Global VAT Guide: January 2023 VAT Updates
January 2023 VAT Updates in Croatia
Joining the Euro Area
As mentioned in a previous newsletter, Croatia became a member of the euro area from 1 January 2023.
The Croatian kuna amounts relating to VAT have been replaced with Euro amounts.
Please see below some of these updates:
- VAT registration threshold
- HRK 300,000.00
- EUR 39,816.84
- Intra-Community acquisition threshold
- HRK 77,000.00
- EUR 10,000.00
- Small-value gifts not subject to VAT
- HRK 160.00
- EUR 21.24.00
- Annual threshold of supplies above which monthly reporting is mandatory
- HRK 800,000.00
- EUR 106,178.25
VAT IOSS Number on Import Declarations
After 1 November 2022, it will no longer be allowed to change, subsequently enter or delete the VAT IOSS number on the import declarations, after the goods have been released upon importation when the IOSS is used.
The Croatian Tax authorities remind that the IOSS was introduced on 1 July 2021 for shipments that have been purchased through e-commerce and that are brought into the EU area.
A H7 declaration can be submitted, provided that the actual value of the shipment does not exceed EUR 150.00 and that the goods being imported are not subject to prohibitions or restrictions, such as that it is not about alcohol or tobacco products and perfumes and toilet waters.
At the same time, such shipments are subject to customs exemption pursuant to Art. 23. Council Regulation (EC) no. 1186/2009 of November 16, 2009 on the establishment of a system of exemption from customs duties in the Community, while VAT is charged:
- Through the IOSS procedure, which stipulates that the buyer has paid VAT to the seller at the time of purchase; or
- At the time of customs clearance, i.e. receipt of the shipment by the postal or courier operator.
If the IOSS procedure is applied, the VAT IOSS number of the seller or e-interface must be indicated.
In doing so, it is emphasized that the VAT IOSS number must be forwarded by the sender (seller or e-interface) and requested at the time of submission of the import customs declaration (either in the form of H7 or in the form of the regular import declaration – H1).
In accordance with the different practices of the customs services in the EU, as well as due to the previous abuses of the VAT IOSS number, the General Directorate for Customs and Taxes has updated the existing Manual for the import and export of low-value shipments, where as per the updated version from September 15, 2022, it is no longer allowed to change, subsequently enter or delete the VAT IOSS number, after the goods have been released.
Only in the case that the wrong VAT IOSS number was initially submitted as a mistake in writing that number and the like, it is allowed to subsequently submit the import customs declaration with the correct VAT IOSS number. In the event that the recipient was charged VAT both by the seller and at the time of importation, the recipient must contact the seller for a VAT refund.
January 2023 VAT Updates in Czech Republic
On 28 November 2022, Czech Republic published Law 366/2022.
There will be an increase in the VAT registration threshold from CZK 1 million to CZK 2 million from 1 January 2023.
January 2023 VAT Updates in Germany
The German Tax Authority updated the template for the Certificate of taxable status.
The changes are:
- The inclusion of the date of the company’s VAT registration; and
- At the bottom of the Cert template there is a text: “This letter was created by machine and is valid without signature.”
January 2023 VAT Updates in Greece
On 30 November 2022, the Greek administration (AADE) announced that the VAT Returns to be submitted from 5 December 2022 onwards, will be pre-filled in the e-reporting platform MyData.
Taxpayers will have to review and either agree with the amounts or correct them.
The responsibility of the correctness of the return lies within the reporting party.
The pre-filling will not cover non-deductible expenses such as housing, food, drinks, entertainment etc.
January 2023 VAT Updates in Poland
In Poland, there is a 50% deductibility for vehicle-related costs when not exclusively used for business purposes.
Poland submitted a request to extend the 50% deductibility by three years.
Below is a summary of Implementing Decision (EU) 2022/2385:
- 50% deductibility for vehicle-related costs not used exclusively for business purposes;
- The 50% deduction of VAT for vehicle-related costs (purchase, leasing, rental; fuel, repairs, spare parts, parking) not used exclusively for business purposes was due to expire on 31 December 2022;
- On 18 February 2022, Poland requested a further three-year extension of the measures;
- On 16 March 2022, the Commission notified Poland that it had all the information it considered necessary for the appraisal of the request;
- On 6 December 2022, the Council of the European Union issued a decision extending the measures until 31 December 2025.
January 2023 VAT Updates in Spain
On 27 December 2022, Agencia Tributaria published the adopted Law 31/2022, of 23 December, regarding the General State Budget for 2023.
Below are some of the VAT related changes (Ley 37/1992, de 28 de diciembre del Impuesto sobre el Valor Añadido):
- Place of supply rules – effective use and enjoyment place of supply rules – narrowing the scope of application of the rule in both B2B (to only rental of means of transport and financial/insurance services) and B2C context (to the listed ‘intangible’ services – advertising, consultants’ engineers, lawyers and to rental of means of transport);
- change of domestic reverse charge – whereby adding certain supplies to the scope (i.e. waste, scrap) and excluding other (taxable leasing of real estate where the supplies are made or arranged via intermediary of non-established businesses);
- bed debt related measures aiming to support the taxpayers (i.e. reducing minimum amount from EUR 300 to EUR 50, longer period to issue a rectification invoice – from 3 to 6 months; specific bankruptcy credits related dispositions);
- certain listed supplies rate changes (i.e. feminine hygiene products, prophylactics); and
- Canary Islands – IGIC – deductions related changes; clarifications regarding the definition of ‘third party territories’ for the purposes of import/export.
January 2023 VAT Updates on DAC7 Implementation
Belgium
On 21 Dec 2022, the Belgian Chambre des Representants de Belguique (Belgische kamer van volkvertegenswoordigers) adopted the project of law transposing directive EU 2021/514.
Bulgaria
On 8 December 2022, the Bulgarian parliament adopted the Draft Law to amend and supplement the Fiscal code (48-202-01-33) whereby DAC7 is transposed to the national legislation.
Czech Republic
Regulation 373/2022 Coll. Act amending Act No. 164/2013 Coll., on international cooperation in tax administration and amending other related laws, as amended, and other related laws whereby DAC7 transposed to the Czech national legislation adopted.
Germany
On 20 December 2022, the Law whereby the DAC7 Directive is transposed to the German legislation (Entwurf eines Gesetzes zur Umsetzung der Richtlinie (EU) 2021/514 des Rates vom 22. März 2021 zur Änderung der Richtlinie 2011/16/EU über die Zusammenarbeit der Verwaltungsbehörden im Bereich der Besteuerung und zur Modernisierung des Steuerverfahrensrechts) has been adoped.
On 28 December 2022, the law was published on Federal Law Gazette Year 2022 Part I No. 56 (Bundesgesetzblatt Jahrgang 2022 Teil I Nr. 56).
Hungary
On 23 December 2022, the Hungarian Tax Authorities published guidance on the reporting obligation applicable from 1 January 2023 to Digital Platform operators. The guidance provides an overview of the reporting entities’ scope, way and timelines to report.
Lithuania
On 21 November 2022, the Lithuanian Tax Administration published detailed guidance on the reporting requirements applicable from 1 January 2023, to the platform operators in application of EU Directive 2021/514, as transposed in the Lithuanian legislation.
The guidance covers such things as:
- The way of providing the data through VMI TIES ( https://www.vmi.lt/ties/);
- The specifics of the requirements applicable to non-EU platform operator that has chosen to register in Lithuania
- It should be no later than 5 working days from the start of operations in the European Union (and if operations start in January 2023, within 5 working days from 1 February 2023).
A Lithuanian legal entity must register the structural unit data by filling in form FR0791A, and a foreign legal entity must register by filling in form FR0227.
Netherlands
On 20 December 20 2022, the Senate approved the 2023 Tax Plan.
The law cannot enter into force until it has been approved by the King and the law has also been published.
In anticipation of the approval of the King and the publication of the law, the Ministry of Finance provides an overview of the most important changes in taxes as of 2023.
The Tax plan includes the legislation whereby the EU Data Exchange Directive on the Digital Platform Economy Act is transposed to the Netherlands.
January 2023 VAT Updates in the European Union – VAT in the Digital Age
On 8 December 2022, the EU Commission published the proposed legislative changes referred to as “VAT in the Digital Age” package – proposal for a Directive (1), a Regulation (2), and Implementing Regulation (3):
- Proposal for a COUNCIL DIRECTIVE amending Directive 2006/112/EC as regards VAT rules for the digital age {SEC(2022) 433 final} – {SWD(2022) 393 final} – {SWD(2022) 394 final};
- Proposal for a COUNCIL REGULATION amending Regulation (EU) No 904/2010 as regards the VAT administrative cooperation arrangements needed for the digital age {SEC(2022) 433 final} – {SWD(2022) 393 final} – {SWD(2022) 394 final}; and
- Proposal for a COUNCIL IMPLEMENTING REGULATION amending Implementing Regulation (EU) No 282/2011 as regards information requirements for certain VAT schemes {SEC(2022) 433 final} – {SWD(2022) 393 final} – {SWD(2022) 394 final}
Until 2 March 2023, the European Commission accepts further feedback on the proposals.
Upon adoption of the proposals at EU level, the EU Member States will be required to transpose these into the national legislation by 31st December of the year that precedes the respective change – i.e.
- changes applicable from 1 Jan 2024 – must be transposed in the national legislation by 31 December 2023;
- changes applicable from 1 Jan 2025 – must be transposed to the legislation – by 31 December 2024 etc.
The proposed changes are in three main categories:
- Digital Reporting – A New Real Time Digital Reporting System Based on e-Invoicing;
- Updated VAT rules for the Platform Economy; and
- Single VAT registration for businesses selling to consumers across the EU
By introducing these changes, it adapts the VAT Directive to the new digital reality. These changes set to achieve the goals set by the Member States Administrations, and create an environment to support the business, while ensuring equal treatment between traditional and digital economy operators, between the EU and Non EU businesses, facilitating and reducing compliance costs via using the technologies towards a streamlined Intra EU reporting.
Below are the highlights of some of the key points in each one of the directions mentioned above:
Digital Reporting – A new Real Time Digital Reporting System Based on e-Invoicing
a. “e-Invoicing becomes the general way”
b. Digital Reporting:
i. (near to) Real Time e-invoicing and Digital Reporting on cross-border (intra EU supplies – Central VIES); and
ii. up to the Member State discretion on domestic, within the Member State, supplies
| Effective from: | Summary: | |
| 1 January 2024 | e-invoicing | – Definition of electronic invoice is “an invoice that contains the information required by this Directive, and which has been issued, transmitted and received in a structured electronic format which allows for its automatic and electronic processing.” – Prior EU approval no longer needed so a Member State implements e-invoicing – existing models can only be applied up to 1 January 2028 (Italian, and so far announced Polish e-invoicing model). |
| 1 January 2025 | e-invoicing | – Format – based on and in compliance with European e-invoicing standard (currently EU B2G), other formats may also be applicable. – Customer acceptance of an e-invoice – no longer needed. – Timelines to issue an invoice for cross-border supplies, “no later than on the fifteenth day of the month following that in which the chargeable event occurs.” |
| 1 January 2028 | e-invoicing | – Structured e-invoices become the mandatory standard; paper and other formats – by exception – if conditions met – Content – additional fields – supplier’s IBAN , Payment Due Date; if a corrective invoice – sequential number. |
| 1 January 2028 | (e-invoicing / VIES) | Timelines to issue an invoice – intra EU supplies, reverse charge supplies, “an invoice shall be issued no later than 2 working days following the chargeable event.” |
| 1 January 2028 | Digital reporting – intra-EU supplies – Central VIES) | – Central VIES – Introduction of transaction-by-transaction reporting on intra EU Cross-border supplies – VIES DRR; – Way of transmission – electronically. – Format of data – European e-invoicing standard (EU B2G) or transmission of the data from electronic invoices using other data formats which ensure interoperability with the European Standard on electronic invoicing. – Due date to submit data, “no later than 2 working days after issuing the invoice, or after the date the invoice had to be issued where the taxable person does not comply with the obligation to issue an invoice.” – Additional fields: – reference to the previous invoice in case of rectification of invoices, identification of the bank account into which the payment for the invoice will be credited scope of reportable supplies. – call-off stocks will be phased out. – supplies of goods and services subject to the reverse charge mechanism – will be included. |
| 1 January 2028 | (Digital Reporting – Domestic) | Within the country B2B supplies – up to Member States to implement such – near – to live time reporting – by no later than 2 working days after the invoice is issued, or after the date the invoice had to be issued where the taxable person does not comply with the obligation to issue an invoice. |
Updated VAT rules for the Platform Economy
a. The proposed changes aim to ensure a level playing field between platforms offering services and other traditional suppliers qualifying as taxable persons, while not imposing a burden on the underlying suppliers operating through the platform.
The proposals are effective from 1 January 2025. Below is a synopsis of these proposals:
- A “deemed supplier “ regime on short-term accommodation rental, and on passenger transport sectors of the platform economy:
- Under this measure, where the underlying supplier does not charge VAT because they are, for example, a natural person or they make use of the special scheme for small enterprises, the platform will charge and account for the VAT on the underlying supply”
- A transaction for which a platform is the deemed supplier cannot be included in the special scheme for travel agents
- The provision of short-term accommodation rental shall be regarded as a sector similar in nature to the hotel sector, and therefore not eligible to be exempt from VAT:
- “The uninterrupted rental of accommodation for a maximum of 45 days with or without the provision of other ancillary services shall be regarded as having a similar function to the hotel sector”
- The application of the deemed supplier rule is extended: Under its expanded scope, the deemed supplier rule will now include:
- All supplies of goods within the EU facilitated by an electronic interface, irrespective of where the underlying supplier is established and the status of the purchaser
- The application of the deemed supplier rule becomes applicable certain transfers of own goods that are facilitated via an electronic interface
- The facilitation service provided by a platform should be regarded as an intermediary service – and taxable where the underlying transaction is supplied
- The supply by the underlying supplier to the platform shall be VAT exempt without a deduction right
- The supply by the platform to the final customer should not impact on the deduction right of the platform for its activities
- IOSS – becomes mandatory for a ‘deemed supplier’
- Platform reporting obligations:
- For supplies falling outside the deemed supplier model, the platform will be obliged to keep the records relating to both business to business (B2B) and business to consumer (B2C) supplies. Accompanying legislation (the proposal to amend Regulation (EU) No 904/2010) will standardise how this information is to be transmitted to the Member States
Single VAT registrations for businesses selling to consumers across the EU – some of the key points are:
a. Single (EU) VAT registration – expanded/new One Stop Shop Schemes OSS – Reverse charge expanded scope – input VAT recovery via the appropriate refund systems:
i. Union One Stop Shop (OSS) – scope will be expanded as to also cover:
- domestic supplies of goods (so far Intra-EU supplies of goods);
- supply of goods with installation or assembly;
- supply of goods on board ships, aircraft or trains;
- supply of gas, electricity, heating and cooling; and
- second-hand goods, works of art, collectors’ items and antiques – may also be reported
ii. New ‘Transfer of Own goods” OSS introduced (covering also the call-off stocks – this ‘quick fix’- being phased out):
- scheme use – optional
- Single VAT registration – in the “Member State of Identification” which may be:
a. EU business – Member State of Establishment or
b. Non-EU business – it may be:
i. a Member state in which a fixed establishment or
ii. the Member State from which transfers of goods initiated
In some cases, a non-EU business may have the option to decide which may be the Member state of identification, “The taxable person shall be bound by that decision for the calendar year concerned and the two calendar years following.”
- supplies in scope – all but: capital goods and goods with limited deductibility (per Member State of arrival’s criteria);
- for transfers of own goods under the scheme, the intra-Community acquisitions are exempt in the Member State to which the goods are dispatched or transported; and
- Return frequency – monthly, nil return should be submitted
iii. VAT recovery procedure – where supplies reported under EU OSSs – not via the OSS return but via “the appropriate refund systems”:
- via Foreign VAT recovery – under the procedure of Directive 2008/9/EC and Directive 86/560/EEC; and
- via local return – where applicable – i.e. where taxable supplies beyond OSS scope for which local registration liability, or where OSS opted out
iv. Reverse charge (art. 194 of Directive 2006/112/EC) – scope extended:
- Mandatory reverse charge where B2B supplies to a customer already identified for VAT in the other Member State (‘establishment” criterion not applicable)
January 2023 VAT Updates in Guatemala
From January 2023, Guatemala will change its invoice requirements.
From 14 January 2023, the term “CF” or “final consumer” can only be used on invoices where the consideration for the supply is less than GTQ 2,500 (USD 320.00).
Essential services (telecommunication services and electricity) will have a threshold of GTQ 500.00.
In cases where the threshold is exceeded and the amount is above GTQ 2,500, invoices must include:
- An identification code (CUI); and
- Tax ID number / PIN (personal identification number) of the seller and buyer.
January 2023 VAT Updates in Norway
The Norwegian Tax Authorities recently approved changes taking effect as of 1 January 2023 in relation to VOEC scheme.
VOEC scheme has been used by foreign supplier to fulfil their VAT obligation in Norway in relation to the supply of low-value goods and electronic services to consumers.
As of 1 January 2023, the VOEC scheme will also apply to all services that can be delivered remotely such as marketing services, legal services and consultancy services therefore foreign suppliers of such who have not yet registered for VAT in Norway should do so either using VOEC scheme or via the normal VAT registration procedure.
January 2023 VAT Updates in Saudi Arabia
Amendments to the Implementing Regulations of Value-Added Tax
At the beginning of December 2022, the Saudi Arabian Tax and Customs Authority (ZATCA) published amendments to the executive regulations of the VAT system.
The amendments affect the rules for applying a zero VAT rate to non-GCC residents, international passenger transport, and military supplies (Art. 33, 34, and 36):
- In Art. 33, clarifications were added in paragraph (2) when the zero rates shall not apply to non-GCC residents;
- In Art. 34, clarifications regarding international passenger transport were removed from paragraph (2); and
- In Art. 36, completely new regulations were added regarding military supplies.
A comparison of the old and new versions of the executive regulations can be found on the ZATCA website.
Tax Amnesty initiative extended until May 2023
The Zakat, Tax and Customs Authority (ZATCA) has previously exempted its taxpayers from fines penalties and violations.
This initiative was in effect from 1 June 2022 until 30 November 2022.
It has been announced that they are extending the period of the amnesty scheme until 31 May 2023.
The exemption covers fines for late registration in all tax systems, late payment, late filing of returns fines in all tax systems, and fines to correct VAT returns, as well as fines for violations of VAT field control related to applying the e-invoicing regulations and other general regulations.
January 2023 VAT Updates in Turkey
The refund limit for transactions subject to the reduced VAT rate has been updated.
From 1 January 2023, the refund limit is set to TRY 57,300.
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