Global VAT Guide: July 2022 VAT Updates
July 2022 VAT Updates in Belgium
Furnished Accommodation
On 15 June 2022, the Belgian Service Public Federal Finances (SPF) issued guidance on the changes in the VAT treatment of furnished accommodation applicable from 1 July 2022.
From 1 July 2022, the scope of taxation relating to the supply of furnished accommodation and any additional services has been modified. The rental of immovable property by nature (such as a house, apartment or studio) is in principle exempt from VAT. A number of exceptions deviate from this principle, such as the provision of furnished accommodation in hotels, motels and establishments where paying guests are accommodated.
In the case of the supply of furnished accommodation, the criteria for distinguishing between an exempted and a taxed service now include:
- A new quantitative criterion linked to a duration of less than three months:
- Stay equal or above 3 months is VAT exempt – for any kind of establishment (hotel, motel, or establishment with a similar function).
- Modified qualitative criteria refer to services, called “related services” usually provided by hotels and motels, which are required for establishments with a similar function where paying guests are usually accommodated for a period of less than three months.
- Establishments with a similar function of below 3 months of accommodation with at least one additional service are subject to VAT;
- Examples of such additional services include physical reception of guests, household linen, and daily breakfast.
The suppliers of accommodation falling into the respective categories may need to reconsider the currently applicable treatment and the changes they may need to adopt to comply with the regulations applicable from 1 July 2022.
Non-EU Businesses VAT Refund Application
As of 1 July 2022, the Belgian Tax Authorities synchronized the VAT refund rules for EU and non-EU claimants:
- The minimum amount per application:
- EUR 400 for quarterly claims
- EUR 50 for annual claims
- The previous thresholds for non-EU claimants were EUR 200 and EUR 25
- Invoices for attaching in support of the application:
- Equal or greater than EUR 1,000
- Equal or greater than EUR 250 for fuel
- Previously all invoices should be attached by non-EU claimants
The administration will notify the applicant electronically, of the date on which it received the request. Please note no notifications were sent to non-EU claimants that their claim was received.
July 2022 VAT Updates on DAC7
The EU Commission opened consultation from 14 June 2022 until 12 Jul 2022 on the Draft Commission Implementing Regulation regarding the form to be used for the communication of information on Excluded Platform Operators and Foreign Platform Operators.
The Draft Regulation is amending Implementing Regulation (EU) 2015/2378 as regards the standard forms and computerised formats to be used in relation to Council Directive 2011/16/EU and the list of statistical data to be provided by Member States for the purposes of evaluating that Directive.
July 2022 VAT Updates in Denmark
New rules were introduced in Denmark in relation to the collection of interest in the event of a late declaration of VAT and in the case of VAT corrections. The purpose of the new rules is to ensure equality between the companies that do not report on time and those that pay late.
Late payment interest will be applied in particular in the following cases:
- If the company has not been registered and therefore must be registered retroactively; and
- If the company has incorrectly posted and must correct its VAT return for a previous period.
In cases where a company has not been registered and is registered retroactively, the rules came into force on 15 June 2022 but for the other corrections in the VAT area, the effective date will be set additionally by the Minister of Taxation.
July 2022 VAT Updates in France
Declaration and Payment of Tax for Operators of Electronic Connection Platforms
On 5 June 2022, the Minister Delegate to the Minister for the Economy, Finance and Industrial and Digital Sovereignty published Order of 3 June 2022 specifying the dates for declaration and payment of the tax on operators of electronic connection platforms with a view to providing certain transport services.
The due date for filing and payment of the taxpayers reporting under the general regime, simplified regime and the ones due to report annually were specified in the Order.
The platforms carrying out such activities – i.e. arranging transport services by car or by two-wheel vehicles should comply with the treatment.
Reverse Charge
The General Tax Code provides for the application of a specific tax fine equal to 5% of the deductible amount in absence of a reverse charge of VAT.
The Council of State referred to the Constitutional Council on the question of whether these provisions infringe the rights and freedoms guaranteed by the Constitution, and in particular, because of the absence of a ceiling on the amount of the fine, the principle of proportionality penalties.
Thus, the Constitutional Council was seized, within the framework of a priority question of constitutionality n°462398 of 14 June 2022, of the conformity of this fine with the principle of proportionality.
Reverse charge consists, for the same operation, of collecting VAT and deducting VAT on the basis of the amount invoiced excluding tax.
For taxpayers whose VAT deduction coefficient is 100% (recovery of full VAT), the operation is ultimately neutral, the VAT collected and deductible cancelled out. However, paragraph 4 of article 1788 A of the CGI sets a fine of 5% of the deductible amount in the absence of reverse charge on the VAT return for an operation where the legislation requires it.
For several types of purchase transactions, professionals must reverse charge the VAT. This is particularly the case in international operations for intra-Community acquisitions, purchases of intra- and extra-Community services, and since 1 January 2022, automatically, imports. Internally, the reverse charge of VAT applies to purchases of waste or in the event of subcontracting in the construction sector.
July 2022 VAT Updates in Italy
Following the measures, in the EU VAT decree 2022/890 of 3 June 2022, the domestic reverse charge mechanism applicable for certain domestic supplies in Italy was extended to 31 December 2026.
The transactions covered by the domestic revise charge are:
- Sales of terminal equipment for the public terrestrial mobile radio communications service;
- Sales of game consoles, tablet PCs and laptops, microprocessors and central processing units, prior to installation in products intended for the final consumer;
- Transfers of greenhouse gas emission allowances;
- Transfers of other units that can be used by operators and of certificates relating to gas and electricity; and
- Sales of gas and electricity to a taxable reseller.
July 2022 VAT Updates in Lithuania
The State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania (VMI) has revised its table with VAT Classification codes and posted the new version in May 2022.
This is in accordance with the amendment of Order No VA-49 of the VMI approved on 21 July 2015.
The table presents three newly added VAT Classification codes that can be used in the reporting/transmitting of invoices through the i.SAF declaration.
Each reported through i.SAF invoice has to be indexed with a corresponding VAT Classification code.
The new codes are:
- PVM54 – Services acquired from foreign countries (other than EU VAT payers) for which VAT on sales is calculated by the purchaser (Article 95 (2) VAT) – 9%.
- PVM55 – Transactions referred to in Article 50 (1) and (4) of the VAT Code – 0%. Provision of goods and services intended to be supplied (provided) to victims of disasters affected by the Russian Federation in 2022.
- PVM56 – Transactions referred to in Article 50 (2) of the VAT Code – Exempt. Provision of goods and services intended to be supplied (provided) to victims of disasters affected by the Russian Federation in 2022.
The VAT Classification Codes table can be found on the VMI website. It includes a full list of codes needed for the i.SAF declaration, as well as their level of necessity.
July 2022 VAT Updates in the Netherlands
The Court in the Netherlands has confirmed a reduced VAT rate will not apply to online sports platforms.
They have confirmed that online sports platform services differ from regular gyms and so, the reduced VAT rate will not apply to online sports platform services.
In relation to COVID, gyms that offer an adapted version of their services are subject to the reduced VAT rate because they are linked to the provision of sports facilities.
The reduced VAT rate will only apply to sports lessons provided to customers online during a mandatory closure of business by gyms and entrepreneurs alike.
July 2022 VAT Updates in Poland
Poland will offer an exemption on VAT and customs duties on goods that are imported for the purpose of providing humanitarian aid to the citizens of Ukraine by state organisations and registered charities until the end of 2022.
Basic necessities such as clothing, medicine and food will be covered under the exemption as well as office supplies, as long as these are used by charitable organisations.
July 2022 VAT Updates in Slovakia
On 15 Jun 2022, the National Council of Slovakia (Narodna Rada) approved the legislation whereby DAC7 Directive is being implemented in Slovakia – Act Nr 943 that amends Act no. 442/2012 Coll. on international assistance and cooperation in tax administration.
This Act enters into force on 1 January 2023, except for Art. I point 16 and Art. II, which enter into force on 1 January 2024.
By this legislation, Slovakia implements Council Directive (EU) 2021/514 of 22 March 2021 amending Directive 2011/16/EU on administrative cooperation in the field of taxation.
The digital platform operators carrying operations reportable in Slovakia should comply with the requirements.
July 2022 VAT Updates in India
Some taxpayers have reported in their GSTR 2B for April and May 2022, they have seen the same invoice twice.
GSTR 2B is a statement that is generated by a system and is automatically populated to reflect input tax credit details.
The Goods and Services Tax Network (GSTN) advised these taxpayers not to avail of the income tax credit on duplicate invoices.
July 2022 VAT Updates in Sri Lanka
From 1 October 2022, the VAT registration threshold will be reduced to LKR 120 million per year.
The VAT registration threshold is currently LKR 300 million.
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