Global VAT Guide: February 2022 VAT Updates

February 2022 VAT Updates in Belgium

In January 2022, the Council of the European Union granted their approval to Belgium to continue applying the small business VAT exemption. This VAT exemption will apply to small businesses whose annual turnover does not exceed EUR 25,000. This means that small businesses will not have to complete the below steps:

• Charge VAT to customers;
• Submit periodic VAT returns; and
• Pay VAT to the Treasury.

While small businesses do not have to worry about the above, they must:

• Submit a declaration of commencement, modification or cessation of activity;
• Submit a declaration of intra-Community supplies for intra-Community deliveries and services provided, declaration of intra-Community supplies;
• Must have a VAT identification number;
• Have certain obligations in relation to accounting and invoicing etc;
• Not deduct VAT;
• Must submit a list of your customers; and
• Submit a special VAT return in cases of intra-Community acquisitions or services for which they are liable for VAT.

VAT units and certain sectors are excluded from this scheme:

• Catering;
• Supply of old materials; and
• Construction work.

To apply for the exemption scheme, existing businesses will have to enter a form 604B (amending declaration of a VAT identification) via MyMinfin.

For new businesses, when they commence activity, a request for registration for VAT purposes (form 604A) must be submitted. They must determine the VAT scheme using the estimated turnover (excluding VAT) and activity. If a business wishes to opt for the VAT exemption scheme and they meet the conditions, this can be done using a form 604A. If a business leaves the scheme, it cannot return to the scheme until 1 January following the third year after the change in scheme.

February 2022 VAT Updates in Czech Republic

The Czech government submitted an application to the EU commission to request permission to increase the VAT registration threshold from CZK 1 million.

The government is requesting the VAT registration threshold be increased to CZK 2 million (approx. EUR 83,000) and if this is approved by the EU, this new threshold will be in place until 31 December 2024.

February 2022 VAT Updates in Germany

From 1 January 2022, three German Federal States are taking steps towards advancing the implementation of e-invoicing. In Hamburg, changes have been made in relation to B2G invoicing. Contractors are obligated to send e-invoices in relation to invoices for supplies and contracts issued for concessions. In Baden Württemberg, it is mandatory to issue and send B2G e-invoices. The recipient of the invoice must be aware of the issuance of e-invoices.

There are some exceptions to this:

• The issuer of the invoice from third countries does not have the technical capabilities to work with electronic invoices;
• The issuer of the invoice or the recipient of the invoice is a commune or association of communes; and
• The invoice amount is less than EUR 1,000 (VAT excluded).

E-invoices can be issued using:

• PEPPOL;
• Email; and
• Web uploading.

In Saarland, B2G e-invoicing became mandatory from 1 January 2022.

There are some exceptions to this:

• Invoicing for cash and immediate payments with a debt-discharging effect; and
• Amounts of EUR 1,000 or less.

We continue to monitor any updates or developments in relation to mandatory B2B e-invoicing.

February 2022 VAT Updates in Hungary

In January 2022, the Council of the European Union has granted their approval to Hungary to continue applying a higher threshold to the small business VAT registration exemption. Small businesses whose annual turnover does not exceed EUR 48,000 will benefit from this VAT exemption. The threshold was previously set at EUR 35,000.

Taxable persons covered by this exemption:

• Do not have to pay and deduct VAT;
• Do not have to keep full detailed record of transactions subject to VAT; and
• Do not have to be registered for VAT.

This measure is optional for businesses. Small businesses whose turnover does not exceed EUR 48,000 have the option to apply for normal VAT arrangements. This measure was originally planned to last from 1 January 2019 to 31 December 2021 but has been extended. This has reduced the administrative burden, and costs for both the tax authorities and small businesses.

This will be in effect until 31 December 2024.

View our Hungary VAT Guide to find the most current VAT information for Hungary including VAT rates, registration requirements, deadlines, EKAER and real-time reporting requirements.

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February 2022 VAT Updates in Lithuania

Lithuania has announced an increase in the Intrastat threshold for 2022.

• Arrivals – EUR 280,000
• Dispatches – EUR 200,000

In 2021, the Intrastat thresholds were:

• Arrivals – EUR 250,000
• Dispatches – EUR 150,000

February 2022 VAT Updates in Romania

As mentioned in a previous newsletter, Romania introduced an e-invoicing program, e-Factura. This can be used for B2G and now voluntarily for B2B transactions. Eligible businesses can register for the new B2B e-invoicing system. The B2B e-invoicing system was introduced as a voluntary program but from 1st July 2022, it will be become mandatory to use e-invoicing for B2B taxpayers supplying high-fiscal risk products.

The high-fiscal risk products list now includes:

• Alcohol;
• Clothing and footwear;
• New construction;
• Vegetables and fruits; and
• Mineral products (water, sand and gravel).

ANAF has confirmed however, that this list will be updated frequently.

February 2022 VAT Updates in China

In November 2021, the Tax Authorities in Shanghai, Inner Mongolia and Guangdong announced plans to pilot a new version of e-invoicing, among selected taxpayers. Selected taxpayers in the pilot program can issue, receive and verify e-invoices through the e-invoicing platform from 1 December 2021. The fully digitalized e-invoice is different to the existing invoices.

The fully digitalized e-invoice contains two sub-types:

• Fully digitalized special VAT e-fapiao; and
• Fully digitalized general VAT e-fapiao.

Now there will be six types of fapiao co-existing within China.

The six types are:

• General VAT fapiao;
• Special VAT fapiao;
• General VAT e-fapiao;
• Special VAT e-fapiao;
• Fully digitalized special VAT e-fapiao; and
• Fully digitalized general VAT e-fapiao.

The fully digitalized e-fapiao will have 17 items of content which include:

• Invoice number;
• Dynamic QR code;
• Issuance date;
• Buyer and seller information;
• Unit quantity and unit price; and
• Tax rate and tax amount etc.

Taxpayers in the pilot program can issue the fully digitalized e-fapiao through the national e-invoicing platform. They will no longer need special tax control equipment. Taxpayers will have the ability to obtain the fully digitalized e-fapiao through the national e-invoicing platform. They will no longer need to obtain the fapiao through application to tax bureaus. The tax authorities will determine the total monthly amount of invoices a taxpayer will receive. This will be based on the taxpayers’ credit rating, operation of the business and risk level.

February 2022 VAT Updates in Mexico

Changes have been made to the e-invoicing system in Mexico. Their electronic invoicing system, CFDI, has been updated from version 3.3 to version 4.0. The authorities have announced there will be a transition period and companies will need to adopt the 4.0 version by 1 May 2022. The implementation phase began in January 2022 and needs to be completed by 30 April 2022.

Some of the new features of version 4.0 include:

• Additional fields for exported goods;
• Changed to the deadlines and reason for the cancellation of invoices;
• An obligation to describe the name/business name of the sender and receiver and the tax domicile;
• Specification as to whether goods/services are subject to indirect taxes; and
• Specific fields for public operations.

Users can use version 4.0 voluntarily from 1 January 2022.

From 1 May 2022, version 3.3 will be obsolete.