Global VAT Guide: September 2024

The September edition of the Global VAT Guide features comprehensive updates on VAT regulations and developments from Austria, Croatia, Czech Republic, European Union, Finland, France, Greece, Portugal, Romania, Slovakia, Bosnia and Herzegovina, Philippines, Russia, Saudi Arabia, and Switzerland.

Austria

The Austrian Parliament is implementing new place of supply rules regarding virtual events.

The place of supply of electronically provided services, telecommunications, broadcasting, and television will be where the service recipient has his or her domicile, registered office, or registered office habitual residence.

The Government bill adopted changes in 7 different Tax Acts and the Fiscal Code.

Some other amendments in the VAT field are in Art. 6 and are regarding:

• exemption for donation of food;
• increasing the registration threshold from EUR 35,000 to EUR 42,000;
• introducing EUR 100,000 threshold (EU turnover) for taxpayers from another Member State in accordance with the EU SME directive;
• expanding the scope of issuing simplified invoices – to exempted taxpayers; and
• changes in the treatment of works of art

These amendments will come into effect from 1 January 2025.

Croatia

On 16 January 2024, Croatia extended its Reciprocity list of non-EU countries for foreign VAT refund purposes adding Macedonia with no restrictions to the expenses, effective from 1 January 2024.

The restrictions for Turkey (expenses exclusively in connection with participation in fairs and exhibitions and related to road transport) have also been removed.

Czech Republic

On 12 June 2024, the last meeting of the Czech Government regarding the Bill to amend Act No. 235/2004 Coll., on VAT was held.

Some of the notable changes include:

• Reducing the statute of limitation to claim input VAT deduction from 3 years to 2 years;
• Increasing the time for obligatory correction of the tax base for taxable supplies from 3 to 7 years;
• Implementing the new place of supply rules regarding virtual events:
  • The place of supply of services transmitted or made available virtually shall be where the non-taxable person has registered office in the case of a legal person, or place of residence in the case of a natural person.
  • In the case of taxable persons Subsection (1), which says that the place of supply is where the event actually takes place, shall not apply to the case of virtual participation.
• Introducing an additional limit of EUR 100 000 (CZK 2.5 million) (EU turnover) for taxpayers from another Member State in accordance with the EU SME directive:
  • if the threshold is met for a period of 12 consecutive calendar months it triggers an immediate registration.
  • if in the 12 consecutive calendar months a threshold of CZK 2 million (~ EUR 80 000) is reached then it triggers a registration on 1 January next year.

When the Bill is approved, the amendments will come into force on 1 January 2025.

European Union

Directive 2022/542, among others has introduced a change in the place of supply of admission to events where the attendance is virtual and the customer is non-taxable person the place of taxation shall be the place where the no-taxable person is established, has permanent established or usually resides.

To comply with the newly introduced requirements the event organisers need reconsider the liabilities to charge and report VAT on supplies considering the specifics of each individual event, attendees may be both businesses and individuals, the event itself may be on site and live broadcasted or recorded and streamlined later on.

Directive 2020/285 introduces set of measures aiming to reduce the administrative burden for small and medium enterprises and to facilitate VAT compliance. It introduces a national threshold of up to EUR 85,000 or its equivalent in local currency and an EU wide threshold of EUR 100,000.

Where the business turnover is below both thresholds VAT exemption may be exercised within the country of establishment and in any other EU member state. The businesses who decide to avail of the exemption need ensure monitoring the threshold on ongoing basis and completing the applicable notifications formalities in the Member state of Establishment and consider. They need to assess pros and cons of the simplified requirements vs the benefits of applying the general or, where applicable a simplified (i.e. OSS regime) which in general may allow input VAT recovery. 

The suppliers need also consider the liability to charge VAT on supplies where their customer is a business but subject to the VAT exemption effective 1 January 2025.

The above changes do aim to simplify compliance but may be challenging in the early periods of adoption and practical implementation.

Some of the EU Member states have already transposed the Directive into their national legislation, for some other the transposal is in legislative process or at a proposal stage, there are some for which the transposition initiation is expected.

Country	Status
Austria	Adopted
Belgium	Adopted
Bulgaria	Expected Transposition
Croatia	Proposal
Cyprus	Expected Transposition
Czech Republic	In Legislative Process
Denmark	Proposal
Estonia	Proposal
Finland	Adopted
France	Adopted
Germany	In Legislative Process
Greece	Expected Transposition
Hungary	Expected Transposition
Ireland	Proposal
Italy	Proposal
Latvia	Expected Transposition
Lithuania	In Legislative Process
Luxembourg	Proposal
Malta	Expected Transposition
Netherlands	Expected Transposition
Poland	Expected Transposition
Portugal	Proposal
Romania	Expected Transposition
Slovakia	Adopted
Slovenia	In Legislative Process
Spain	Expected Transposition
Sweden	Proposal

Finland

On 9 August 2024, the Ministry of Finance published a draft proposal for Budget 2025.

Tax measures are planned to come into effect from 1 January 2025 (unless stated otherwise).

Some of the proposals include:

• an increase in the standard VAT rate from 24% to 25.5% from 1 September 2024;
• increasing the VAT rate on some commodities from the 10% reduced VAT rate to 14% reduced VAT rate from 1 January 2025;
• subjecting menstrual pads, incontinence pads, and child diapers to a reduced VAT rate of 14%, instead of the standard VAT rate; and
• sweets will be subject to the standard VAT rate instead of the 10% reduced VAT rate, effective from 1 June 2025; and
• abolishing the special scheme providing relief for small entrepreneurs and increasing the threshold for small entrepreneurs from EUR 15,000 to EUR 20,000.

France

The French Tax Authorities initiated a Public Consultation in the period 24 July – 1 October 2024 on the modification of the Administrative guidelines on VAT rules on imports reflecting the changes introduced by the Finance Law for 2024 (Article 112 of Finance Law No. 2023-1322 of December 29, 2023)

Below is an overview of the modifications:

• As an exception to the general competence of the DGFiP (the General Directorate of Public Finances) in the management of import VAT due by taxable persons, VAT due on certain import transactions by taxable persons in specific situations (verbal declarations or exhibitors at fairs and exhibitions) may continue to be declared and paid to the DGDDI. (General Directorate of Customs and Indirect Taxes (DGDDI) not by DGFiP as per the general rules effective 1 January 2022;
• The rules regarding the liability of VAT on imports are adjusted:
  • as to take into account recent developments in e-commerce practices, certain taxable resellers who make distance sales of imported goods are now designated as liable for VAT due on importation when a discrepancy is found between the tax base declared on importation and the actual commercial value of the imported goods.
  • with regard to flows between taxable persons or when the importation is carried out in the absence of any delivery, and in order to remove any ambiguity between tax and customs terminology, the rules on liability for VAT on importation are rewritten with a direct reference to the concepts from the Union Customs Code ( Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 establishing the Union Customs Code.
• The rules determining the place of supply of tangible movable goods have been supplemented.

Greece

On the 12 July 2024, the AADE and Deputy Minister of Finances Christos Dimas announced a gradual reduction of the permissible deviation limits when submitting VAT Returns and their complete elimination from 1 January 2025.

Below is a synopsis of the implementation stages as per by AADE Decision A. 1108 /08-07-2024:

• From 1 January 2024 until 30 June 2024, a deviation rate of thirty percent (30%) remains in effect in the case of revenue data, as well as thirty percent (30%) in the case of expense data;
• From 1 July 2024 until 30 September2024 it is reduced to ten percent (10%) in the case of revenue data, as well as to twenty percent (20%) in the case of expense data;
• From 1 October 2024 until 31 December 2024 at zero percent (0%) in the case of revenue data, as well as at five percent (5%) in the case of expense data; and
• From 1 January 2025, the permissible limits of deviations in the case of income and expenditure data per tax period of VAT declaration cease to exist in relation to the corresponding data that have been transmitted to the myDATA digital platform.

Portugal

On 4 July 2024, the Portugal Council of Ministers approved the “Accelerate the Economy” (“Acelerar a Economia”) Framework, which includes different measures to boost the economy.

Among the tax measures is the introduction, from January 2025, of the concept of VAT groups, which aims to improve the cash flow of companies, reduce the VAT refund processing, and streamline procedures by consolidating the balances of tax to be paid to the State and tax to be refunded by the State.

Romania

On 11 July 2024, the Romanian Government drafted a memorandum of the reciprocity declaration based on which taxable persons from the United Kingdom will benefit from the reimbursement of the VAT they paid in Romania, according to the provisions of the 13^th Directive.

Currently, TBI is in contact with the Romanian Tax Administration and the UK Embassy in Romania confirming details like the effective date of the declaration and whether retroactive claims will be possible.

Slovakia

Threshold for Issuing Simple Invoices

The Slovakian Government is preparing significant changes in the VAT Act 222/2004 Coll., effective from January 2025.

Among these changes is decreasing the threshold for issuing simplified Invoices.

There will be a reduction in the threshold from EUR 1000 to EUR 400 (excluding VAT).

Some other notable changes include:

• Implementing EU SME directive introducing a registration threshold of EUR 100 000 (EU turnover) for taxpayers from another Member State;
• Increasing the national registration threshold from EUR 49,790 to EUR 62,500; and
• Changes in the place of supply rule for virtual events.

VAT Gap

With a draft bill, the Ministry of Finance has proposed changes to VAT law with an aim to reduce the VAT gap and minimise VAT evasion.

Some of the changes include:

• An amendment to the rules in relation to adjustments of the deducted input VAT for investment property;
• An expansion of the number of cases to which the obligation to correct deducted input VAT will apply; and
• A more precise legal definition of the term “investment property”.

The proposed changes are to come info effect from 1 January 2025.

The deadline for consultation is 13 September 2024.

Bosnia & Herzegovina

The Bosnian Indirect Taxation Administration recently published instructions on the issuance of Certificates for VAT and other Indirect Taxes.

To obtain a VAT Certificate, the taxpayer must submit (in person or by post) a written request to the Tax Department of the regional centre competent on a prescribed Form pointed out in “Prilog 2”.

The Tax Department checks the formal correctness of the request and if it finds that it is correct, the certificate is issued within five (5) days from the date of submission.

The instructions enter into force on the eighth (8) day from the day of its publication in the Official Gazette.

Philippines

On 28 August 2024, the President of Philippines Senate signed the Senate Bill No. 2528.

Upon adoption of this Bill, the scope of the supplies subject to VAT at 12%  will be expanded to include Digital Services and Digital goods, including where provided by  non-resident digital service providers, aiming to ensure equality between  the local providers  and the foreign sellers trading online.

According to the Bill, any digital services supplied over the internet or other electronic network such as online search engines, online marketplaces, cloud services, online media and advertising, online platform as well as digital goods should be subject to VAT.

An online marketplace (e-marketplace) shall also be liable to remit VAT on transactions by non-resident sellers provided that it controls the key aspects of the supply or is involved in ordering or delivery.

A non-resident digital services provider will be required to register and remit VAT on supplies consumed in Philippines by non-VAT registered customers (as opposed to B2B supplies where the Philippines VAT registered customer shall be liable to withhold and remit the VAT due on purchases of digital services purchased from non-resident digital services providers).

The Bill specifies the applicable invoicing and filing requirements.

A non-established digital services provider would not be entitled to input VAT recovery, however would be subject to simplified reporting requirements – i.e. daily sales journal and subsidiary purchase journal are not required to be maintained by a non-established provider.

The  non-resident digital services provider should complete a simplified registration online following a dedicated automated procedure.

The VAT registration is mandatory upon taxable gross sales for the past 12 months exceeding  or expected to exceed the threshold as provided in Section 109(CC) of the VAT Act.

Timelines for the effective implementation of the digital economy related VAT rules:

• This Act shall take effect 15 days after its publication in the Official Gazette;
• Department of Finance (DOF),  shall issue rules and regulations for the effective implementation of this Act not later than 90 days from the effectivity of the Act; and
• Non-resident digital services providers shall immediately be subject to value- added tax under this Act after 120  days from the effectivity of the implementing rules and regulations.

Russia

The FTS (Federal Tax Service) has confirmed the VAT obligations of Russian resident IT companies that acquire electronic services from non-resident companies.

Transactions involving the sale of goods, works and services in the territory of Russia are subject to Russian VAT.

Electronic services are deemed to be supplied in Russia if the buyer of services carried out activities in Russia.

Electronic services include, inter alia, services for the provision of the right to use electronic books and other electronic publications, information, educational materials, graphic images, musical works with or without text and audiovisual works via the Internet.

Saudi Arabia

As mentioned in the May 2024 newsletter, the ZATCA (tax and customs authority) previously announced criteria for Group 12 taxpayers for applying the integration phase of e-invoicing.

Group 12 includes all taxpayers with an annual turnover, in the years 2022 and 2023, exceeding SAR 10 million.

Group 12 taxpayers are required to connect their e-invoicing system to the ZATCA from 1 December 2024 – 28 February 2025.

The Zakat, Tax and Customs Authority, announced criteria for an additional 3 groups for applying the integration phase of e-invoicing.

Group 15 includes all taxpayers with an annual turnover exceeding SAR 4 million in the years 2022 and 2023.

These taxpayers will be requires to connect their e-invoicing system to the ZATCA from 1 March 2025 to 31 May 2025.

Below is the timeline of integration for groups 13 – group 15:

• Group 13 – Sales exceeding SAR 7 million in 2022 or 2023
  • Integration period 1 January 2025 – 31 March 2025.

• Group 14 – Sales exceeding SAR 5 million in 2022 or 2023
  • Integration period 1 February 2025 – 30 April 2025.

• Group 15 – Sales exceeding SAR 4 million in 2022 or 2023
  • Integration period 1 March 2025 – 31 May 2025.

Switzerland

On 21 August 2024, the Federal Counsel adopted amendments of the Ordinance on the application of the VAT Act as to reflect the changes in the VAT Act adopted on 16 June 2023:

• emission allowances becoming subject to acquisition tax;
• introduction of annual VAT return frequency for small and medium enterprises;
• waive of fiscal representative requirement in certain cases;
• administrative measures in case of non-compliance;
• e-commerce related changes – digital platform becoming liable to VAT when facilitating supplies.

In the period 9 July – 23 August 2024 a public consultation was conducted on Swiss Federal Tax Administration draft Guidelines detailing the practical implementation of upcoming changes to Swiss VAT rules for e-commerce, set to take effect on 1 January 2025.

A key feature of these changes is the introduction of the ‘’deemed supplier’’ concept – a platform facilitating the supply is deemed to have acquired the goods from the underlying seller and to have supplied the goods to the final consumer. In such a case the platform has the same obligations as a person making the supply.

The new VAT obligations apply to sales of goods imported or already present on Swiss territory. The exemption where the tax due is below CHF5 is maintained.

The Guidelines list indicators that should show whether the platform facilitates the transaction vs  conditions under which a platform is not deemed to  have facilitated a supply.

The Guidelines provide further details on registration and de-registration requirements, applicable exemption thresholds, applicable ways to report import VAT at customs, VAT return related formalities and input VAT deduction entitlement.

The Guidelines cover also the invoicing requirements platforms must comply with.

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