Global VAT Guide: June 2024

The June edition of the Global VAT Guide features comprehensive updates on VAT regulations and developments from Bulgaria, Finland, Italy, Romania, Sweden, United Kingdom and Vietnam.

Bulgaria

Bulgaria has published amendments to Ordinance No. H-10, which addresses the refund of VAT paid by non-resident individuals who are not established in the EU. A new Article 2b has been introduced to this regulation. Starting from January 1, 2025, Article 2b will grant the right to refund VAT paid by non-EU individuals who are members of the OECD. This article stipulates that VAT will be refundable if these countries do not impose VAT or a similar tax within their tax systems. VAT refunds will be available for certain goods and services related to professional events, including: Access to fairs, conferences, and exhibitions of a commercial nature held within the country, linked to the independent economic activity of the individual; Accommodation, transportation services, and consumption of food and drink at these events; Goods and services of negligible value intended for advertising the independent economic activity of the individual, including samples. These amendments regarding VAT refunds to non-EU individuals from OECD countries will take effect on January 1, 2025.

Finland

On May 16, 2023, the Finnish government proposed amendments to the VAT Act, specifically targeting a special scheme for small enterprises. These amendments, set to take effect on January 1, 2025, include the following changes: Small businesses based in another EU Member State can opt for a VAT exemption if their annual turnover within the European Union does not exceed EUR 100,000. Small businesses based in Finland can apply for a VAT exemption in other EU Member States if their annual turnover in the EU does not exceed EUR 100,000. The special scheme providing relief for small entrepreneurs (Chapter 14a of the AVL) will be abolished. VAT registration for small entrepreneurs with a turnover exceeding EUR 15,000 will be required once the threshold is surpassed, rather than at the start of the accounting year. Italy The long-awaited reciprocity agreement between Italy and the UK regarding foreign VAT refunds has finally been established. On May 2, 2024, Agenzia Entrate issued Resolution No. 22, confirming that both governments, through verbal notes of identical content, formally acknowledge the legal conditions for recognizing reciprocity. This allows for VAT refunds on purchases made by Italian operators in the UK and by British operators in Italy, starting from January 1, 2021. It is also noted that the UK has continuously provided refunds to Italian operators without interruption. The agreement still requires implementation in accordance with British and Italian legislation.

Romania

Romania has enacted Law No. 126/2024, which amends Law No. 241/2005 on preventing and combating tax fraud. This new legislation, effective from May 16, 2024, introduces a new criminal offence related to VAT fraud. Offenders may face 7 to 15 years of imprisonment and the prohibition of certain rights. The amendment criminalizes any actions within a fraudulent scheme that reduce state budget resources by at least EUR 1 million through the following means: Using or presenting false, incorrect, or incomplete VAT-related statements, documents, or electronic documents. Failing to disclose VAT-related information when legally required to do so. Using seemingly accurate VAT records (both paper and electronic) to conceal unpaid VAT or to create a false claim for a VAT refund.

Changes to VAT return (D300 Form)

There will be changes to the periodic VAT Return Form D300. The first reporting period in which the new form version needs be used is May 2024 Monthly return. The technical specifications of the new form version were published by the Romanian Tax Administration on 30 May 2024. The changes concern removal of recently added (Aug 2023) boxes whereby reported certain exempt supplies for which there may be entitlement to VAT deduction – such as certain qualifying hospital related services or supplies related to medical devices and products such as orthopedic and prostheses. The below have been removed from form D300: line 14.1 “Deliveries of goods and provision of services exempted with the right of deduction, provided for in art. 294 para. (5) letters a) and b) of the Fiscal Code”; line 14.2 “Deliveries of goods exempted with the right of deduction, provided for in art. 294 para. (5) letters c) and d) of the Fiscal Code”.

Sweden

Various amendments to the VAT Act were proposed by the Ministry of Finance and included in this was the increase in VAT turnover limit to SEK 120,000. The amendments will also allow companies established in the EU to apply the EUR 120,000 turnover limit in Sweden. Companies that are established in Sweden may also apply exemptions from tax liability in other EU countries. The amendments are proposed to come into effect in 1 January 2025.

United Kingdom

On 18 April 2024, HMRC published a policy paper – Revenue and Customs Brief 5 (2024): Tour Operators’ Margin Scheme for B2) wholesale supplies. The brief sets out a technical change to the VAT treatment of B2B wholesale supplies in relation to the Tour Operators’ Margin Scheme (TOMS). HMRC policy that businesses have a choice whether to apply the TOMS to these supplies remains unchanged. The TOMS is a mandatory VAT accounting scheme for businesses that buy-in and sell certain travel services, such as:

• passenger transport;
• hotel accommodation;
• car hire

Under the TOMS, tour operators cannot recover any VAT on the services they buy in, but only account for VAT on their profit margin. HMRC’s policy allows tour operators to choose whether to apply the TOMS to B2B wholesale supplies. This policy remains unchanged. HMRC’s guidance states that TOMS is only mandatory for supplies to final consumers or to businesses for their own consumption (for example, business travel for employees). Services supplied to another business for onward sale (‘wholesale’ supplies) are subject to normal VAT rules, although these supplies can be included in the TOMS by concession. Following a recent First Tier Tribunal case HMRC reviewed their approach and guidance on the correct treatment of B2B wholesale supplies. HMRC has concluded that B2B wholesale supplies are within the scope of the TOMS and by concession tour operators may opt for B2B wholesale supplies out of the TOMS. This is a technical change to the legal interpretation and will not affect tour operators’ ability to choose whether to apply the TOMS or not to B2B wholesale supplies.

Vietnam

The Ministry of Finance has completed draft proposals to extend the tax payment deadlines in 2024. The proposed extension of the payment deadlines are: May, June and second quarter of 2024

• 5 months extension

July 2024

• 4 months extension

August 2024

• 3 months extension

September 2024

• 2 months extension

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