the measures introduced. European Council Member states confirm the creation of a European Public Prosecutors Office On 12 October 2017, the regulation establishing the European Public Prosecutor's Office (EPPO) was adopted by those member states which are part of the EPPO enhanced cooperation. The EPPO will be in charge of investigating, prosecuting and bringing to justice the perpetrators of offences against the Union's financial interests; for example, fraud against EU structural funds or large-scale cross-border VAT fraud. It will bring together European and national law-enforcement efforts to counter EU fraud. The EPPO will work as a collegial structure composed of two levels. The central level will consist of a European chief prosecutor, who will have overall responsibility for the office. The decentralised level will be made up of European delegated prosecutors located in the member states, who will be in charge of the day-to-day conduct of criminal investigations and prosecutions in line with the regulation and legislation of that member state. The EPPO central office will be based in Luxembourg. The date on which the EPPO will assume its investigative and prosecutorial tasks will be set by the Commission on the basis of a proposal from the European Chief Prosecutor once the EPPO has been set up. This date will not be earlier than three years after the entry into force of this regulation. So far, 20 member states have joined the enhanced cooperation: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Germany, Greece, Spain, Finland, France, Italy, Latvia, Lithuania, Luxembourg, Portugal, Romania, Slovenia and Slovakia. The European Commission welcomed the Council s agreement With 20 Member States joining, we will have a strong, independent and efficient body to fight transnational crime against the EU budget and cross-border VAT fraud. A summary of the Commission proposal for an EPPO is available here EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transactions and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeh olders. In doing so, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Ernst & Young LLP Ernst & Young LLP Published in the UK. All Rights Reserved. The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC and is a member of Ernst & Young Global Limited. Ernst & Young LLP, 1 More London Place, London, SE1 2AF. Information in this publication is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice.

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