Newsletter. No. 1/ January 2010

Transcription

1 1 Newsletter No. 1/ January VAT Forum CV/SC. This newsletter contains recent information. Some information can be subject to sudden changes. VAT Forum CV/SC can not be held responsible for injudicious use of the information below. If you wish to take decisions based on the information below, please consult your indirect tax adviser. Index 1. European News Implementing order for Sweden and the United Kingdom Implementing order for Slovenia Customs exemptions regulation Regulation on EU VAT refund codes ECJ C-433/08, Yaesu Europe BV - VAT judgement Infringement proceedings against 8 EU Member States concerning VAT groups Infringement proceedings against France List of gold coins 2010 Expert Group on e-invoicing 2. Country news 2.1 Belgium Reduced VAT rate in the construction and catering industries Organisation of Federal Ministry of Finance Bill for postponing VAT fines Exempt small businesses - taxable persons with no right to deduct non-taxable legal persons VAT package Intrastat VAT package Conversion of VAT package Flat-rate farmers VAT Package Draft programme law VAT package checking the VAT number of a service recipient Notice on telecommunication services Decision on the VAT package 2.2. Bulgaria Services of lawyers Exemptions from tax on importation Refund application period Repayment period Registration Electronic cash registers Cash receipts 2.3 Czech Republic Change in VAT rate 2.4 Germany Place of supply of services in 2010

2 2 2.5 Ireland Bad debt relief Change in VAT rate New Electronic VAT Refund (EVR) procedures with effect from 1 January Italy VAT Package legislation unpublished 2.7 Portugal Supplies of services between a permanent establishment and its main office Place of supply of services 2.8 Switzerland Adoption of the implementation order for the Swiss VAT law by the Federal Council 2.9 United Kingdom EC Sales List instructions Major changes in Tour Operator s Margin Scheme which affect (all) business VAT rate change Electronic filing of VAT returns Communication of changes

3 3 1. European News Implementing order for Sweden and the United Kingdom An implementing order dated 7 December 2009 has authorised Sweden and the United Kingdom, in derogation from article 167 of Directive 2006/112/EC, to defer the right to deduct VAT for certain taxable persons until this VAT has been paid to their supplier or service provider. The taxable persons in question need to have opted for a scheme where they incur the VAT on the goods they have supplied and services they have rendered when they receive payment. By virtue of this scheme, their annual turnover may be no higher than SEK for Sweden or GBP for the United Kingdom. This order applies with effect from 1 January 2010 until the date when a directive comes into effect that authorises the EU Member States to defer the right to deduct VAT until the time when it is paid to the supplier or service provider, for taxable persons whose annual turnover does not exceed a certain threshold, whereby these taxable persons can apply an optional scheme by means of which the VAT on the goods they have supplied and services they have rendered is only incurred when they receive payment for them. In any case, this order applies until 31 December 2012 at the latest. Implementing order for Slovenia An implementing order dated 7 December 2009 has authorised Slovenia, in derogation from article 167 of Directive 2006/112/EC, to defer the right to deduct VAT for certain taxable persons until this VAT has been paid to their supplier or service provider. The taxable persons in question need to have opted for a scheme where they incur the VAT on the goods they have supplied and services they have rendered when they receive payment. By virtue of this scheme, their annual turnover may be no higher than EUR. This order applies with effect from 1 January 2010 until the date when a directive comes into effect that authorises the EU Member States to defer the right to deduct VAT until the time when it is paid to the supplier or service provider, for taxable persons whose annual turnover does not exceed a certain threshold, whereby these taxable persons can apply an optional scheme by means of which the VAT on the goods they have supplied and services they have rendered is only incurred when they receive payment for them. In any case, this order applies until 31 December 2012 at the latest. Customs exemptions regulation Regulation (EC) no. 1186/2009 of 16 November 2009 setting up a Community system of reliefs from Customs duty has appeared in the Official Journal of the European Union. It is a codification of Regulation (EEC) no. 918/83 of 28 March 1983, which has been repeatedly and profoundly amended. The codification of this regulation was necessary for the sake of clarity and rational ordering of the text. The regulation comes into effect on 1 January 2010 (OJ EU, no. L 324 of 12 December 2009, 23).

4 4 Regulation on EU VAT refund codes Regulation (EC) no. 1174/2009 of 30 November 2009 laying down rules for the implementation of Articles 34a and 37 of Council Regulation (EC) no. 1798/2003 in terms of the refund of VAT according to Directive 2008/9/EC has appeared in the Official Journal of the European Union. In accordance with article 9(2) of Directive 2008/9/EC, the Member State of refund may require the applicant to provide additional electronic coded information as regards each code set out in paragraph 1 of Directive 2008/9/EC to the extent that such information is necessary because of any restrictions on the right of deduction under Directive 2006/112/EC, as applicable in the Member State of refund or for the implementation of a relevant derogation received by the Member State of refund under Articles 395 or 396 of that Directive. In accordance with article 34A(2) of Regulation (EC) no.1798/2003, the competent authorities of the EU Member State of refund are to inform the competent authorities of the other EU Member States by electronic means of all the information they request on the basis of article 9(2) of Directive 2008/9/EC. To do so, the technical specifications for sending the extra data required from the Member States on the basis of article 9(2) of Directive 2008/9/EC need to be set. Specifically, the codes required need to be determined. The codes as issued by the Permanent Committee for Administrative Cooperation on the basis of the data required by the Member States with a view to the application of article 9(2) of Directive 2008/9/EC (SCAC codes) are included in the annex to the new regulation. The ten original codes are further subdivided to arrive at a total of 167 possible codes. In accordance with article 11 of Directive 2008/9/EC, applicants may be required to describe their business activity using harmonised codes. They must use the current codes determined in article 2(1)(d) of Regulation (EC) no. 1893/2006 of 20 December 2006 establishing the statistical classification of economic activities, NACE Rev. 2 and amending Regulation (EEC) no. 3037/90 as well as certain EC Regulations on specific statistical domains. The regulation will come into effect on 1 January 2010 (OJ EU, no. L 314 of 1 December 2009, 50). ECJ C-433/08, Yaesu Europe BV - VAT judgement The European Court of Justice gave its judgement on 3 December 2009 in case C-433/08, Yaesu Europe BV, concerning the term signature in a request for a VAT refund in accordance with the Eighth VAT Directive and a national legal regulation whereby the taxable person or legal representative is required to sign in person and the signature of a mandate holder is not allowed. The Court ruled that the term signature in the model for a VAT refund request in annex A to the Eighth VAT Directive is a concept in Community law that requires a uniform explanation, namely that such an application for a refund does not necessarily require a signature from the taxable person in person, but that in this case the signature of a mandate holder is sufficient. Infringement proceedings against 8 EU Member States concerning VAT groups The European Commission has formally requested that the Netherlands, Ireland, Spain, Finland, Sweden, the United Kingdom, the Czech Republic and Denmark amend their legislation concerning the application of their VAT grouping system. These requests took the form of a reasoned opinion, the second step in the infringement proceedings described in

5 5 article 226 of the EU Treaty. If these EU Member States do not follow up on this opinion within two months, the European Commission can bring the case before the European Court of Justice. According to article 11 of the VAT Directive, the EU Member States may regard as a single taxable person any persons established in the territory of that Member State who, while legally independent, are closely bound to one another by financial, economic and organisational links, for reasons of administrative simplification. In July 2009, the European Commission accepted a notice on the VAT grouping option provided by the VAT Directive. It clarified how the terms of article 11 of the VAT directive could be converted into a practical system that took into account the basic principles of the Community VAT system and guaranteed that the choice to apply VAT grouping would not have any consequences outside the EU Member State in question. The proceedings against Sweden concern the fact that Sweden limits its VAT grouping system to financial and insurance services. This is also one of the grievances in the proceedings against Finland. According to the European Commission, the rules of the VAT Directive concerning VAT groups do not allow the option to be limited to a single branch of industry. The other complaint against Finland is that non-taxable persons can also join a VAT group in that country. The same complaint is brought against Ireland, the Netherlands, Spain, the United Kingdom, Denmark and the Czech Republic. The proceedings against the Netherlands also concern the fact that the Netherlands did not inform the VAT Committee of amendments to the implementation of its VAT grouping system. Infringement proceedings against France The European Commission has brought infringement proceedings against France due to the fact that it exempts from VAT the sale of land by a taxable person to a natural person who intends to build a private home on this land. List of gold coins 2010 The European Commission has published the list of gold coins applicable in 2010 that meet the criteria for the special scheme for investment gold described in article 344 (1)(2) of the VAT Directive (OJ EU, no. C 289 of 28 November 2009, 12). Expert Group on e-invoicing The Expert Group on e-invoicing appointed by the European Commission on 31 October 2007 has filed its report on proposals for an European e-invoicing Framework. This group, consisting of 30 experts, met thirteen times between 26 February 2008 and 13 November The report sums up the requirements and conditions to enable a widespread use of electronic invoices. Interested parties can comment on this report until 26 February:

6 6 2. Country news 2.1 Belgium Reduced VAT rate in the construction and catering industries by A Royal Decree dated 9 December 2009 to amend R.D. no. 20 appeared in the Belgian Official Gazette on 14 December It deals with: - the extension of the temporary measures in 2009 concerning the VAT rate on construction, namely an extension until 31 December 2010 of the measures described in article 1 quater (demolition and reconstruction), 1quinquies (construction/supply of homes) and 1sexies (housing in the context of social policy) of R.D. no. 20, although only if the request for urban planning permission concerning the work in question is filed with the appropriate authority before 1 April the introduction of a reduced VAT rate of 12% for the restaurant and catering industry, namely by adding to Category I of Table B of the annex to R.D. no. 20 the phrase Restaurant and catering services. This subjects restaurant and catering services, excluding the provision of drinks, to the12% VAT rate. This measure takes effect on 1 January Organisation of Federal Ministry of Finance by marc.govers@vat-house.com A Royal Decree dated 3 December 2009 containing the arrangements for the operational departments of the Federal Government Department of Finance appeared in the Belgian Official Gazette on 9 December The Ministry of Finance will be made up of six general authorities: - the General Tax Authority; - the General Customs and Excise Authority; - the General Tax Collection and Recovery Authority; - the General Authority for Fighting Tax Fraud; - the General Authority for Heritage Documentation; - the General Authority of the Treasury. The General Tax Authority will have the income tax authority and VAT authority allocated to it, excluding collection and recovery. It will be organised into authorities oriented towards its target groups: private individuals, small and medium companies and large companies. The powers of the General Customs and Excise Authority are defined by its specific nature: - the implementation of the laws on Customs and Excise duties, the basis of which is mainly supra-national (European law); - the implementation of the laws on eco-taxes; - the implementation of the requirements of the VAT Code relating to the import and export of goods; - a series of interventions described in various specific laws, such as the las of 15 May 2007 on the penalties for counterfeiting and piracy of intellectual property rights, the law of 2 April 1971 on fighting organisms detrimental to plants and plant-based products, the law of 28 July 1981 containing approval of the agreement on the international trade in endangered animal and plant species living in the wild, and the annexes to this agreement, issued in Washington

7 7 on 3 March 1973, and the amendment to the agreement, accepted in Bonn on 22 June 1979 etc. In the long term, the powers of the General Tax Collection and Recovery Authority, can be extended after further study to include other charges or debt claims of both a fiscal and nonfiscal nature. However, in anticipation of a solution to the problems arising in particular from the residual powers of the old VAT, registration and domains authority, the powers of the General Tax Collection and Recovery are limited to merely income taxes, the taxes equivalent to income taxes and VAT. The powers allocated to the General Authority for Fighting Tax Fraud are aimed towards a structured fight against such fraud, and cover all taxes. It has a general coordinating role, which does not detract from the specific powers of the other general authorities to fight fraud. Determining the powers of the General Authority for Heritage Documentation is less systematic and cannot be expressed in such general and synthetic terms as for the other general authorities. This is particularly a consequence of the fact that its powers are varied in nature (fiscal, the collection of non-fiscal debt claims for several government bodies, residual powers in material, the management of State assets, the transfer of ownership of privately owned property to the State, the activities of the purchasing committees, custodianship of mortgages etc.). This large number of tasks often requires a non-limitative summary. The General Authority of the Treasury has the particular task of managing and coordinating financial relations at bilateral, European and multilateral level (economic politics, trade and development), the management of the State Treasury, its public debt and the treatment of matters peculiar to the regulation of the financial markets and services, making payments from the Treasury (e.g. paying the wages of persons paid by the Treasury and pensions owed by the same Treasury), the general State bookkeeping (except for the matters entrusted by law to the Federal Government Department of the Budget and Management Control), management of the Official Receiver, the National Office for Moveable Value and management of the Belgian Royal Mint and the Monetary Fund. A Royal Decree dated 3 December 2009 also appeared in the Belgian Official Gazette on 9 December 2009 containing the arrangements for services other than operational services by the Federal Government Department of Finance. Bill for postponing VAT fines by marc.govers@vat-house.com On 11 December 2009, at the suggestion of the Minister of Finance, the Cabinet approved a pre-draft for a law postponing the imposition of cash fines related to VAT. A judge can grant postponement of payment of an administrative cash fine in whole or in part. Debtors can obtain a postponement if they have not incurred any similar administrative cash fine over a reference period of two years. The postponement applies for a test period of three years after the postponement is granted. Exempt small businesses - taxable persons with no right to deduct non-taxable legal persons VAT package by marc.govers@vat-house.com The tax authority has published a clarification of the amendments to the place of service and related obligations from 1 January 2010 that are relevant to exempt small businesses (art. 56, 2 of the VAT Code), taxable persons with no right to deduct (art. 44 of the VAT Code) and non-taxable legal persons (art. 6 of the VAT Code).

8 8 More specifically, it deals in more detail with: - the transactions on which they owe Belgian VAT, namely intra-community services and the intra-community acquisition of goods; - the transactions on which they theoretically do not owe Belgian VAT; - the obligations derived from the new rules that apply from 1 January 2010 onwards: the communication of one s VAT number and filing a special VAT return; - examples linked to the new rules determining the place of service. The tax authority provided the following clarification with respect to a taxable person without the right to deduct who renders an intra-community service. In certain cases (particularly for lawyers), it may occur that the service is effectively taxed in the EU Member State of the recipient, because this service, in contrast to the Belgian system, is not exempted in that EU Member State. The recipient of the service will consequently owe VAT in their own Member State that was incurred on that service. If the exempted taxable person is rendering such a service for the first time, s/he must inform the appropriate VAT inspection office in advance by means of a declaration. If s/he does not yet have a VAT number, one will be granted on the basis of this declaration. Taxable persons can inform their VAT inspection office in advance of 1 January 2010 that they will be rendering services that will take place in the EU Member State of the recipient according to the new rules from 1 January 2010 onwards and will be effectively taxed there, with the result that the taxable persons in question will owe the VAT. The necessary formalities for obtaining a VAT number can be carried out already. In that case, the VAT number will be valid from 1 January An exempted taxable person will need to include the full amount of such services that are effectively taxed in the EU Member State of the recipient in an intra-community report. This report must be filed on a quarterly basis. The report can be filed electronically or on paper. (Informaties en mededelingen, AOIF-VAT, 11 December 2009, Intrastat VAT package by marc.govers@vat-house.com With respect to the influence of the VAT package on intrastat, the National Bank of Belgium has made clear that there are no changes in the filing of intrastat returns. A problem may arise in the comparison with the VAT figures because the credit notes for intra-community services are also included in boxes 84 and 48 of the periodic VAT return (Intrastat Newsletter no. 19, December 2009). Conversion of VAT package by marc.govers@vat-house.com A law dated 26 November 2009 to amend the VAT Code appeared in the Belgian Official Gazette on 4 December The amendment contains the transposition of the VAT package into Belgian law. It will come into effect on 1 January Flat-rate farmers VAT Package by marc.govers@vat-house.com The tax authority has published a clarification of the changes to the place of service and the accompanying obligations from 1 January 2010 that are of importance to agricultural businesses that come under the special scheme for farmers.

9 9 Specifically, it deals with the following in greater detail: - the transactions for which a flat-rate farmer owes Belgian VAT, namely services (including the services of vets, long-term rental of vehicles, goods transport, material work on moveable goods, intellectual service by persons such as accountants or consultants), and the intra-community acquisition of goods (a flat-rate farmer is assumed to have opted to subject all its intra-community acquisitions of goods to Belgian VAT from the point that it informs its supplier of its VAT number); - the transactions for which a flat-rate farmer in principle does not owe Belgian VAT; - the obligations linked to the new rules that will apply from 1 January 2010: communication of the VAT number and filing a special VAT return; - examples of the new rules determining the place of service; - a flat-rate farmer who renders a service to a taxable person established in another EU Member State: in that case the flat-rate farmer will need to include the total amount for such services that are effectively taxed in the EU Member State of the recipient in the farmer s annual intra-community report. This report can be filed on paper or electronically. (Informaties en mededelingen, AOIF-VAT, 1 December 2009, Draft programme law by marc.govers@vat-house.com On 25 November 2009, the government filed a draft programme law that includes a provision for subjecting to VAT the transfer of land that accompanies a new building or part of a new building if the transfer of that building is subject to VAT. 1) VAT and land The following will be amended: - article 1, 9 of the VAT Code - article 8 of the VAT Code - article 12, 2 of the VAT Code - article 16, 1 of the VAT Code - article 30 of the VAT Code - article 36, 1 of the VAT Code - article 44, 3, 1 of the VAT Code. The term accompanying land is defined as the land for which planning permission was obtained and that was transferred by the same person at the same time as the building it accompanies. Due to a combination of various Community provisions, a system applied in Belgium to date that involved a choice between exemption from VAT imposition on the understanding that only the supply of new buildings was taxed, namely all new constructions fixed into the ground, with the exception of building land and the land that accompanies a building. In its judgement dated 8 June 2000 in case C-400/98 (Breitsohl), concerning the interpretation of article 4(3)(a) of the Sixth VAT Directive (now article 12(1)(a) of Directive 2006/112/EC), the European Court of Justice clarified that the option to tax supplies of buildings or parts of buildings and the accompanying land must be related to the buildings or parts of buildings and, inseparably linked to this, the accompanying land.

10 10 In other words, the supply of a building and the accompanying land cannot be seen as separate issues and, in the optional system, a taxable person who supplies a building and the accompanying land can either invoke the exemption for the building and the land as a whole, or opt for VAT on the whole. Since the European Court of Justice aims towards consistent interpretation of Community law in all the EU Member States, and given that its jurisdiction is binding to all, the Community provisions must be followed both in terms of the supplies in question when forming part of a taxable person s regular activity and in the case of the option. The intention is therefore to subject the transfer of land accompanying a new building or part of a new building to VAT when the transfer of the building is subject to VAT. In the case of the option, it is irrelevant whether it is a taxable person whose economic activity does not consist of regularly selling buildings with VAT applied (second point of article 44, 3, 1, a) of the VAT Code) or a person who is acting otherwise than as a taxable person in the exercise of an economic activity (third point of the same clause). The option system, which is necessary to allow the transfer of a building to occur within the scope of VAT, is however separate from the original purpose that may have been given to the building (private use or for business purposes). Since VAT imposition is only possible if the option exists, the option cannot be partial and cannot be intended to split the object of the transfer arbitrarily by its current or future purpose. The general VAT exemption that currently applies to supplies of building land is not under debate, incidentally. Such supplies will therefore remain subject to transfer fees. Taken schematically, three cases can be distinguished: - professional constructors, i.e. persons who regularly buy or construct new buildings or have them constructed, have the legal capacity of taxable persons and are obliged to subject the supply of new buildings or parts of new buildings and the accompanying land to VAT; - any other taxable persons who are not professional constructors, irrelevant of whether they are subject to VAT or exempted, must opt for VAT if they have the intention to subject the supply of a new building or part of a new building with the accompanying land to VAT. As soon as this option has been exercised, it applies to the totality of the transferred building or the transferred part of a building and the accompanying land (with no distinction on the basis of whether the transferred goods were wholly or partly intended for businesses purposes, whether the right to deduct input VAT was exercised or whether part of them were intended for private use); - people known as occasional taxable persons (non-taxable persons such as private individuals or non-taxable legal persons) who opt for VAT on an occasional transaction and in that case the option applies to the entirety of the transferred building or the transferred part of a building and the land that belongs to the transferred goods. To allow the regions involved to adapt their laws where necessary and thus to avoid double taxation (simultaneous imposition of VAT and proportional transfer fees on the same land), the new rule will come into effect on 1 January 2011 at the latest. 2) Exchange of information The task of tax collection is extremely information intensive. To work efficiently, therefore, the access to information relevant for determining a taxable person s tax circumstances must

11 11 not be blocked or hindered. The intention is to remove all obstacles that may stand in the way of closer cooperation between various authorities of the Federal Government Department of Finance and to make sure that all the data within the Department of Finance are included in a database that is shared by all the authorities within the Department of Finance, which can be sued for all the taxes that the Department of Finance establishes and/or collects. Clauses with this intent have already been included in various codes (including art. 93quaterdecies, 3 of the VAT Code). To prevent different possibilities for interpretation, article 93quaterdecies, 3 of the VAT Code will state that: All the authorities dependent upon the Federal Government Department of Finance are obliged to make available all the information in their possession that is adequate, relevant and not superfluous to all officials of this Government, insofar as those officials are legally charged with the establishment or collection of taxes, and insofar as this data contributes to fulfilling the mandate of those officials to establish or collect any tax imposed by the State. Any official of the Federal Government Department of Finance who is legally mandated to carry out an inspection or investigation task is legally authorised to request, seek or collect all adequate, relevant and non-superfluous information that contributes to the establishment or collection of any other tax imposed by the State. VAT package checking the VAT number of a service recipient by marc.govers@vathouse.com From 1 January 2010 onwards, in accordance with the new rule for determining the place of service, services will take place where the recipient is established, and no longer where the service provider is established. This new rule for determining the place of service will be linked to various measures to fight VAT fraud, such as the obligation from 1 January 2010 onwards to include in the intra-community listing to be filed by the service provider those services that were carried out for a taxable person in another EU Member State, where that taxable person owes the VAT, as long as these service provisions are not exempt from VAT in that EU Member State. From then on, Belgian service providers will be obliged to check the accuracy of the VAT identification number of recipients in other EU Member States in order to fill in the intra-community report correctly. This check can be done at the Central Unit for Administrative Cooperation with the other EU Member States for VAT (CLO), Paleizenstraat 48, 5 th floor, 1030 Brussels and over the telephone ( ) or by fax ( ). Verification is also possible on the internet using the European Commission s service at: Informing another EU Member State of the data relating to the services carried out by Belgian taxable persons for taxable persons established on their territory is a new measure in the fight against fraud, which leads to considerable losses of VAT takings on the part of the EU Member States and disrupts economic activity within the Single Market. This provision of information makes it possible for the EU Member State involved to ensure that the VAT on the transactions concerned is genuinely paid by the recipients of the services. Since, according to the new rule in force from 1 January 2010 onwards, a large number of service activities between taxable persons must theoretically be taxed at the place where they

12 12 are effectively used and enjoyed, the associated formalities are largely aimed at making it possible to follow up the taxation of these services. In accordance with Directive 2008/117/EC on the fight against VAT fraud in intra- Community transactions, and more specifically in the fight against VAT circuit fraud, the frequency of how often the intra-community report has to be filed will be increased as of 1 January 2010 and, in theory, will be on a monthly basis (although under certain circumstances it is possible to file the report on a quarterly basis). The obligation to file the intra-community report will apply from 1 January 2010 onwards both to intra-community supplies of goods and to services, but it should be pointed out that classic circuit fraud usually involves abuses of supplies of goods. The current data on intra-community supplies of goods has been used constructively in Belgium to detect circuit fraud and other cases of non-declaration of movements of goods. No exact figures are available for the overall goods flow from Belgium to other EU Member States and vice versa. The introduction of this obligation will however chart the extent of service provisions to which the main rule applies for services between taxable persons within the EU. As for the invoicing of a service by a Belgian taxable person for a customer established in another EU Member State, the following principles apply. The Belgian service provider is obliged to demonstrate the capacity of the customer as a taxable person acting of such, and the customer s place of establishment in another EU Member State, if the criterion of the recipient s place of establishment applies and the service provider consequently does not charge VAT on the invoice. This capacity can be demonstrated using the VAT identification number allocated by an EU Member State to the customer or in any other way. However, in order to fill in the intra-community report, the service provider will always need to know the VAT identification number allocated by this other EU Member State to the contract partner. If the customer s capacity as a taxable person acting as such cannot be demonstrated, the transaction is considered to take place in Belgium either on the basis of the criterion of the service provider s place of establishment, or as a result of the legal presumption of article 21, 5 of the VAT code that one of the parties (in this case the service provider) is established in Belgium, and Belgian VAT will need to be charged on the invoice. In this case the customer will not be able to claim a refund of Belgian VAT given that his capacity as a taxable person could not be demonstrated and consequently he has no right to deduct the VAT. However, if the customer s capacity as a taxable person with or without the right to deduct is demonstrated after the invoice has been issued with Belgian VAT, the Belgian service provider will need to issue a corrective document in the sense of article 53, 2, third part, of the VAT Code and according to the conditions of article 12 of R.D. no. 1, and a refund of the Belgian VAT charged can be obtained on the basis of article 77, 1, 1 of the VAT Code. In this situation, the transaction will be taxed in the customer s Member State (Q&A, Chamber, Q. no. 494 and 496 from Mr de Donnea on 28 May 2009, QRVA, 3 November 2009, no. 83, 89). Notice on telecommunication services by marc.govers@vat-house.com The tax authority has published Notice AOIF no. 50/2009 dated 12 November 2009 concerning the applicable VAT treatment of transactions made by means of telecommunications tools marketed specifically for that purpose. The telecommunications sector increasingly offers a number of service that go far beyond merely providing telephone services in the strict sense. For example, a taxable person can offer various services to the public using a specially marketed telephone number with a high call charge (e.g. 0900

13 13 numbers) to provide information (weather and stock market forecasts etc.), and to enable participation in games, parking place reservations, the purchase of travel tickets, underwriting insurance policies etc. In some cases goods are even supplied in this way. This offer of services and supplies of goods will incidentally develop and diversify further in the future. Currently, for example, if one receives digital television it is already possible to receive certain content by pressing a button. This method of offering content is in fact no different from offering content by means of a special telephone number. This notice clarifies the rules that apply for VAT in the sector of activity concerned. The starting point consists of a user sending a message in the form of a telecommunications message, whereby this message is both a binding expression of the desire to receive certain content and on the other hand a possible obligation to make a payment. It is a return to the basic principles and the application of a VAT system that takes into account the underlying economic, commercial and legal links between the various parties and, consequently, with the correct nature of the content provided by the content provider, and consequently also with the services rendered by the facilitators and other parties involved, also taking into account future technological and commercial developments. The notice contains a number of clarifying diagrams. The rules explained in the notice apply from 1 April Decision on the VAT package by marc.govers@vat-house.com The tax authority has published Decision no. E.T /1 to 6 concerning the administrative obligations as of 1 January 2010 resulting from the VAT package. More specifically, the following issues are dealt with: - the change to the periodic VAT return (general, outgoing transactions, incoming transactions) - the changes to the conditions of VAT identification - the change to the intra-community report - the change to the annual customer listing. (Decision no. E.T /1 to 6 of 16 November 2009, Bulgaria The VAT Act amendments were published in the Bulgarian Official Gazette n 95 on 1/12/09. Services of lawyers by Lubka Tzenova Following the Constitutional Court's judgment of 23 April 2007, in which the Court declared that the part of the legal definition of economic activities under which that concept was extended to the activities of liberal professionals such as private bailiffs and notaries, was unconstitutional on the grounds that it had not been adopted by the parliament after the first or second reading, the government proposed amending Art. 3(2) of the VAT Act again, thereby stating the original text of that provision again. The proposed amendment will come into force on 1 January 2010, which means that, from that date, the services of all lawyers are subject to VAT.

14 14 Exemptions from tax on importation by Lubka Tzenova The exemption from tax on importation will extend to goods within the permitted duty-free importation allowance, as long as: 1. The value of the goods is not more than 15 euro; and 2. The value of the parcel is not more than 45 euro, if the parcel comes from a country outside the EU and is sent from a natural person to another natural person. Refund application period by Lubka Tzenova Under article 72 of the VAT Act, taxable persons must have exercised their right to deduct input tax at the latest in the VAT return for the third tax period following the period in which that right arose. From 1 January 2010, the refund application period will be extended from 3 to 12 tax periods. Repayment period by Lubka Tzenova Under article 92 of the VAT Act, the tax authorities will first offset the taxable person's VAT claim against his outstanding tax and social insurance liabilities or, in the absence of outstanding liabilities, the taxable person must carry forward the claim to the following three tax periods. If, after the third tax period, it has not been possible to deduct the tax in full, the tax authorities will refund the balance to the taxable person within 45 days. From 1 January 2010, VAT claims must be carried forward to the following two, instead of three, tax periods, and the balance will be refunded within 30 days instead of 45. Registration by Lubka Tzenova Under the new article 97a(1) and (2) of the VAT Act, non-registered taxable persons who receive services that are deemed to be supplied in Bulgaria and in respect of which they must account for VAT under the reverse charge mechanism, and taxable persons who are established in Bulgaria and who render services that are deemed to be supplied in another Member State, must apply for registration no less than seven days prior to the date on which those events will occur. Small businesses which are registered under Art. 97a(1) or (2) must register again if they exceed the turnover threshold for compulsory registration or wish to opt for voluntary registration. Electronic cash registers by Lubka Tzenova From 1 July 2011, all businesses must record their transactions with an electronic cash register that is directly connected with the computer system of the tax authorities, which will enable the authorities to check, at distance, the businesses periodic turnover. Failure to use the prescribed type of cash register or failure to provide the tax authorities with online access to the register is subject to a penalty ranging from EUR to EUR In the

15 15 event of repeated violation of those obligations, the tax authorities may impose a penalty ranging from EUR to EUR Cash receipts by Lubka Tzenova Taxable persons who fail to issue a cash receipt to their customers risk a penalty ranging from EUR 50 to EUR 250 if the customers are non-taxable natural persons, or from EUR 250 to EUR if the customers are legal persons or self-employed traders. 2.3 Czech Republic Change in VAT rate by jan@kaucky.eu As from 1 January 2010 the VAT rates in Czech Republic will increase with 1% Standard rate: from 19% to 20% Reduced rate: from 9% to 10%. 2.4 Germany Place of supply of services in 2010 A new administrative Circular with regard to the place of supply of services is now available: Startseite/Aktuelles/BMF Schreiben/V eroffentlichungen zu Steuerarten/umsatzsteuer/227a,templateId=raw,property=publication File.pdf 2.5 Ireland Bad debt relief A new VAT information leaflet is available on Bad debt relief. Bad debt relief arises when a customer defaults in full or part on payment to a supplier where that supplier has accounted for VAT in respect of the supply. The conditions under which bad debt relief is allowed are set out in Section 10(3)(c) of the VAT Act and regulations 8(1)(m) and 16A of the VAT Regulations, 2006 (as amended). Source: Irish Revenue Change in VAT rate The standard rate of VAT will be decreased from 21.5% to 21% with effect from 1 January 2010.

16 16 New Electronic VAT Refund (EVR) procedures with effect from 1 January 2010 New and existing agents, acting on behalf of Irish traders can make an application on behalf of a client for a refund of VAT incurred in another Member State, provided that they: have a TAIN number (Tax Advisor Identification Number) and are registered with ROS and have been linked to their client for EVR. Agents must register with Revenue by obtaining a TAIN number (Tax Advisor Identification Number). This function is handled by Dublin North City District, TAIN Section, Upper O'Connell Street, Dublin 1, Tel: , dublinagents@revenue.ie. To register, Agents must apply in writing stating their tax number, their full Name, Address, Tel/Fax/ and supply a list of their clients which should include each clients' VAT number. Once registered, the Agent will be linked to their client(s) on Revenue s Online Service (ROS). If not already registered, an Agent must register for ROS through A new tax head EVR will be available on ROS from 1 January Agents (or their clients, if registered on ROS) can make an application for refund of VAT online under EVR. An agent may submit a maximum of 5 applications to each Member State in any calendar year. When an application is submitted online, a message is forwarded to the applicant s ROS inbox stating that their application has been received by Revenue and that it has been forwarded to the relevant Member State for refund. If an application is successful, a decision message will be forwarded to the applicant s ROS inbox. Payment will then be made (by electronic fund transfer) to the bank account provided in the application. EU Member States have different requirements. Some States may require that invoices/importation documents be forwarded with the application as a scanned attachment. These attachments must not exceed 5MB in size. If attachments exceed this amount, then only the largest invoices should be attached. The Member State of Refund may request that the remaining invoices be forwarded for examination. The Tax Authority of the Member State of Refund may also request additional information before a final decision is made on an application. The applicant will be notified directly via the contact details provided in their application i.e. or telephone. Allowable expenditure may differ from State to State. If in doubt, you should contact the Member State for clarification. ROS allows for the submission of a maximum of five applications to each Member State in a calendar year. However, some States may only accept four. If errors occur when completing the application or you are prevented from submitting the application, you should direct your enquiries to the ROS helpdesk at: roshelp@revenue.ie or telephone Queries relating to refund procedures operated by other Member States, should be directed to the Tax Authority of that State. Further information is available on the Revenue website at and the European Commission website:

17 17 Enquiries can also be addressed to: or telephone Source: Irish Revenue 2.6 Italy VAT Package legislation unpublished by The VAT package has not been published until today in the Italian Official Gazette, this means traders can opt to use the old Italian law or the currently applicable provisions of the Directive 2006/112/EC through its direct application. 29/ pdf (this links contains an overview of the new rules in Italy (in Italian). 2.7 Portugal Supplies of services between a permanent establishment and its main office An administrative Circular has been issued in order to claify the VAT status of services rendered between the headquaters office and its permanent establishment established in different EU member states. Of.Circulado n.º: Place of supply of services An administrative Circular has been issued which further elaborates on the new place of supply rules. It also contains the fact that only services as specified under article 44 Directive 2006/112/EC should be contained in the recapitulative statement (which is contrary to the law provisions, which are c.q. not in line with the 2006/112/EC Directive) D7A90BC2B832/0/OficCirc_30115.pdf 2.8 Switzerland Adoption of the implementation order for the Swiss VAT law by the Federal Council The Swiss Federal Council adopted the implementation order for the new VAT law on 27 November This order will come into effect on 1 January 2010, at the same time as the new law. It will replace a large proportion of the current publications by the federal tax authority. It will help to simplify VAT and improve clarity and legal certainty for taxable persons.

18 United Kingdom EC Sales List instructions Notice 725 has been revised to reflect changes from 1 January 2010 affecting ESLs. Those changes can be found in Section 17). e&_pagelabel=pagelibrary_showcontent&propertytype=document&id=hmce_cl_ #P41_1629 Major changes in Tour Operator s Margin Scheme which affect (all) business by Steve.Botham@covertax.co.uk The UK has issued a fresh Notice on the operation of the Tour Operator s Margin Scheme. This includes details on amendments made effective from 1 January These include: - Removal of the opt-in to the TOMS for wholesale supplies (previously detailed in section 3.2) Removal of the opt-out for travel supplies consumed by businesses (previously detailed in section 3.3) The introduction of a new market value calculation (annual adjustment),which is set out in a new section 8. Section 4.15 has been amended to clarify the tax point rules under method 2. Section 4.20 has been amended to reflect the new invoicing regulations for TOMS supplies made to business customers after 1 October Section 6.1 has been amended to update what should be included in the total selling price for the annual calculations. Section 6.4 has been amended to add another typical example of overhead finance charges. The removal of the B2B opt out will increase costs to business customers until 31 December, such supplies can be dealt with under normal VAT accounting, thus permitting a deduction of input tax on such supplies. From 1 January 2010 this will no longer be possible, thus removing the right to deduct and increasing costs for businesses purchasing designated travel services. VAT rate change by Steve.Botham@covertax.co.uk The main issue in pre-budget report, setting aside the VAT package changes, is the return of the UK standard rate to 17.5% from 1 January There is an easement for businesses open over New Year s Eve, previously only offered to pubs, bars and restaurants, whereby the VAT increase will only take effect from 6.00 am on 1 January In addition, businesses, such as retailers will be permitted to use old price tags until 31 January, adding the VAT increase at the till. This would appear to be an amendment of consumer protection legislation, rather than tax legislation. There is further consultation on strengthening the legislation concerning the disclosure of the use of tax, including VAT, avoidance schemes. It could be that more routine tax management arrangements could be drawn at least into the avoidance disclosure regime, potentially resulting in more detailed enquiries from the UK tax authorities.

19 19 A full set of Budget Notices can be downloaded by following this link Electronic filing of VAT returns A document which summarises the responses received to the consultation on draft amendment legislation for the compulsory online filing of VAT Returns and electronic payment of VAT has been published. The VAT regulations have been amended to include the requirement for the following businesses to file their VAT returns online and to pay VAT electronically: existing businesses with an annual turnover of 100,000 or more for accounting periods starting on or after 1 April 2010 newly registered businesses with an effective date of registration on or after 1 April 2010 (whatever their turnover). Following an undertaking given by Ministers they include an exemption from online filing for businesses who have a religious conscience objection to the use of computers and the internet. They also include an exemption for all businesses subject to an insolvency procedure. e&_pagelabel=pagelibrary_showcontent&propertytype=document&id=hmce_prod1_ Communication of changes A new form to communicate any changes to your VAT registered business has been published. 1_028516