International VAT Rate Round Up: July 2020

Keeping up with VAT isn’t easy. That is why our researchers compile the latest updates to VAT regulations and deadlines from around the world each month.

European Union

The European Commission recently approved the proposed 6-month delay of the VAT e-commerce package, with the new date for implementation set for 1 July 2021.

Bulgaria

Many countries in the EU have reduced the VAT rate on ebooks over the last couple of years and up until now, Bulgaria has kept the VAT rate on ebooks at 20%.

From 1 July 2020, the Bulgarian government will temporarily drop the VAT rate for ebooks from 20% to 9%.

This temporary cut will be in place until 31 December 2020.

Czech Republic

In March 2020, a special law suspended the electronic record of sales (EET) until 19 August 2020.

This has been further postponed to January 2021, at which time all entities will start recording their sales. This postponement means that taxpayers do not have to send sales data to the Financial Authority, they do not have to issue receipts in accordance with the Sales Registration Act and they are not obliged to place an information notice.

EET enables the recording of all cash payments for goods and services and facilitates online communication between entrepreneurs and the Financial Authority. How it works:

• The entrepreneur sends an XML data message of a transaction to the Financial Authority;
• The Financial Authority will send a confirmation of receipt with a unique code (FIK);
• The entrepreneur issues a receipt to the customer;
• The customer receives the receipt;
• The customer can verify the receipt and the entrepreneur can verify the sales registered under their name through the web application of the Financial Administration

Despite the delay, the EET system is now fully operational and if taxpayers want to record sales, they can do so on a voluntary basis.

Greece

The Greek government have announced plans to extend the timeline of the discounted VAT rates applicable in certain islands from 30 June 2020 to 31 December 2020.

The standard Greek VAT rate is discounted by 30% for the below islands and this discounted rate will now remain in place until 31 December 2020:

• Leros
• Chios
• Lesbos
• Samos
• Kos

In June 2020, Greece provided an update to the phased roll out of its myDATA e-inovice and e-books program.

E-book reporting is to begin on 1 October 2020.

This new process will be implemented in phases to give companies time to connect their accounting software with the government’s myDATA platform, and Greek established companies of any legal form are obliged to transmit their transaction data to the myDATA platform.

This will allow for digital reporting – companies will report their transactions, invoices and accounting records to the Tax Office using the myDATA platform.

All organizations are required to provide tax and accounting details for their expenses, provided by the company’s licenced accountant.

Below are the phases of the roll out:

• Companies that have decided to issue e-invoices through a licenced provider must start the electronic transmission of their e-invoice data from 20 July 2020;
• Companies that issue their invoices using other means (accounting software, ERP) must begin sending revenue invoice data on 1 October 2020;
• The transmission of retail sales receipt data will begin on 1 October 2020;
• For data related to sales documents issued from 1 January 2020 to 1 October 2020, businesses must transmit the relevant data by 31 December 2020;
• Accounting and tax details of expense documents issued from 1 January 2020 up to 1 October 2020 must be transmitted by 28 February 2021.

Hungary

The Online Invoice Reporting System is a tax-reporting tool for invoicing data and was introduced in 2018.

The Hungarian Tax Authority (NAV) have announced that from 1 July 2020, the scope for the Online Reporting System will be extended to combat tax fraud and to tighten the economy.

A 3-month sanction-free period will be introduced.

This means that the deadline of 1 July 2020 is not delayed but NAV will not penalise reporting omissions for 3 months if taxpayers register in the Online Invoice system (by 30 September 2020).

Going forward, the below will apply:

• The threshold of HUF 100,000 for invoice data reporting is eliminated. Businesses will have to declare all of their issued invoices to the National Tax and Customs Administration (NTCA). For any invoices issued before 1 July 2020, only invoices exceeding the HUF 100,000 threshold need to be reported;
• Invoices that are issued manually (without accounting/billing software) must be reported on the NTCA website with 4 days (or 5 days before 1 July 2020). Invoices with input VAT exceeding HUF 500,000 or more must be reported within 1 day after the invoice has been issued; and
• Invoices issued using accounting/billing software must be reported in real time. This is done by electronic submission to the NTCA

Also, from 1 July 2020, the data relating to all approved supplier invoices must be provided to NAV on the M-sheet.

The below will be reported in the M-sheet:

• Number of the invoice
• The Tax number of the taxable person selling the product/service
• The Tax base indicated in the invoice and the amount of output VAT
• The delivery date of the invoice

United Kingdom

The United Kingdom left the European Union on 31 January 2020.

This saw the end of their 47-year membership in the European Union and the beginning of negotiations between the UK and the EU.

The UK is still bound by some of the EU’s rules during the “transition period”, which ends on 31 December 2020.

Article 132 of the Withdrawal Agreement allows for a possible extension of the transition period – this may be extended by one or two years.

On 12 June 2020 the UK formally told the EU that it will not seek an extension to the transition and negotiation period.

Pressure is building on both sides to come to agreement on a trade deal by October 2020 so this can be ratified and put in place for 2021.

The EU have stated that they are ready “to intensify” the talks with the UK as chief negotiators have mentioned there has been a lack of progress with their discussions.

The UK believes they will not be in a position to implement full post-Brexit border controls on goods entering from the EU until July 2021.

Face to face negotiations between the UK and EU have resumed in Brussels. This is the first time Michel Barnier and David Frost have met in person since March 2020.

Johnson is hoping a deal could be reached soon and there is a “very good” chance of getting a trade deal by December 2020.