Global VAT Guide: April 2024

The April edition of the Global VAT Guide, features comprehensive updates on VAT regulations and developments from Cyprus, Czech Republic, Denmark, France, Germany, Hungary, China, Colombia, South Africa, UAE and the United Kingdom.

Cyprus

An imposition of VAT on energy products subject to the carbon tax is proposed in the Green Tax Reform. The bill in question concerns the introduction of a carbon tax on the transport sector and polluting industries. The Green Tax Reform was open to comments until 20 March 2024. Expected to enter into force on 1 April 2024.

Czech Republic

On 18 January 2024, The General Directorate of Finance (GFR) published Information on the limitation of VAT input tax deduction for selected passenger cars (M1 category) from 1 January 2024. There are changes in the area of entitlement to a tax deduction for the so-called selected passenger car. The amendment is constructed in the form of setting a limit amount of input tax of CZK 420,000 for the received taxable performance (selected passenger car). It is not important whether the selected passenger car is purchased domestically, from another member state, or imported from a third country. The limited amount of input tax is applied to the purchase of passenger cars (M1) and technical improvements of the same. Selected passenger cars M1 category includes motor vehicles with a maximum of eight seats in addition to the driver’s seat and without space for standing passengers, regardless of whether the number of seats is limited to the driver’s seat.

In the case of financial leasing, the amount of input tax is limited for the leasing lessee (user). For the purposes of the VAT Act, financial leasing means the supply of goods.

It is different in the case of operational leasing, where the limitation is for the leasing company. For the purposes of the VAT Act, operational leasing means the provision of a service.

Denmark

On 28 February 2024, the Minister of Taxation submitted Bill No. L 119 with proposals to amend the VAT Act that includes “The special scheme for small businesses“.

It is proposed, with effect from 1 January 2025, that Article 1 of the SME Directive and Article 2 of the Amending Directive be implemented by inserting Chapter 17 of the VAT Act, which will contain the special scheme for small businesses. 

Adjustment of the rules on the place of delivery for certain virtually delivered services (activities within culture, art, sport, science, education, entertainment, fairs and exhibitions).

It is proposed that the place of delivery is where the consumption is, regardless of:

• whether the services provided are accessed physically;
• where the event or other activities take place;
• whether it is streaming; and
• whether the service is available virtually

This must enter into force on 1 January 2025 Repeal of special VAT rule for electricity and gas trade – reverse charge

It is proposed repeal of Section 46 of the VAT Act, subsection 3*, with effect 1 July 2024, so that after that no more permits can be granted not to use the reverse payment obligation for the sale of electricity and gas to partial registrations that resell these goods. It is also proposed that permits already granted to expire on 1 July 2024.

France Airbnb rentals reporting obligations

With accepting LAW no. 2023-1322 of 29 December 2023, on finances for 2024 (1) the French Tax Administration amends Art. 261D of the General Tax Code(CGI) placing rentals Airbnb type in VAT scope and reporting obligations in force since 31 December 2023. The previous version of the Art. 261D contained a list of classified establishments subject to VAT. The new version repeals the list of classified establishments and expands the VAT scope to establishments that provide:

Accommodation services provided within the framework of the hotel sector or sectors with a similar function which meet the following cumulative conditions:

• they are offered to the customer for a period not exceeding thirty nights, without prejudice to the renewal possibilities offered;
• they include the provision of furnished premises and at least three of the following services: breakfast, regular cleaning of the premises, the supply of household linen and the reception, even if not personalized, of customers;

Rentals of bare, furnished or equipped premises granted to the operator of an accommodation establishment that meets the conditions set out above, excluding those granted to the operator of an establishment mentioned in l Article L. 633-1 of Construction and Housing Code, the activity of which does not give rise to the right to deduction.” The new conditions place the rentals of Airbnb and similar types equal to hotels and include them in the VAT scope under a 10% VAT rate. This means these establishments will now have reporting obligations.

France – Place of supply of virtual events

On 30 December 2023, the French Tax Authority gazetted LAW no. 2023-1322 of 29 December 2023, on finances for 2024. Art. 83. includes adjustment of the rules on the place of supply of certain virtually-delivered services (activities within cultural, artistic, sporting, scientific, educational, entertainment or similar, such as fairs and exhibitions) – The place of delivery is where the recipient is established or resides. This must enter into force on 1 January 2025.

Germany

The German Federal Tax Administration (BZSt) published some transitional measures for digital platform operators. The measures will be applicable only for the first reporting period in 2024. These measures include:

• The reporting deadline is extended before 1 April 2024 (until 31 March 2024);
• The required records can be created before 1 April 2024 (until 31 March 2024);
• The providers subject to reporting requirements of the information concerning them can be notified by the digital platform operator before 1 April 2024 (until 31 March 2024); and
• Digital platform operators will not be subject to penalty if they do not submit or correct an already submitted return before 1 April 2024 (until 31 March 2024).

Hungary

On 1 December 2023, the Hungarian Tax Authority gazetted amendments to VAT law CXXVII of 2007. Most of the changes enter into force in January 2025 except for the 5% VAT rate on the import of works of art. This came into effect from 1 January 2024. Summary of the changes:

• The place of supply of virtual events would be the place where the recipient is established or resides;
• The import of works of art goes to a 5% reduced VAT rate;
• Activities exempted by other Member States are excluded from the input tax deduction;
• The mandatory data on the electronic cash register receipts is expanded to contain a description and quantity of the supply, applicable VAT rate, and clear indication if the transaction is exempt or under a margin scheme; and
• Persons exempt from tax are allowed to issue simplified invoices showing only the total consideration

China

The Shanghai government has issued some measures to improve the implementation of existing tax incentives. The aim is to reduce the burden of small and medium sized enterprises between the period 23 March and 31 December 2024. The government has announced some measures that will reduce the cost of electricity, gas, water and financing to accelerate economic growth and assist businesses to overcome financial difficulties.

Colombia

Three months postponement of the mandatory issuance of new electronic document types was announced by the National Tax and Customs Directorate (DIAN) with the publication of Resolution Nr. 000008 from 31 January 2024. The deadlines for implementation are between 1 May and 1 November, according to the classification of the taxpayer or the type of equivalent document.

01 May 2024

• For the generation of the new electronic POS for Large Taxpayers who are electronic billers and issue cash register machine tickets with a POS system to support sales operation

1 June 2024

• For Income Tax filers who are not Large Taxpayers

1 July 2024

• For non-Income Tax filers and those who do not have any of the qualifications of the previous groups

Between 1August 2024 and 1 November 2024

• The 11 documents that the DIAN considers as equivalent to the invoice
• 1 August 2024 – for passenger transport tickets
• 1 September 2024 – for passenger air transportation tickets
• 1 October 2024 – for documents issued for the collection of tolls
• 1 November 2024 – for movie tickets and entrance tickets to public performances (performing arts, and other public shows)

South Africa

On 21 February 2024, the National Treasury published the 2024 Budget Review. Among the VAT proposed changes is the prescription period for input tax claims. To ease the administrative burden on both taxpayers and SARS, it is proposed that the VAT Act be amended in relation to the tax period in which past unclaimed input tax credits may be claimed. To ensure ease of audit functions and clarity of returns in this regard, it is also proposed that the act be amended to clarify that such deductions be made in the original period in which the entitlement to that deduction arose.

UAE

Federal Tax Authority (FT) announced two additional conditions to list the juridical person as a Tax Agent with effect from 1 December 2023. The juridical person wishing to be registered as a Tax Agent, and to be listed in the Register, must meet the following conditions:

• The juridical person must have one of the partners or directors listed in the Tax Agents Register; and
• The juridical person must have at least one natural person registered as a Tax Agent for every ten (10) employees working in the tax field.

United Kingdom

Untied Kingdom VAT Threshold

From 1 April 2024, the below will apply: VAT threshold has increased from £85,000 to £90,000

• This is expected to remove 28,000 small businesses from liability.

Small businesses rates multiplier remains at its previous level for the fourth year

• This is expected to save more than a million business rate payers from a 6.6% increase in their bills

United Kingdom – Update of VAT Notice 700/21 Record Keeping

On 18 March 2024, HMRC updated VAT Notice 700/21 – Record keeping. The update includes the removal of the obligation to state the reason for any zero rate or exemption on the VAT invoice.

United Kingdom – Update of VAT notice 723A refunds of UK VAT for non-UK businesses

On 29 February 2024, HMRC updated VAT Notice 723A – Refunds of UK VAT for non-UK businesses. The update includes newly added sections and updated sections. Newly added sections:

• 6 VAT groups;
• 9.5 Email security; and
• 14 Electronic signatures

Updated sections:

• 5 VAT paid on imports – When claiming Import VAT, the claimant must be the owner of the goods
• 10 Application form – The Application form should be completed electronically
• 11 Certificate of status -the certificate of status must also include the names of the group members in case of VAT group; and in case information is missing on the electronically issued certificate, alternative evidence is needed
• 16 Method of payment – Payable order is excluded as a method of payment of the refund

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