Global VAT Guide: October 2020
Czech Republic has approved the implementation for the EU e-commerce VAT package for 1 July 2021.
The Czech Tax Office confirmed the new rules which include the requirement of an intermediary for the OSS import scheme (regardless of which EU country is the Member State of identification).
The Czech Republic does not require non-EU businesses to appoint a Fiscal Representative for regular VAT registrations.
The French tax administration has announced it will postpone the VAT group scheme for one year.
The VAT group scheme allows different legal entities that are established in the same EU Member State to be considered as a “single taxable person” as long as the entities are closely related to each other in terms of organisation, financially and economically.
This regime will allow a single VAT return to be filed.
The effective entry of a full VAT grouping is scheduled for 1 January 2023 and not January 2022 as initially proposed.
Real-time data invoice reporting was introduced in Hungary on 1 July 2018 and it was obligatory to provide real-time data on invoices that contain VAT amounts over HUF 100,000.
This threshold was removed on 1 July 2020 and it is now obligatory to submit all invoices from domestic B2B transactions in real-time.
From 1 January 2021, the real-time invoice reporting obligation (RTIR) will be extended to include domestic B2C transactions, B2B intra-community supplies of goods and services and other export sales.
From 1 January 2021, taxpayers will be able to submit their invoice data to the tax authority’s system using version 3.0 of the tax authority’s XSD schema.
The Ministry of Finance has announced there will be a grace period for businesses to comply with the new RTIR obligation.
The grace period will be extended by three months and will end on 31 March 2021.
Currently, schema version 2.0 is being used and can be used until the end of the grace period.
The new schema will become mandatory from 1 April 2020.
During this time, there will be no penalties issued and this extra time is aimed to help businesses transition to the new system.
In Italy, electronic invoices must be issued and received through the tax authorities SDI system.
Qualifying taxable persons and their representatives may consult and download both issued and received electronic invoices through a specific online service that was made available on the ITA website, provided they adhered to such a service by 30 September 2020.
On 23 September 2020, the Italian Tax Authorities enacted Protocol No.311557/2020 and it was announced the period to join the service of consultation and acquisition of electronic invoices is extended from 30 September 2020 until 28 February 2021.
The United Kingdom will be leaving the EU Customs Union after the Brexit transition period ends.
The intra-Community rules will no longer apply to VAT for transactions between the UK and other members of the EU.
Import VAT will be due the moment the import of goods from the UK into EU countries takes place.
The Netherlands is one of the countries that allows businesses to apply the reverse charge mechanism when importing goods from non-EU countries.
A letter and a form were issued by the tax authorities in September to entrepreneurs who are eligible for a permit and have not applied for it.
The permit they are referring to is the Article 23 permit.
By obtaining an Article 23 permit, VAT will not have to be paid to customs.
The VAT to be paid will be declared on the VAT return.
Without an Article 23 permit, VAT must be paid to customs every time goods are imported.
To apply for the permit, the completed application form that was received from the tax authorities must be sent to the tax authorities before the 15 October 2020.
The deadline for taxpayers to start uploading their digital VAT books with the government for the first time has been extended.
Digital books is the government’s web service that comprises all electronic invoices issued and received by VAT taxpayers and VAT exempt persons during a 1 month period.
The revised deadlines as per the General Resolution 4796/2020 are:
- June 2020 – turnover in 2018 below ARS 500,000 (previously January 2020);
- Jul 2020 – turnover in 2018 between ARS 500,000 and ARS 2 million (previously March 2020);
- Sep 2020 – turnover in 2018 between ARS 2 million and ARS 5 million (previously May 2020);
- Oct 2020 – turnover in 2018 between ARS 5 million and ARS 10 million;
- Nov 2020 – turnover in 2018 above ARS 10 million; and
- Jan 2021 – VAT exempt businesses (previously July 2020)
On 8 September 2020, the DGT (Directorate General of Taxation) appointed 12 companies as VAT collectors for foreign digital goods and services sold to customers in Indonesia.
This appointment will require the 12 companies to collect the 10% VAT on the sale of foreign digital products and services and remit the VAT to the DGT.
The list of 12 companies that will be VAT collectors from 1 October 2020 are:
- LinkedIn Singapore Pte. Ltd;
- McAfee Ireland Ltd;
- Microsoft Ireland Operations Ltd;
- Mojang AB;
- Novi Digital Entertainment Pte. Ltd;
- PCCW Vuclip (Singapore) Pte. Ltd;
- Skype Communications SARL;
- Twitter Asia Pacific Pte. Ltd;
- Twitter International Company;
- PT Shopee International Indonesia.
- PT Jingdong Indonesia First; and
- Zoom Video Communications, Inc;
This is the third wave of companies the Indonesian government have nominated to collect 10% VAT.
United Kingdom – Brexit update
The United Kingdom left the EU on 31 January 2020 and is now in the “transition period” until 31 December 2020.
From 1 January 2020, the UK will leave the EU’s Single Market and Customs Union.
Negotiations began in March 2020 to decide the future of the EU and EU relationship from January 2021 onwards.
If a deal is not agreed, the EU and UK will revert to basic trading rules. This could cause friction and could leave future ties and the relationship in limbo.
Britain and the European Union have both said that a post-Brexit deal was still some way off and a no-deal Brexit is still possible.
Negotiations have been very tricky so far and the UK and EU have been at a stalemate over the key issues.
Some of the main issues include:
- Fishing rights;
- Northern Ireland agreement; and
- State aid
On 9 September 2020, the Internal Market Bill was published.
This will give the UK the power to override parts of the Withdrawal Agreement that deals with trade to and from Northern Ireland.
EU leaders are concerned this bill could lead to the re-imposition of a hard land border between Northern Ireland and the Republic of Ireland.
The UK has said it respects the peace accord but wants this law as a safety net in case the EU makes unreasonable demands after Brexit that might negatively affect trade between Northern Ireland and the rest of the UK.
The EU has threatened legal action if Britain does not drop the bill and the German Minister Michael Roth has said that this is “casting a dark shadow over the ongoing negotiations”.
The EU says an agreement must be sealed by the end of October or early November to leave time for the ratification process and to allow both sides to get ready.
With only three months remaining until the end of the transition period and talks continuing into October 2020, it is hoped a common ground will be found sooner rather than later to avoid a “no-deal Brexit”.
United Kingdom – VAT payment deferral scheme
On 24 September 2020, the Chancellor announced that UK VAT registered businesses that deferred VAT due from 20 March 2020 to 30 June 2020 will have an option to pay in smaller payments over a longer period.
The original deadline to pay the VAT liability in one lump sum for this period was 31 March 2021.
Businesses can now make smaller payments up until the end of March 2022, interest free.
Businesses will have to opt into this scheme and for those that do opt in, VAT liabilities due between 20 March 2020 and 30 June 2020 do not need to be paid in full until the end of March 2022.
Please note that VAT returns should still be submitted on time and any VAT which is due after 30 June 2020 should still be paid in full.