International VAT Rate Round Up: Q4 2023

Q4 2023 VAT Changes in Bulgaria

The Deputy Minister in an interview for local media commented on the further application of the 9% VAT rate for restaurants and catering services.

A decision is to be made on what to offer parliament – whether VAT goes back to 20% or 9% VAT rate to continue, but with a set of measures to lighten the business.

Q4 2023 VAT Changes in Czech Republic

On 13 October 2023, Bill 488 that combines the two reduced VAT rates (10% and 15%) into a single VAT rate of 12% was accepted at the third reading.

The new VAT rate will come into effect from 1 January 2024.

Some of the services taxable at the new rate are:

• Public transport of persons and their luggage;
• Accommodation services;
• Catering services;
• Granting permission to enter performances, theatres, circuses, amusement parks, concerts, museums, zoos, cinemas, exhibitions, and similar cultural events or facilities; and
• Providing access to sporting events; use of indoor and outdoor sports facilities for sports activities.

Q4 2023 VAT Changes in Estonia

Several weeks after rejecting draft 10 OE for reducing the VAT rate of basic food to 5%, a new draft with the same proposal was submitted – 272 OE. Except for the 5% rate on foodstuff, the Bill proposes 5% VAT on medicines also.

Estonia is among the 4 EU countries that have not presented, to this moment, a reduced VAT rate for essential foods.

Other proposals were reviewed by the Committee on Finance in relation to reducing the standard VAT rate.

Some of the proposals were the standard VAT rate to be reduced to 18.9%, 18.6%, or 18.4% – all of them will most probably will be rejected according to the comments published after the 1^st reading.

Q4 2023 VAT Changes in Germany

After rejecting the draft Bill 20/5810, proposing a further extension of the 7% VAT on restaurant and catering services, a new proposal was submitted in this regard under number 394/23.

• 1^st version 394/23 – proposes the rate to become permanent;
• 2^nd version 394/1/23 – proposes 3 years extension; and
• 3^rd version 394/2/23 – proposes extension until 31 December 2025.

On the 1036^th meeting of the Federal Council, held on 29 September 2023, the resolution was referred to the committees.

Q4 2023 VAT Changes in Greece

A 13% VAT rate has been proposed in Budget 2024 on short-term property rentals with an aim to regulate the short-term rental market on short-term property rentals (Airbnb type) to legal entities and natural persons with three or more rented apartments.

The natural persons who have three or more rented apartments are required to start a business.

Those with 2 or fewer properties remain under the current regime – no VAT charged.

Q4 2023 VAT Changes in Greece

On 19 October 2023, the Greek Tax Authorities published clarifications on the application of VAT provisions to electric vehicle charging – E 2060/2023.

The circular clarifies that the charging of an electric vehicle constitutes for VAT purposes a supply of electricity (D.K. 2716) for which the VAT rate of 6% is applied.

Q4 2023 VAT Changes in Italy

The Italian Tax Authority has extended the reduced VAT rate on gas, domestic and industrial use.

The 5% reduced VAT rate will apply until the end of 2023.

Q4 2023 VAT Changes in Ireland

Three VAT rate changes were proposed in the Irish 2024 Budget:

• 9% to gas and electricity supplies is extended for one year, until 31 October 2024;
• The supply of electronic books and audiobooks will be reduced to 0%, with effect from 1 January 2024. (currently at 9%); and
• The supply and installation of solar panels on school buildings will be reduced to 0%, with effect from 1 January 2024.

Q4 2023 VAT Changes in Lithuania

In June 2023, in Seimas of the Republic of Lithuania was submitted Bill (Reg. Nr. XIVP-2926) proposing amendments in the VAT Law, Art. 19, Paragraph 3, Clause 6 – catering services and takeaway meals provided by restaurants, cafes, and similar catering establishments to be permanently placed to 9% reduced VAT rate.

The project was planned to enter into force on 1 January 2024, but for this to happen the Bill had to be accepted no later than 1 July 2023, as according to Lithuanian Legislation the approval should be at least 6 months before the law would come into effect.

At the end of September 2023 this has not happened, yet, so on 1 January 2024, the catering services will go back to the standard VAT rate of 21%.

The current status of the Bill is rejected, our assumption is that the effective date cannot be met. On the Seimas webpage, it is visible that further discussions are ongoing.

We are expecting the rate increase to be a temporary situation until approval of the draft Bill and entering into force in mid or late 2024.

Q4 2023 VAT Changes in Macedonia

On 25 September 2023, Macedonian Tax Authority published in the Official Gazette No. 199/23 amendments to the VAT Law, among which VAT rate changes for the following goods are taxable at a VAT rate of 5%:

• Basic foods (not basic products will be taxable at a 10% VAT rate);
• Publications (such as books including electronic/digital textbooks, brochures and similar printed materials, newspapers and other periodic publications, children’s picture books, books, as well as electronic/digital textbooks for drawing and painting for children and cartographic products of any kind);
• Feminine hygienic products;
• Pellets, pellet stoves and pellet boilers; and
• Energy for heating.

Q4 2023 VAT Changes in Malta

On 6 October 2023, Legal Notice 231/2023 was published in the Government Gazette of Malta, No. 21,126 introducing a new reduced rate of 12%.

The new rate comes into force on 1 January 2024 and applies to:

• Custody and management of securities;
• Management of credit and credit guarantees by a person or body other than those who granted the credit;
• Hiring of a pleasure boat to a person according to an agreement for any term or part of a term that, when added to the term of a previous hiring, of the same goods or of other goods of the same kind, to the said person during the previous twelve (12) months ending on the date of the beginning of the existing hiring, does not exceed five (5) weeks; and
• Services consisting of the care of the human body required to be delivered by a person in the exercise of any profession regulated by the Health Care Professions Act (Cap.464), including services supplied in the course of a health studio business or similar business, but not including exempt supplies referred to in item 11 of Part Two of the Fifth Schedule.

Q4 2023 VAT Changes in Romania

As a result of a meeting in Brussels between the Romanian Prime Minister and the President of the European Commission, Romania may remove the reduced VAT rates (5% and 9%) and maintain only the standard rate of 19%.

This among other fiscal measures was recommended by the European Commission, aiming to combat the Romanian budget deficit.

If Romania considers the recommendation the change will take effect from 1 January 2025.

Q4 2023 VAT Changes in Singapore

As previously mentioned, the VAT rate will change again in Singapore.

In Budget 2022 the Minister for Finance announced a 2-steps rate increase:

• From 7% to 8% starting 1 January 2023; and
• From 8% to 9% starting 1 January 2024.

Q4 2023 VAT Changes in Thailand

On 16 September 2023, the Thai Royal Gazette published Royal Degree Nr 780 concerning the reduction of the VAT rate.

The Degree extends the application of the 7% rate (including local taxes) until the end of September 2024.

If not extended again, from the 1 October 2024 the rate will go back to 10%.

Q4 2023 VAT Changes in Vietnam

On 13 October 2023, the Minister of Finance submitted a resolution 11239/BTC-CST proposing an extension of the application of the 8% reduced VAT rate until 30 June 2024.

The proposal should be approved by the National Assembly.

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