Global VAT Guide: May 2023 VAT Updates
May 2023 VAT Updates in Belgium
On 3 March 2023, Circular 2023/C/25 relating to commercial passenger transport taxable in Belgium by taxable persons not established in Belgium, confirmed:
- Abolition of the special regime for commercial passenger transport by taxable persons not established in Belgium provided for in VAT decision no. ET122.611, dated 20 February 2014;
- The change is effective 1 Jul 2023; and
- Transporters who are liable to report VAT – may opt between a regular return or OSS return.
May 2023 VAT Updates in Cyprus
On 20 April 2023, the Cypriot administration announced further extension of the filing and payment deadline of the below:
|Tax period||Submission due by date||Extension date||Second extension date|
|01/12/2022 – 28/02/2023||10 April 2023||26 April 2023||10 May 2023|
The extension aims to allow taxpayers to adapt to filing in the newly introduced e-tax portal “Tax for All”.
The portal was effectively launched on 27 March 2023.
May 2023 VAT Updates in Italy
With a decision issued on 21 March 2023, the European Council has allowed Italy to apply a higher threshold for VAT exemption of small enterprises.
The taxable persons whose annual turnover is no higher than EUR 85 000 are not obligated to register for VAT. The VAT registration threshold was previously set at EUR 65,000.
This will be applied retroactively and only for a limited period of time from 1 January 2023 until 31 December 2024.
May 2023 VAT Updates in The Netherlands
On 6 April 2023, the Ministry of Finance of the Netherlands, published in the Government Gazette 2023, 10047 the updated version of VAT Decree, Travel Agency arrangements (Omzetbelasting. Reisbureauregeling) dated 24 March 2023.
The effective date of implementation is 7 April 2023.
The overview of the changes mentioned:
“This Decree replaces and updates the Decree of 19 August 2019, No. 2019-7277 ( Stcrt. 2019, No. 47961 ) as last amended by Decree of 22 February 2021, No. 2021-1926 ( Stcrt. 2021, No. 10781 ).
Section 7 of this Decree discusses the consequences for turnover tax in the event of cancellation of (travel) agreements.
The newly introduced section 7 text:
“7. Cancellation of (travel) agreements:
In practice, the (travel) agreement concluded by the parties for the provision of a service often includes the possibility that the customer can dissolve the agreement for a contractually determined amount (so-called cancellation costs). It often happens that an amount that has been paid as an advance or as a reservation of a performance is regarded as the amount of the cancellation costs upon termination of the agreement. It also happens that the customer is obliged to pay a certain amount of cancellation costs to the other party after the termination of the agreement (possibly in addition to the advance payment or reservation amount referred to above). In the event of a later cancellation and no-show, there is a taxable performance.”
The Decree transposes the applicable European case-law (quoted below) whereby specifying that depending on the time of cancellation – early cancellation may not be subject to VAT, whilst a late cancellation and no-show may be considered a taxable supply:
- (5) ECJ 18 July 2007, C 277/05 (Société thermale d’Eugénie-les-Bains), ECLI:EU:C:2007:440, ECJ 22 November 2018, C-295/17 (MEO), ECLI:EU:C :2018:942, ECJ 3 July 2019, C-242/18 (Unicredit Leasing), ECLI:EU:C:2019:558, and ECJ 11 June 2020, C-43/19 (Vodafone Portugal); and
(6) ECLI:EU:C:2020:465, C-250/14 and C-289/14 (Air France KLM / Hop! – Brit Air SAS), ECLI:EU:C:2015:841, para 28 ECJ 22 November 2018 , C-295/17 (MEO), ECLI:EU:C:2018:942, ECJ 3 July 2019, C-242/18 (Unicredit Leasing), ECLI:EU:C:2019:558, and ECJ 11 June 2020 , C-43/19 (Vodafone Portugal).
May 2023 VAT Updates in Poland
In March 2023, the dedicated body within the Council of Ministers (Stały Komitet Rady Ministrów approved the draft act on the KSeF (Polish e-invoices) whereby e-invoicing becomes mandatory.
From January 1, 2022, Polish entrepreneurs have had the option of voluntarily issue invoices via KSeF.
Currently, the e-invoice operates as one of the permitted forms of sales documentation, next to paper invoices and electronic invoices already present in the economy.
The draft regulation comprises a number of changes that include:
Timelines to implement
- Postponement of the entry into force of the Act from 1 January 2024 to 1 July 2024
- Extension by an additional six months of the deadline for the implementation of the KSeF by taxpayers subjectively and objectively exempt from VAT – the KSeF will be mandatory for them from 1 January 2025
- Invoices from cash registers will be able to be issued in the current form until 31 December 2024
- A fiscal receipt with a tax identification number will be recognized as a simplified invoice until 31 December 2024.
- B2C invoices will not be covered by KSeF
- Tickets that may be considered as invoices (including receipts on toll motorways) are excluded from KSeF
- Invoices issued under the OSS and IOSS procedures will also be excluded from KSeF.
Miscellaneous provisions regarding the Date of issue, converting from a foreign currency and the possibility/entitlement to issue corrective invoices
- The foreign currency exchange rate used for conversion into PLN will be maintained from the day preceding the date indicated in field P_1 of the structured invoice for one additional day to be sent to KSeF
- In the event of a failure on the part of the taxpayer, it is possible to issue invoices offline outside the KSeF and deliver the invoice to the KSeF on the next business day after issuing it offline
- Clarification of the date of issue and other issues important for the invoicing process during failures and in offline mode
- In the period of failure and in offline mode, it will be allowed to issue corrective invoices
- Elimination of corrective notes in KsEF and outside KsEF.
- Liberalization of sanctions and their application only from 1 January 2025.
On 31 March 2023, the Polish government made an official announcement in relation to Poland introducing, “Temporary reverse charge of gas tax in gas system, electricity in the power system and services for the transfer of greenhouse gas emission allowances”.
The solution aims to increase the competitiveness of the Polish stock exchange system. It is noted that this was expected by the interested industries.
The regulations will apply from 1 April 1 2023 to 28 February 2025.
Poland availed of the possibility to introduce country-specific provisions on the basis of Art. 199a sec. 1 lit. a and e of the VAT Directive and to introduce reverse charge on energy related supplies.
Such reverse charge mechanism had been applied, among others in: Czech Republic, Denmark, Germany, Ireland, Italy, Portugal, and Romania.
The legislative changes may result in charge on the VAT reporting forms (JPK-VAT).
May 2023 VAT Updates in Ecuador
The Internal Revenue Service (SRI) enabled the new version of the Value Added Tax (VAT) form, which allows you to declare and pay VAT on sales made on credit, within a period of up to 3 months.
In this way, transfers of goods or services made by micro, small and medium-sized enterprises (as defined in the Organic Code of Production, Trade and Investment -COPCI), in which a period of more than one month has been granted for payment, must be declared in the following month and paid within 3 months.
The new version of this form is available in SRI online in www.sri.gob.ec Declarations section.
In order to facilitate compliance with this obligation, the SRI published on its website the guide for the declaration and payment of this tax that taxpayers can access in https://www.sri.gob.ec/web/guest/formularios-e-instructivos
May 2023 VAT Updates in Japan
In April 2023, the Consumption Tax Act and related regulatory documents were partially revised.
Some necessary modifications were made to the Qualified Invoicing System that is being introduced from 1 October 2023.
The Japanese tax authorities outline that the revision may affect not only businesses already registered as invoice issuers but also businesses that are considering becoming invoice issuers in the future.
Detailed information on the different measures in the guidance “April 2023 Revision of the Invoice System” has been published.
The measures aim to facilitate taxpayers adapt to the new requirements and include:
- 2% special case – Measures to reduce the burden on small businesses that become invoice issuers;
- Special exemption for transactions below threshold – Purchase tax deduction (credit) is possible by keeping only certain records for transactions below a specified threshold (less than 10,000 yen (approximately EUR 67);
- Exemption from the obligation to issue a qualified invoice – if certain listed transactions (i.e. return of goods, discounts) are below specified threshold, there is no need to issue an invoice for supplies below 10,000 yen;
- Revision of the registration system for invoice issuers – Revision of the registration system when a tax-exempt business operator becomes an invoice issuer;
In addition, in April “Invoice System Q&A” was subject to a number of updates. As were the different step-by-step guides (i.e. how to register as a qualified invoice issuer).
May 2023 VAT Updates in the United Kingdom
On 23 March 2023, the Bank of England announced increasing the base rate from 4% to 4.25%.
HMRC interest rates are linked to the Bank of England base rate.
As a consequence, HMRC interest rates for late payment and repayment will increase:
- From 3 April 2023 for quarterly instalment payments; and
- From 13 April 2023 for non-quarterly instalments payments
Late payment interest (Default interest rate) is set at a base rate (4.25%) plus 2.5% = 6.75%.
Repayment interest (Statutory interest rate) is set at a base rate (4.25%) minus 1% = 3.25%, with a lower limit – or ‘minimum floor’ – of 0.5%
Below is a summary of recent changes in the interest rates:
|From||Default interest rate applicable %||Statutory interest rate applicable %|
|13 April 2023||6.75||3.25|
|21 February 2023||6.50||3.00|
|6 January 2023||6.00||2.50|
|22 November 2023||5.50||2.00|
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