COVID-19: VAT update
The outbreak of COVID-19 was so unexpected and came as a huge shock to individuals, businesses and governments all around the world.
Governments are trying their best to quickly introduce some relief for businesses in the form of tax breaks, extending VAT return and/or VAT payment deadlines and reducing their VAT rates in an attempt to support their economies at this trying time.
Below we have summarised some of the steps that have been taken by a number of countries at this time.
Up until now, monthly VAT returns had a filing date of the 15th day of the second month of a tax period.
Individual extensions for monthly VAT returns can be granted by the Tax Office upon reasoned request.
Deferral of VAT payments or instalment payments are possible.
Companies that are in difficulty can request a VAT payment delay. This is in place until 30 June 2020.
Periodic VAT returns have been extended:
- February 2020 VAT return – deadline extended until 6 April 2020
- March 2020 VAT return – deadline extended until 7 May 2020
- Q1 2020 VAT return – deadline extended until 7 May 2020
VAT payments have also been extended by 2 months:
- February 2020 VAT payment – payment deadline extended to 20 May 2020
- March 2020 VAT payment – payment deadline extended to 20 June 2020
- Q1 2020 VAT payment – payment deadline extended to 20 June 2020
There is currently no extension of the deadlines for filing of tax returns or other returns.
The deadline for declaration and payment of value-added tax will not be changed.
There will be a postponement of 1 month for companies with a turnover over 50 million DKK. For large companies, the deadlines are as follows:
- The deadline of 27 April 2020 is postponed to 25 May 2020;
- The deadline of 25 May 2020 is postponed to 25 June 2020; and
- The deadline of 25 June 2020 is postponed to 27 July 2020
For small and medium-sized businesses that pay VAT on a quarterly basis – Q1 and Q2 2020 will be merged, so the reporting and payment deadline will be 1 September 2020.
For small and medium-sized businesses companies that pay VAT semi-annually – the first and second half of 2020 will be combined and the reporting and payment deadline will be 1 March 2021.
It is still possible to report VAT at the original deadline but VAT must be reported and paid no later than the deferred deadline.
For both quarterly and bi-annual submissions, it is necessary to report VAT for each separate period on each separate return, even though the periods are merged into one.
The Finnish tax authorities cannot grant more time for filing VAT returns or other tax returns for self-assessed taxes. These must still be filed on time.
Tax payers can request that the late-filing penalty be removed.
If tax payers have a justified reason for filing late, such as illness, they may not have to pay a late filing penalty.
If companies are unable to make tax payments that are due this year due to the economic consequences of the corona pandemic, these payments can be deferred on request and these will be, generally, free of interest. Companies can apply to their tax office until 31 December 2020.
Companies will have to demonstrate that they are directly affected and will need to give the reason for the deferral request. Companies do not have to provide detailed evidence of the value of the damage that has been caused.
It has also been reported that there are discussions as to whether an extension of the deadlines for submitting VAT returns or a general changeover from monthly to quarterly VAT returns could be made. There is nothing set in stone for this right now.
A four-month VAT payment delay has been introduced. This will be applicable to businesses in areas of the country where the sectors of the economy have not been able to operate for over 10 days due to restrictions imposed by the government to contain coronavirus.
Payment due between 11 and 30 March is postponed up until 31 August 202o. No late payment interest will be calculated during this time. As a prerequisite for the delay in payment, the businesses must maintain all job positions.
VAT returns must continue to be filed on time and the Irish Revenue have advised companies to contact them to renegotiate payment terms.
The application of interest on late payments is suspended for January/February VAT and both February and March PAYE (Employers) liabilities.
The deadline date for the filing of the 2019 Annual VAT return is postponed to 30 June 2020.
On 17 March 2020, the Norwegian government announced an extension of VAT payments:
- January – February 2020 VAT payment due on 10 April 2020 – payment postponed until 10 June 2020
The tax administration will not impose fines for late submission of VAT returns at this time.
An extension will be applied to VAT for businesses that declare on a monthly or quarterly basis.
Companies that have paid taxes to their tax account from 1 January 2020 to March 2020 are eligible to have this tax refunded. However, taxes must be repaid including interest within 12 months.
These rules will only apply to businesses with an acceptable financial track record and will not apply to businesses with larger tax debts. These rules are expected to come into force on 7 April 2020 but can be applied retrospectively from 1 January 2020.
On 25 March 2020, the Federal Council decided to waive interest on arrears for a limited period.
This means that late payments of VAT and other taxes for the period 20 March 2020 to 31 December 2020 will not owe interest on arrears. Declarations must still be made on time.