Global VAT Guide: October 2021 VAT Updates
October 2021 VAT Updates in Czech Republic
On 14 September 2021, Czech Republic made an amendment to the VAT act in relation to the new EU e-Commerce rules.
- The abolition of the import VAT exemption for goods in small consignments with a value below EUR 22;
- The extension of the OSS and the introduction of IOSS;
- New distance sales rules in the EU, such as:
- The removal of distance sales thresholds of EUR 35,000 and EUR 100,000 and the introduction of a single threshold of EUR 10,000 for small businesses.
- The introduction of the new rules for goods sold on digital platforms.
Despite the delay in the legislative process, the new EU VAT rules on e-commerce came into effect from 1 July 2021.
October 2021 VAT Updates in France
In September 2021, it was announced that the dates of the mandatory e-invoicing rollout in France has changed.
Below is the updated timeline:
- 1 July 2024 – large businesses with more than 5,000 employees or businesses with an annual turnover exceeding EUR 1.5 billion or with a balance sheet exceeding EUR 2 billion will have to issue e-invoices;
- 1 July 2024 – all businesses established in France or with headquarters in France will have to accept e-invoices from their suppliers;
- 1 January 2025 – intermediate businesses will have to issue e-invoices; and
- 1 January 2026 – small and medium businesses with less than 250 employees or businesses with an annual turnover not exceeding EUR 50 million or balance sheet not exceeding EUR 43 million will have to issue e-invoices.
October 2021 VAT Updates in Italy
Changes to the mandatory business-to-business (B2B) e-invoicing rules for transactions carried out by established businesses with taxpayers that are not registered, resident or established in Italy will be effective from 1 January 2022.
The Esterometro will be abolished and all cross-border invoices (export, import, intra-community, etc.) will have to be transmitted through SDI on a transactional basis.
These measures effectively extend the scope of mandatory e-invoicing to B2B foreign transactions.
The extension of the scope of mandatory e-invoicing will be enacted by the Budget Law (No. 178) of 30 December 2020 which provides for taxpayers resident or established in Italy to submit e-invoice data through the interchange system (SDI) in an XML format documenting the transactions carried out with foreign businesses:
- Purchase e-invoices received from non-resident and non-registered business suppliers must be submitted through the SDI portal by the 15th of the month following that in which either a paper invoice is received; or a tax point occurs; and
- Sales e-invoices issued to non-resident and non-registered business customers must be submitted through the SDI portal within 12 days from the date of the tax point.
As mentioned previously, in cases of non-compliance with the new rules, a penalty of EUR 2 per invoice up to a maximum of EUR 400 per month is applied.
The penalty will be reduced to 50% if e-invoices that we not submitted are transmitted to the SDI within 15 days from the deadline.
Up until now, the information on B2B invoices for transactions with non-resident businesses were declared to Agenzia delle Entrate (“ADE”) through the document Transmission of Invoice Data (“TDF”) on a quarterly basis. This transmission scheme is known as the Esterometro.
Starting next year, with the extension of mandatory e-invoicing SDI transmission to B2B transaction with foreign businesses, the Esterometro will be abolished.
In order to replace the TDF document transmission with e-invoices, ADE has introduced new technical specifications in the FatturaPA format in which new values and document types have been included to allow companies that intend to start declaring invoices for foreign transactions through SDI to do so ahead of 1 January 2022.
To comply with the new government requirements, companies established in Italy need to adapt their Accounting and Billing systems to be able to transmit this new type of tax document.
October 2021 VAT Updates in Romania
Romania has published an amendment of Law No. 207/2015 in the Official Gazette that will change the VAT reimbursement process in relation to the extending the reimbursement process with a tax audit to all taxpayers.
A risk analysis will be carried out and this will be the basis for the tax audit.
Below are a list of the exceptions. If one of the below is applicable, the VAT amounts will only be reimbursed after a tax audit is carried out.
- The taxpayer submits the first VAT return with negative amounts of VAT and a refund option;
- There are errors in the VAT returns submitted;
- The taxpayer initiates a liquidation/insolvency procedure;
- The Tax Authorities have documents that could indicate an unwarranted VAT reimbursement; and
- The taxpayer has on record fiscal deeds that are considered crimes.
This new process will come into effect from 1 February 2022.
October 2021 VAT Updates in the Philippines
On 21 September 2021, a bill was approved that will lead to the introduction of a 12% VAT rate on non-resident digital service companies.
This new 12% VAT will apply to non-resident companies if their gross sales are greater than PHP 3 million.
The below are some examples that will be subject to 12% VAT:
- Streaming services;
- Online advertising services;
- Electronic marketplaces; and
- Online software.
The date of introduction have not been confirmed yet.
October 2021 VAT Updates in the United Kingdom
Distance sale of goods from Northern Ireland to the EU
If you sell goods from Northern Ireland to consumers in the EU (that are not registered for VAT) and annual sales go above the distance selling threshold of EUR 10,000 you will need to pay VAT on these sales in the country the goods are being delivered to.
To avoid the requirement to register for VAT in all 27 Member States there is an option to register for the One Stop Shop (OSS) Union Scheme and manage the reporting of this VAT on these sales in one central return.
To apply for the scheme Taxpayers must:
- Sell goods from Northern Ireland to consumers in the EU;
- Sales of goods to EU consumers must be in excess of EUR 10k a year; and
- Be registered for UK VAT.
After registration, Taxpayers must:
- Charge VAT at the rate of each EU country that goods are sent to; and
- Submit a return and make a quarterly payment to the HMRC for total VAT due on all distance sale of goods to consumers in the EU.
When and how to register:
- Taxpayers must apply to register by the 10th of the month following their first eligible supply in order to use the OSS for this supply; and
- Registration is done through the GOV.UK website using the Government Gateway and password provided when UK VAT registration took place.
Withdraw of online VAT return facility
In April 2019, most VAT registered businesses with a turnover above £85,000 were required to sign up for Making Tax Digital or MTD.
HMRC have confirmed around 10% of businesses have continued to file their VAT returns online.
HMRC wrote to 800 businesses in May 2021 to remind them to sign up for MTD and in an attempt to prompt businesses to comply, HMRC will be withdrawing access to the online VAT return facility. This means that these businesses will be unable to file their VAT returns unless they sign up for MTD.
HMRC can charge a penalty of up to £400 if businesses that are required to report using Making Tax Digital are not using it.
VAT registered businesses that have a taxable turnover of less than £85,000 will be required to follow Making Tax Digital rules for their first VAT return starting on or after April 2022.
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