EY VAT News week to 19 June 2017

Transcription

1 Click here to view online EY VAT News week to 19 June 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. Previous editions of EY VAT News can be found here. In this edition: EY Events EY Indirect Tax Perspectives: 4 July 2017, confirmed attendance by Nigel Mellor, Senior OTS Policy Advisor EY ReFIT (Retail) Forum: 21 July 2017 EY Publications Trade Watch June 2017 Court of Justice of the European Union Judgment The exemption of an intra-community supply of a new means of transport is not subject to the condition that the purchaser resides in the member state of destination Judgment The different treatment regarding output tax and input tax Fleming claims is compatible with EU law Opinion Duplicate Contract Bridge is a sport for VAT purposes Calendar update Upper Tribunal Overpayments constitute consideration for taxable supplies Supplies of caravans are held to be zero rated where the right to site the caravans is a separate supply First-tier Tribunal Services are provided by an intermediary and are not within the Tour Operator's Margin Scheme HMRC Material VAT Guidance: get clearance on the rules for complex transactions EY Global Tax Alerts US Report of recent US international tax developments European Commission Corrections and amendments to the UCC Implementing Regulation European Council Meeting of the Economic and Financial Affairs Council (e-publications and the introduction of a generalised reverse charge mechanism)

2 EY Events EY Indirect Tax Perspectives 4 July 2017 The next EY Indirect Tax Perspectives event will be on the morning of Tuesday 4 July 2017 at 1 More London Place. In addition to the usual update on current and future indirect tax developments we intend to focus on 3 current important indirect tax topics in detail. These are: The implications of the new Corporate Criminal Offence for businesses that fail to prevent the facilitation of tax evasion which are potentially wide ranging for many entities A post general election discussion looking at the latest position and implications of Brexit from an indirect tax perspective The Office of Tax Simplification (OTS) a look at the current developments and recommendations arising from the OTS review of Value Added Tax. We are pleased to announce that we will be joined by Nigel Mellor, Senior Policy Advisor at the OTS, who will provide his thoughts and latest update regarding the review If you would like to register for the event please refer to our invitation and contact Elaine McCluskey or Olivia D'Silva. EY ReFIT (Retail) Forum - 21 July 2017 On behalf of the EY Indirect Tax Retail Team, we are delighted to invite you to the next EY ReFIT Forum, which will be held on Friday 21 July. ReFIT is an indirect tax forum for people working in Finance/Tax/VAT in a retail environment. The agenda is VAT focussed, but we also include other tax issues which are relevant. Through Forums such as ReFIT, we help to make sense of the latest changes, updates and caselaw and provide you with an excellent opportunity to network with your peers. Details: Date: Friday 21 July 2017 Time: 10am arrival for tea/coffee, 10.30am start and 1pm finish with a buffet lunch Location: 1 More London Place, London, SE1 2AF We do hope that you can join us following the election on June 8, all eyes will be on the plans for Brexit, but it's also business as usual with compliance both in the UK and in foreign territories becoming increasingly complex we will look through the issues and consider some solutions: Agenda Caselaw Update Global VAT/GST update including GCC Real time reporting Spain New Criminal Corporate Offence Brexit Update Hot Topics Open Forum If you would like to attend this event please contact Simon Baxter. EY Publications Trade Watch June 2017

3 The latest edition of Trade Watch is now available. Trade Watch is a quarterly communication prepared by EY's Global Customs & International Trade Practice. In this edition, there is a spotlight on changing trade blocks, including Brexit and the Trump administration's intention to renegotiate the North America Free Trade Agreement (NAFTA). Court of Justice of the European Union Judgment The exemption of an intra-community supply of a new means of transport is not subject to the condition that the purchaser resides in the member state of destination C-26/16 Santogal On 14 June 2017, the Court of Justice of the European Union (CJEU) released its decision in this Portuguese referral concerning the scope of the exemption with credit (zero-rating) under Article 138(2)(a) of the VAT Directive for the intra- Community supply of a new means of transport. Santogal sold a new vehicle to an Angolan national. The purchaser informed Santogal that he intended to use the vehicle for his personal use in Spain, where he was resident, and that he would take personal responsibility for transporting the vehicle and registering it there. He provided Santogal with his foreign identification number in Spain, confirmation of his entry in the Spanish central register of foreign nationals and a copy of his Angolan passport. The address given by the purchaser in the course of the sale did not, however, match that stated on his entry in the central register of foreign nationals. Following technical inspection of the vehicle in Spain, the purchaser provided Santogal with two further documents to complete the sale, a technical inspection certificate and a Spanish temporary tourist registration document. The registration document provided an address which did not match any that had been given previously. Santogal undertook no further due diligence and did not investigate the temporary nature of the registration document. In light of the documentation received, Santogal took the view that the sale was exempt from VAT pursuant to domestic legislation which is intended to transpose Article 138(2)(a). The Portuguese authorities concluded that the sale of the vehicle failed to qualify for exemption as the purchaser did not reside in Spain and that from its enquiries it had found that the purchaser had a Portuguese tax identification number and that Portugal was his place of residence. In agreement with the Advocate General, the CJEU firstly concluded that the reference for a preliminary ruling was admissible, despite the initial reference quoting Article 138(2)(b) rather than 138(2)(a). The CJEU went on to consider that a Member State is not entitled to make the exemption of an intra-community supply of a new means of transport subject to the condition that the purchaser resides in the member state of destination. Exemption is appropriate provided three conditions are satisfied;the ability to dispose of the goods as owner has been transferred to the purchaser, the supplier establishes that those goods have been dispatched or transported to another Member State and, as a result of that dispatch or that transport, they have physically left the territory of the Member State of supply. The vehicle was sold in Portugal, the goods were transported to Spain and the vehicle was registered there. Article 138(2)(a) in no way makes the right of exemption subject to the requirement that the purchaser must have a place of residence in the Member State of destination. The CJEU also considered that a Member State cannot refuse exemption simply because the vehicle was registered only temporarily in the Member State of destination. However, the CJEU held that the principles of legal certainty, proportionality and protection of legitimate expectations preclude the vendor of a new means of transport, transported by the purchaser to another Member State and registered on a temporary basis in that State, from being required to pay VAT at a later stage in the event of tax evasion by the purchaser, unless it is established that that vendor knew or ought to have known that the transaction was connected with fraud and he did not take all reasonable steps to avoid participation in that fraud; which is for the referring court to determine. Comment: The case provides a useful reminder of the importance of meeting the substantive conditions for zero rating and undertaking appropriate due diligence and obtaining documentary evidence to substantiate cross border supplies. Businesses which have had exemption (zero rating) refused in similar circumstances may wish to revisit the decision. For further information please contact Jamie Ratcliffe. Judgment The different treatment regarding output tax and input tax Fleming claims is compatible with EU law C-38/16 Compass Contract Services

4 On 14 June 2017, the Court of Justice of the European Union (CJEU) released its decision in this UK referral from the Firsttier Tribunal (FTT) asking whether the different treatment of output tax and input tax Fleming claims (where the former could be made for periods ending before 4 December 1996 and the latter for periods ending before 1 May 1997) breaches any principles of EU law. Compass Contract Services Limited (Compass), a catering business, supplies (inter alia) cold food and in 2006 it was accepted that certain supplies on which it had charged and accounted for VAT should have been zero rated. Compass sought repayment of the output tax overpaid but HMRC only accepted the claim up to 31 October 1996 suggesting that the remainder of the claim was time barred. Compass appealed the decision to the FTT which referred the case to the CJEU to consider whether the difference in treatment between output tax and input tax claims breaches any principles of EU law and if so how claims for the period 4 December 1996 and 30 April 1997 should be treated? In agreement with the Advocate General, the CJEU held that the right for a refund of overpaid VAT cannot be considered equivalent to a right for deduction of VAT as the latter is a basic principle of the common system of VAT established by the EU whilst the former is derived from general EU law. It follows that those differences can lead to rules specific to each of those two rights, including the limitation period for actions to enforce those rights and, specifically, the date from which such a period applies. National tax authorities are not required to treat the holders of those rights in the same way and the principle of equal treatment does not preclude those two situations from being treated differently. With regard to the principle of effectiveness, in the interests of legal certainty, it is compatible with EU law to stipulate time limits for bringing proceedings provided the limitation period is reasonable and any new legislation includes transitional arrangements allowing an adequate period after the enactment of the legislation for lodging a claim. The fact that the transitional periods concerning the date from which new reduced limitation periods become applicable are different, can have no effect on such a conclusion provided they do not render impossible or excessively difficult the repayment of overpaid VAT or the deduction of input VAT. In summary, the CJEU considered that the principles of fiscal neutrality, equal treatment and effectiveness do not preclude the existence of two dates with effect from which the three-year period for each type of claim is to be applicable. Comment: This will undoubtedly be a disappointing result for those hoping to extend output tax claims to cover the additional period. Opinion: Duplicate Contract Bridge is a sport for VAT purposes C-90/16 The English Bridge Union On 15 June 2017, the Court of Justice of the European Union (CJEU) delivered the opinion of Advocate General Szpunar (AG) in this 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 significant physical element of performance or whether a game, such as Duplicate Contract Bridge (DCB), with a predominantly mental element of performance, falls within the meaning of a sport (in other words, whether DCB is a sport for VAT purposes). DCB is the most widely used variation of contract bridge in club and tournament play. It is called duplicate because the same bridge deal is played at each table and scoring is based on relative performance. In this way, every hand is played in competition with others playing identical cards, consequently the element of skill is increased while that of chance is reduced. The English Bridge Union (EBU) is the national body for DCB in England. It organises tournaments and charges players an entry fee to play in those tournaments. The EBU made a claim to HMRC to recover VAT which had been paid in respect of those entry fees, claiming that the fees should be exempt pursuant to Article 132(1)(m). HMRC refused the claims and the First-tier Tribunal dismissed EBU's appeal. The Upper Tribunal subsequently referred the case to the CJEU. The AG has opined that whilst the term sport has undergone substantial change over a number of years, definitions provided by organisations including SportAccord International Federations' Union, the International University Sports Federation and the International Olympic Committee can be used to provide a good starting point in determining whether an activity is a sport. Each of these organisations include mental sports or endorse activities without a physical element. However, whilst the acceptance by international sporting associations should be of relevance to whether an activity can, in principle, be regarded as a sport, the term also needs to be interpreted in light of the purpose of the exemptions to the VAT Directive.

5 In this regard the AG considered that most activities commonly referred to as a sport have the following elements in common: They require a certain effort to overcome a challenge or an obstacle and as such are not purely recreational, eg competition against others or the surpassing of individual physical or mental limits; Overcoming of these challenges or obstacles trains a certain physical or mental skill and thereby yields benefits for the physical or mental wellbeing of the persons engaging in the sport; Such activities are usually practised not solely in a purely commercial context; Public perception or international recognition serve as an indication to the existence of a sport To summarise, sport within the meaning of the directive, needs to be understood as meaning the training of mental or physical fitness in a way that is generally beneficial to the health and the well-being of the individual. The presence of a physical element is not necessary for an activity to be considered a sport within the meaning of Article 132(1)(m). With regard to whether DCB qualifies as a sport, the AG concluded that it is ultimately for the referring court to determine by reference to the facts and interpretation of national legislation and the principles established above. However the AG proposed that the answer should be yes ; DCB is neither a game of chance, nor does its classification as a sport seem to be contrary to the principles established above. The fact that tournaments take place on an international stage and that the results of the game seem to be directly dependent on the skill and training invested in the activity suggest that DCB is a sport. Considerable mental effort and training are necessary in order to compete and moreover, there is a broad international acceptance of DCB as a sport, not least because the International Olympic Committee, in 1998, decided to classify it as such. The relatively small role played by chance in obtaining the results points to DCB constituting a sport for the purposes of Article 132(1)(m). Comments: It will be interesting to see whether the CJEU follows the AG's opinion, if the judgment follows the opinion this is a good result for the EBU. Relevant bodies engaged in similar sports activities should consider the implications of this opinion and the opportunities it presents to revisit supplies previously treated as standard rated. For further information please contact Dermot Rafferty Calendar update Thursday 29 June 2017 Opinion 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. This case had originally been listed for an AG opinion on 11 May Judgment C-288/16 IK L.Č. - A Latvian referral regarding the interpretation of the exemption of services connected with the exportation or importation of goods. Must Article 146(1)(e) of Council Directive 2006/112/EC be interpreted as meaning that the exemption laid down therein is applicable only where there is a direct legal connection or a reciprocal contractual relationship between the service provider and the consignee or the consignor of the goods? What criteria must be met by the direct connection referred to in the abovementioned provision in order for a service connected with the importation or exportation of goods to be exempt? Tuesday 4 July 2017 Opinion C-308/16 Kozuba Premium Selection - A Polish referral, asking whether Article 135(1)(j) of Council Directive 2006/112/EC precludes a national provision under which the supply of buildings and civil engineering works is exempt save where: The supply is made within the period of first occupation or prior to the first occupation The period between the first occupation and the supply was shorter than 2 years following their erection or upgrade if the expenditure incurred on the upgrade constituted at least 30% of the initial value.

6 Wednesday 5 July 2017 Opinion C-374/16 Geissel - A German referral asking whether a tax invoice is valid, in this case for the purpose of VAT recovery, where it records the suppliers postal address rather than the address from which the economic activity is performed. The referral also asks whether the VAT Directive precludes a national practice of accepting claims of good faith only outside the assessment process. Comment: this is an interesting case, with economic activities being provided electronically increasing, it can be difficult to verify the actual place of an economic activity. Opinion C-375/16 Butin A German referral asking whether a valid VAT invoice requires the taxable person to record the address from which the economic activity is performed and if not whether a postal address is sufficient. The referral also seeks clarification regarding which address should be used by those without business premises (e.g. those trading through the internet). A further question has been asked whether, in the event that formal invoicing requirements are not met, must the taxable person automatically be allowed to deduct input tax where no tax evasion has been committed or the taxable person did not know, and could not have known, of the connection with fraud or, in that event, does the principle of the protection of legitimate expectations presuppose that the taxable person has done everything that could reasonably be required of him in order to verify the accuracy of the content of the invoice? This case will be joined with Geissel above. Thursday 6 July 2017 Judgment C-254/16 Glencore Agriculture Hungary A Hungarian referral asking various questions concerning whether national law, which extends the timeframe within which the repayment of overpaid VAT is made, following a tax investigation which led to a fine for non-compliance, is compatible with EU law. The referral also considers the right to default interest. Judgment -a C-392/16 Marcu A Romanian referral concerning a belated registration requirement in relation to property transactions. The referral asks whether EU legislation precludes national legislation and established tax authority practice from refusing the application of a reverse charge procedure (mandatory in Romania at the time) where it has not been requested or authorised at the time of the relevant transaction. Thursday 13 July 2017 Opinion C-574/15 Scialdone An Italian referral, made in criminal proceedings, concerning the compatibility with EU law of national provisions relating to penalties for non-payment of VAT and the interaction with national provisions relating to penalties for non-payment of income tax. This case had originally been listed for an AG opinion on 15 June Thursday 20 July 2017 Opinion C-251/16 Cussens and Others An Irish referral asking whether certain transactions constitute an abusive practice liable to redefinition under the Halifax doctrine (which addresses the scope of the EU principle of abuse of rights in the context of VAT), even in the absence of national legislation giving effect to that principle and in circumstances where the transactions were completed before the CJEU judgment in Halifax. Upper Tribunal Overpayments constitute consideration for taxable supplies National Car Parks Limited The Upper Tribunal (UT) has released its decision in this appeal by National Car Parks Limited (NCP) against the First-tier Tribunal (FTT) decision that voluntary payments made by customers in excess of car parking tariffs constitute consideration for a taxable supply of services. NCP, a commercial car park operator, submitted a claim for overpaid VAT in respect of overpayments against car park tariffs in its pay and display car parks. Customers are notified by instructions on the front of the machines that change is not given and that overpayments are accepted. Where an overpayment is made the machines do not recognise any additional parking time. It was NCP's contention that overpayments should be treated as ex-gratia payments and outside the scope of VAT. The FTT held that in a situation where there is no legal restriction on the amount that could be charged for parking, and taking account of EU law and English contract law, the full price paid by the customer, including any additional amount, constitutes the consideration for the supply of a right to park for a given period of time and is accordingly the taxable amount for VAT purposes.

7 Dismissing this latest appeal, the UT held that there is a supply of services for VAT purposes where there is a legal relationship between the provider of the service and the recipient, pursuant to which there is reciprocal performance. The taxable amount is everything which constitutes consideration obtained or to be obtained by the supplier from the customer or a third party in return for the supply. The meaning of consideration for VAT purposes is the value actually given by the customer (or a third party) in return for the service supplied and actually received by the supplier and not a value assessed according to objective criteria. Under the contract between NCP and the customer, which is formed when the customer pays for a ticket, NCP grants the customer the right to park his or her car. Where NCP sets a charge but the customer makes an overpayment, that amount is the value given by the customer and received by NCP for its supply, accordingly that is the taxable amount for VAT purposes. The UT differentiated the treatment of overpayments in these circumstances from scenarios of overpayments which are freely given and are in addition to a contractually agreed price e.g. tips in restaurants. In dismissing the appeal, the UT considered that the earlier decision in King's Lynn was wrongly decided. The UT considered that the tribunal in that case was unduly influenced by the fact that the car parking charges were set by statutory order and that neither the council nor the customer was able, unilaterally, to alter the charge without the order being amended. The UT concluded that the way in which a tariff of charges is set cannot determine the nature of an overpayment. Comment: It will be interesting to see if this decision holds any repercussions for local authorities making claims following the King's Lynn case, where it had been held that overpayments for car parking supplied by a local authority were not subject to VAT on the grounds that the local authority was subject to a statutory restriction on the amount which could be charged. For further information please contact Andrew Needham. Supplies of caravans are held to be zero rated where the right to site the caravans is a separate supply C Jenkin & Son Limited C Jenkin & Son Limited (CJS) supplied caravans, used as mobile homes, to members of the travelling community for use as their homes and to be sited on pitches provided, in general, by local authorities. It was common ground that the caravans fell within the definition of a caravan for the purposes of zero rating under Item 1 of Group 9 of Schedule 8, VAT Act The caravans were the subject of leasing agreements made between the traveller and CJS, and there were separate pitch agreements made between the traveller who had leased a caravan and the owner of the site on which it was placed. The leasing agreement for the caravan made between CJS and the traveller was couched in terms of a tenancy of real property, although no interest in land was created. HMRC assessed CJS to recover over-claimed input tax. The input tax had been reclaimed on the basis that the supplies of the caravans to the travellers were zero-rated, whereas HMRC asserted that the supplies were supplies of accommodation in caravans and, as such, excluded from zero rating by Note (b) to Group 9. HMRC considered that the supplies were grants of an interest in or right over land or a licence to occupy land and exempt under item 1 of Group 1 of Schedule 9. CJS appealed to the First-tier Tribunal (FTT). At the hearing, both parties agreed that there was no legal basis on which the supplies could be held to be exempt. It was accepted by HMRC that CJS was not making supplies of an interest in or right over land as such supplies were made by the site owners who granted the lessees of the caravans the right to occupy the pitches. The FTT held that the caravans were used, and intended to be used, as peoples homes to live in as residential accommodation and, as such, were excluded from zero rating. The FTT stated that, as everyone agreed that CJS's supplies were not exempt and it had found that the supplies were excluded from zero rating, the only possible conclusion was that the supplies were standard rated. The FTT observed that, as no one had argued that the supplies were chargeable to VAT at the standard rate, the decision was not authority for that conclusion, even though it was probably right. In terms of the assessments under appeal, the only issue was whether they were good in law. The FTT held that the effect of HMRC classifying the Appellant's supplies as exempt was in this instance to impose a liability which was not authorised by law. Lacking any legal basis, the assessments therefore had to fail. CJS appealed the decision which challenged the zero rating of its supplies and HMRC appealed the decision regarding the legal basis to assess. In allowing CJS's appeal, the UT considered that that a supply of accommodation in a caravan requires more than simply providing the caravan. The supplies, whether by way of sale or lease, by CJS were not supplies of accommodation but were supplies of items that could be used as accommodation. The caravans are not merely placed on the site; they are physically connected to utilities as well as mains drainage. Without such facilities, it would not be possible to occupy the caravans for residential purposes. The pitch and services are provided by a third party, CJS does not supply them and has no control over

8 those elements. Without them, The UT concluded that CJS cannot supply accommodation in a caravan and therefore the supply of the caravans by CJS qualifies to be treated as zero rated. The UT did point out that the fact that a caravan and the right to put it on a particular site are supplied by two separate persons would not necessarily result in the supplies not being regarded as accommodation in a caravan if the arrangements were an abuse (reference was made to C-425/06 Ministero dell'economia e delle Finanze v Part Service Srl as an example of two suppliers taking part in a leasing transaction being regarded as making a single supply of leasing). In allowing CJS's appeal the UT dismissed HMRCs appeal. For further information please contact Ali Anderson. First-tier Tribunal Services are provided by an intermediary and are not within the Tour Operator's Margin Scheme Lowcost Holidays Limited t/a Lowcost Beds This is an appeal to the First-tier Tribunal (FTT) by Lowcostholidays Ltd t/a Lowcostbeds.com and Lowcostbeds.com Ltd. Lowcost, a travel agent, offers holiday accommodation in EU member states, and other countries, predominantly to customers based in the UK. The issue between the parties is whether Lowcost provides holiday accommodation to customers as a principal, dealing in its own name, under article 306 of the VAT Directive, and therefore within the Tour Operators Margin Scheme (TOMS), with a liability to account for UK VAT, or whether it acts solely as an intermediary or agent in the supply chain. There are currently before the tribunal several other appeals (hotel appeals) of a very similar nature to this one. Shortly before the hearing of the hotel appeal made by Opodo Limited, which took place on 29 March 2016, the other appellants in the hotel appeals became aware that HMRC proposed to make an application at that hearing for the tribunal to make a referral to the Court of Justice of the European Union (CJEU) regarding the proper interpretation of article 306 and in particular the term act solely as intermediaries. As HMRC proposed to make the same application in all of the hotel appeals, the appellants made an application to the tribunal requesting, in outline, for the CJEU referrals to be dealt with all together separately at a later hearing, in which all the appellants would participate, or, for the other appellants to be permitted to make representations on that issue. This application was dealt with by Judge Morgan at a hearing on 29 March At that hearing it was decided that, under rule 5(3)(b) of the Tribunal Procedure (First-tier Tribunal (Tax Chamber) Rules 2009, the CJEU referral in relation to each of the relevant appeals, including this appeal, is to be treated as a separate issue to be dealt with in a separate hearing at which all of the CJEU referrals will be considered together. Accordingly the initial hearing before the tribunal in this appeal and each of the related appeals is confined to consideration of whether, under the principles set out in Secret Hotels2, the appellant was acting as a principal or as a disclosed or undisclosed agent under principles of English law. The FTT has concluded in this hearing that Lowcost was not within TOMS, as regards the transactions in issue, on the basis that it was acting as a disclosed agent. The contract with the customer, as contained in the Terms and Conditions on the Lowcost website, is quite clear that the customer contracts with Lowcost as agent for the accommodation suppliers. Specific reference was made to the fact that the deposits and final payments for the accommodation were paid into the bank account of Lowcost and that Lowcost retained the interest thereon, which HMRC considered was an indication of Lowcost acting as a principal rather than as an agent. This issue was also considered by the Supreme Court in SecretHotels2 and in that case it was decided that the question of interest was a matter as between the appellant and the customer and did not affect the fundamental nature of the contract with the customer. The contract between Lowcost and the customer, is one under which Lowcost is clearly acting as the agent of the accommodation provider. However, the FTT's conclusion is subject to the determination at a later hearing of whether there is to be a CJEU referral on the meaning of act solely as an intermediary under EU law and, if so, the outcome of that referral. Comment: The issue of agency verses principal remains high on HMRC's agenda. This is clearly supported by the approach that has been taken by HMRC in this latest case, the wider hotel appeals litigation and the fact that no formal guidance has been issued by HMRC to date. Travel companies should review their position in light of the relevant decisions to ensure that any potential risk of challenge is mitigated.

9 For further information please contact Martyne Pearson. HMRC Material VAT Guidance: get clearance on the rules for complex transactions HMRC guidance regarding obtaining clarification about how VAT law applies in a particular situation, and how to take part in an EU trial for complex cross-border VAT ruling requests has been updated. The trial has been extended to 30 September 2018 and Denmark, Ireland, Italy and Sweden have been added to the list of participating member states. For further information please refer to EU Commission VAT cross-border rulings and the EU Commission Information Notice for detailed information regarding conditions and procedures together with a full list of those member states participating. EY Global Tax Alerts US - US House Ways and Means Committee Chairman Kevin Brady on 13 June suggested a five-year phase-in of the House Tax Reform Blueprint's border adjustability proposal as a way to address concerns about the controversial measure. Chairman Brady was quoted as saying the phase-in reflects input the committee has received and said it really resolves the major challenges. He also said the plan would include targeted rules for the financial services, insurance, communications and digital-services industries. It is not clear if Chairman Brady's proposed transition period will bring opponents of the provision on-board. A number of Congressional tax writers indicated they will need to see more details regarding the transition before deciding if the proposal would lead them to support border adjustability. European Commission Corrections and amendments to the UCC Implementing Regulation The Commission has adopted corrections and amendments to the Union Customs Code (UCC) Implementing Regulation. The text has been published in the Official Journal and the new rules will enter into force on 14 June. The most important changes can be summarised as follows: Clarification and simplification of the rules for issuing a long-term supplier's declaration (for instance, re-introduction of the possibility of issuing at any point in the year a single declaration covering the full calendar year Article 62) More time is given to exporters to get a Registered Exporter (REX) number for the purposes of the Trade Facilitation Agreements, particularly for the EU-Canada agreement (CETA) [Article 68] International Road Transport is better secured in financial terms because the limit up to which any guaranteeing association may become liable in relation to a particular international road transport (TIR) operation has increased from EUR to EUR [Article 163] The rules for designating the customs office of exit in cases of export followed by transit of excise goods have been clarified [Article 329(8)] Further details regarding the UCC can be found here. For further information please contact Gerard Koevoets.

10 European Council Meeting of the Economic and Financial Affairs Council (e-publications and the introduction of a generalised reverse charge mechanism) At the European Union's Economic and Financial Affairs Council (ECOFIN) meeting on 16 June 2017 the Council were invited to: Agree on the proposal for a directive to amend the current EU VAT rules in order to allow e-publications to benefit from reduced VAT rates, at the discretion of the member states Agree a general approach on a proposal for a directive that would allow a temporary application of a generalised VAT reverse charge mechanism (RCM), in derogation from the main principles of the current VAT system. The proposal aims to contribute to the prevention of VAT fraud by allowing member states to apply a RCM to domestic supplies of goods and services above a threshold of 10,000 Despite progress being made, the Council was unable to reach an agreement on either proposal at this stage. Comment: The lack of progress regarding the RCM is not a great surprise. As previously reported we understand that Lawyers to the European Council of Ministers, during a recent meeting, suggested that the proposed RCM could be deemed disproportionate and disturb the EU single market. The Lawyers also considered that the RCM deviates from the general VAT principles of levying VAT throughout the supply chain. The Lawyers have called for further investigation into alternative proposals. However, the lack of progress regarding e-publications is disappointing given that the European Parliament has now voted in favour of the proposal to reduce the VAT rate on e-books, to align them with printed books and publications. 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 stakeholders. 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. Ernst & Young LLP accepts no responsibility for any loss arising from any action taken or not taken by anyone using this material. ey.com/uk Important commercial notice: This may constitute an advertisement or solicitation under US law, if its primary purpose is to advertise or promote Ernst & Young LLP s products or services. Our principal postal address is 1 More London Place, London SE1 2AF. Please click here to remove this from the subscription for this communication. Use the link below to opt-out if you would prefer not to receive any advertising or promotional from Ernst & Young LLP (except for EY Online and the ey.com website, which track preference through a separate process). Your address will be immediately removed from our central mailing list for newsletters and alerts, and all s from Ernst & Young LLP designated as advertising or promotional will be automatically blocked as soon as necessary. Click here to remove yourself from all Ernst & Young LLP commercial s.