Welcome to our monthly VAT News and Tips summary intended for companies having activities across the 28 Member States. You will find here below updated information and schemes on a country-by-country basis.
EUROPEAN COURT OF JUSTICE
Supply Chain – Which supply is zero-rated ? (C-628/16)
In accordance with earlier cases relative to A-B-C transactions, the ECJ ruled that the first sale (by A) may not be zero-rated where goods are to be delivered to the final customer (C) but still physically in the country of the first supplier (A).
The Court goes a step further: the fact that A had not been informed that the goods would be resold and that B presents had a VAT number issued by the country of destination does not qualify the first sale as a zero-rated intra-EU delivery.
That case-law again shows that the allocation of transport to a well-defined supply in the chain is crucial. The ECJ proves to be even stricter than in a previous case-law where A was given conclusive information (shipment and VAT registration number) allowing to treat first supply as a zero-rated one under certain circumstances (see ECJ C-430/09).
Compliance check regarding VAT refunds
The European Commission launched a compliance check to assess whether VAT refunds procedures by EU Member States are in line with current EU law and case law of the European Court of Justice. Over the next eight months, tax provisions in each Member State will be scrutinised to ensure that refund procedures allow businesses to quickly and easily recover VAT credits both in their own country and in other EU countries. The Commission could decide to launch infringements procedures in cases of non-compliance with the rules.
It is apparent that some EU countries make use of time-consuming and unfair procedures to process VAT refund claims. Such initiative of the European Commission is likely to put pressure on reluctant authorities to follow the relevant EU regulations. Businesses which are experiencing trouble in obtaining VAT refund in specific countries may contact us in order to draw attention of the Commission on concrete cases.
E-Commerce – Joint Liability of Platform Operators
The governing coalition agreement considers new legislation to tackle VAT fraud on e-commerce of goods. Under this new system, operators of electronic platform which do not preclude incompliant traders from using their platform will be liable for VAT that would not be paid by such traders.
After France and the UK, Germany is already rendering electronic platforms liable ahead of the EU Commission project that will enter into force in 2021.
VAT rate decrease on accommodation services
Austria will decrease the VAT rate on accommodation services. These services will be rated at 10% (instead of 13%) as from 01/11/2018.
Importation – Deferred Payment
Since 01/03/2018, deferred payment of import VAT has been made applicable to all types of tangible goods. Such deferment prevents cash flow inconvenience on import VAT since it is simultaneously paid and recovered.
If you wish to discuss any of the above topics, please do not hesitate to contact us freely.