Global VAT Guide: August 2022 VAT Updates
August 2022 VAT Updates in Bulgaria
It has been confirmed that the VAT registration threshold will increase from BGN 50,000 to BGN 100,000.
The new VAT registration threshold will come into effect on 1 January 2023.
August 2022 VAT Updates in Denmark
As of 1 July 2022, the Danish Tax Agency has changed its practice so that subcontracting services in the form of transport of goods out of the EU are no longer exempt from VAT.
The change in practice has taken place as a consequence of an EU ruling.
According to the new rule, the exemption no longer applies to suppliers of transport services of goods to a place outside the EU when the services are not delivered to the sender or recipient of the goods.
August 2022 VAT Updates for the EU
Crypto-assets & E-money
The EU Commission has introduced an initiative to amend the Directive on Administrative Cooperation (‘DAC’) to ensure that EU rules stay in line with the evolving economy and include other areas such as crypto-assets and e-money.
The legislative proposal will be accompanied by an impact assessment, and this is expected in Q3 2022.
Taxpayers carrying out activities that may be impacted should comply with the new requirements upon adoption at the EU and country legislation level.
Tax evasion & Tax planning
The EU Commission has issued a proposal of Regulations that aims to limit the aggressive tax planning – i.e. via intercompany structures – Public Consultation in the period 6 July 2022 – 12 October 2022.
The legislative proposal will be accompanied by an impact assessment and this is expected in Q1 2023.
VAT in the Digital Age
In its work programme for 2022, adopted on 19 October 2021, the European Commission announced that it would put forward, under the section REFIT Initiatives, sub-section “An economy that works for people” initiative with the aim to modernise the current VAT rules considering the opportunities offered by digital technologies.
The Commission’s action plan for fair and simple taxation underlined the need to reflect on how technology can be used by tax authorities to fight tax fraud and benefit businesses, and whether the current VAT rules are adapted to doing business in the digital age.
It announced a legislative proposal for 2022 under the heading ‘VAT in the digital age’:
- VAT reporting obligations and e-invoicing;
- VAT treatment of the platform economy; and
- Single EU VAT registration.
The package is expected to harmonise and promote the provision of cross-border supplies in the single market, and to help improve tax collection and therefore ensure sustainable revenues during the COVID-19 recovery.
The legislative proposal will be accompanied by an impact assessment, and this is expected in Q3 2022.
August 2022 VAT Updates in Italy
Between 30 June 2022 and 20 July 2022, the Italian Ministry of Finance Public completed the public consultation concerning the draft legislative decree implementing the EU Directive 2021/514 dated 22 Mar 2021 (DAC7 Directive).
The measures regarding digital platforms are expected to come into effect on 1 January 2023.
Platforms should start collecting the required reportable information from 1 January 2023.
The first reporting due for 2023 will be due to be filed by 31 January 2024 at the latest.
August 2022 VAT Updates in Lithuania
Lithuania is planning to increase the VAT registration threshold for persons that purchase goods from the other Member States.
The VAT registration will be increased from EUR 14,000 to EUR 30,000.
This will exclude excise goods and new vehicles.
If this change is implemented, it will come into effect on 1 January 2023.
August 2022 VAT Updates in the Netherlands
On 30 June 2022, a memo on the Amendment of the International Tax Assistance Act related to the implementation of 2011/16/EU on administrative cooperation in the field of taxation (OJEU 2021, L 104) (Act on the implementation of the EU Directive on data exchange for the digital platform economy) was submitted by State Secretary for Finance Van Rij (Fiscaliteit en Belastingdienst).
Implementation aspects are as follows:
- 1 Jul 2022 – specifications published and available for consultation by external stakeholders;
- 1 Jan 2023 – IT support ready and facilities available for registering non-EU platforms; and
- Early 2024 – reporting platform operators will be able to report for reporting the year 2023.
The measures regarding digital platforms will come into effect on 1 January 2023.
That means the platforms will start collecting information about reportable merchants on that date and will submit that information to be reported to the tax authorities annually.
The 2023 information must be submitted by 31 January 2024 at the latest.
August 2022 VAT Updates in Portugal
Portugal has announced that from 1 January 2023, there will be changes in relation to the submission due date of SAF-T:
- Monthly SAF-T
- Must be submitted by the 5th day of the following month.
Portugal has also announced an extension of deadlines relating to June 2022 and Q2 2022 VAT returns, SAF-T and payments:
- June 2022 monthly VAT Return – to be filed by 31 August 2022;
- Q2 2022 quarterly VAT Return – to be filed by 31 August 2022;
- The payment deadline – is 6 September 2022; and
- SAF-T (PT) – to be filed by 31 August 2022.
August 2022 VAT Updates in Romania
Companies, including foreign ones, having transport of goods subject to customs operations, intra-Community acquisitions and/or supplies with transport in Romania of high-risk products are subject to the new e-transport obligation.
Companies that have transactions falling under this scope would need to report the transports related to them and obtain the related ITU codes for each transport.
The e-Transport regulation is mandatory as of 1 July 2022. According to the procedure published on the website of the Ministry of Finance, the data to be reported includes transport-specific details, such as the place of loading and unloading, and the license plates of the truck carrying the goods.
August 2022 VAT Updates in Kenya
A draft Amendment Regulation has been published in Kenya Gazette Vol.CXXIV-No.96 27 May 2022. The legislative process is yet to be completed.
Under the current regulations, B2B taxable supplies made through the internet, electronic networks and digital marketplaces, by a non-resident supply to Kenya B2B customers – are subject to reverse charge.
The suggested change is that the treatment of all supplies, B2B and B2C, are aligned and will be subject to VAT.
This measure is considered to be a simplification of the compliance obligations of the non-established suppliers as they would no longer be required to identify the status of their customers.
August 2022 VAT Updates in Singapore
The Singapore Tax Authorities have announced their plan to extend the scope of the Overseas Vendor Registration (OVR) Regime.
This will ensure a level playing field for local businesses to compete effectively.
From 1 January 2023, the Overseas Vendor Registration (“OVR”) regime will be extended to:
- Goods imported via air or post with a value not exceeding $400 (“Low-Value Goods”); and
- Business-to-Consumer, B2C, imported non-digital services.
Digital services that are currently subject to GST will remain taxable.
Consequently, from 1 January 2023, all B2C supplies of imported remote services, whether digital or non-digital, will be taxed by way of the extended OVR regime:
- Digital Services – (e.g. Downloadable digital content, subscription-based media, software programmes, electronic data management services;
- Non-Digital Services (e.g. Live interaction with providers of educational learning, fitness training, counselling, telemedicine); and
- Low-value goods – Goods imported via air or post with a value not exceeding $400 are not subject to GST as they are eligible for the GST import relief.
August 2022 VAT Updates in South Africa
A VAT domestic reverse charge (DRC) on valuable metal was introduced in South Africa as of 1 July 2022.
As per the regulations issued in terms of section 74(2) of the VAT law, the supply of certain valuable metals is subject to a domestic reverse charge mechanism.
This means that the liability to account for and pay the VAT on a supply of certain valuable metals shifts from the supplier to the customer.
The supplier and the recipient must fulfil certain invoicing and reporting obligations in relation to the application of the domestic reverse charge.
There is a transition period of one month from 1 July 2022 so that the affected suppliers of valuable metals could make the necessary adjustments to their invoicing and accounting systems no later than 1 August 2022 when the DRC Regulations will apply for all affected transactions.
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