Global VAT Guide: July 2021 VAT Updates
July 2021 VAT Updates in Austria
On 3 June 2021, the Court of Justice of the European Union (CJEU) issued its ruling in the Titanium case (number C-931/19) and provided some clarity around the concept of fixed establishment. In this case, the taxpayer is a real estate company that owns a property in Austria. This company has a registered office and management located in Jersey and the property was let to taxable Austrian people. The company has no presence or staff in Austria. They outsourced the management of the property to an Austrian property management company.
The outsourced company was in charge of the administrative and supportive tasks in Austria for this property. The decisions surrounding the leasing of the property remained with the owners of the property. The owner of the property did not charge Austrian VAT on the rent they received because they believed they did not have a permanent establishment in Austria and the VAT liability was reverse-charged to the Austrian tenants.
The Austrian Tax Authorities were of the opinion that the property was a fixed establishment in Austria and VAT should have been charged to the tenants because the reverse-charge mechanism does not apply. The CJEU decided that in a situation where the owner of a property does not have their own staff and cannot perform services in relation to the letting of their property does not constitute a fixed establishment.
This company that owns the property does not have staff available and cannot act independently. This means they do not meet the criteria and this is not regarded as a fixed establishment.
July 2021 VAT Updates in Greece
It was announced that the start of the mandatory transmission of business documents to the myDATA platform has been postponed to:
- 1st October 2021 – for taxpayers with revenue over EUR 50,000 and double entry accounting books or with revenue over EUR 100,000 and single entry accounting books.
- 1st November 2021 – for all other taxpayers.
This means documents issued from those dates onwards will need to be sent to the myDATA platform. Historic data prior to the go-live date must be reported by the end of March 2022. For now, the obligation to transmit documents relates to the revenue document data and not expense data.
Businesses will need to issue their receipts through electronic tax mechanisms so that they can:
- Transmit their data per transaction and in real time to the platform; and
- Ensure QR codes are embedded on receipts to identify the tax mechanism.
July 2021 VAT Updates in Chile
On 3 June 2020, Chile implemented VAT legislation on the supply of digital services.
Since then the Chilean Tax Authorities have also implemented means to monitor whether foreign suppliers have registered for VAT in the country by way of anonymous reporting made through a portal created specifically for this purpose and also by enacting regulations that require banks and other financial operators to report on a quarterly basis on payments made by customers for the purchase of electronically supplied services from foreign suppliers.
The Chilean Tax Authorities have now started contacting those businesses that may have made B2C sales of electronically supplied services based on the information reported and collected.
Businesses that do not comply with the VAT registration requirements will be subject to an audit and potentially penalties will be triggered. The financial institutions will also be responsible for any VAT liability arising from non-compliance.
July 2021 VAT Updates in Saudi Arabia
As previously mentioned, in December 2020 Saudi Arabia’s General Authority of Zakat and Tax issued regulations on the introduction of e-invoicing. The regulation is applicable to all resident taxable persons including any third party issuing tax invoices on behalf of the taxpayer. The Tax and Customs Authority recently published guidelines and standards in relation to the implementation of the e-invoicing system. The first phase of e-invoicing, otherwise known as the “issue and storage phase” is set for 4 December 2021.
Guidance has been announced in relation to phase one to provide an overview of the process of e-invoicing implementation. Some of the guidance includes:
- E-invoice XML implementation standards;
- E-invoice security features standards;
- Controls, technical specifications, controls and procedural rules;
- Use of an e-invoice system;
- Generation and storage of e-invoices;
- Simplified guidelines; and
- Phase one FAQ’s.
For phase one, the below must be actioned:
- Install or update invoicing systems;
- Add the buyer’s VAT registration number to invoices if they are registered for VAT; and
- Add QR codes to invoices.
Below are the basic steps of how phase one will function:
- A seller will issue an invoice and save this through their e-invoicing system – this system must be compliant with the requirements set out;
- The invoice must contain all items that are required on a tax invoice; and
- The buy will receive a copy of this invoice.
The second phase, otherwise known as the “integration” phase, will come into effect from 1 January 2023 (the original date for the second phase was set for 1 July 2022.)
From 1 January 2023, taxpayers will be required to transmit electronic invoices and share these with Saudi Arabia’s General Authority of Zakat and Tax for verification.
Non-compliance will result in penalties.
July 2021 VAT Updates in the United Kingdom
UK regulations require that HMRC cannot accept direct debits without an associated email address. HMRC will send letters to businesses that have not provided an email address asking to set up new instructions in their Business Tax Account. The request for an update will not affect the new VAT deferral payment scheme.
If an email address is not provided further to receiving the letter, the direct debit will be cancelled. This may cause delays in making payments to the tax authorities that may result in penalties being applied. Businesses are advised to check the information provided to HMRC and take action were required.
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