VAT Newsletter – second quarter 2021

Dear Sir or Madam,

Attached please find the VAT newsletter for the second quarter 2021 highlighting the latest developments in the field of VAT in Austria, Bulgaria, Czech Republic, Germany, Hungary, Poland, Romania, Serbia, Slovakia and Slovenia.

Kind regards
LeitnerLeitner

AUSTRIA

Amendments to the VAT Act/Fiscal Code

• The (temporary) VAT rate of 0 % with the right to deduct input VAT for local supplies and intra-community acquisitions of protective masks has been extended until 31 December 2021 (§ 28 Section 54 Austrian VAT Act).

Case law

• The Supreme Administrative Court asked in its request for a preliminary ruling the ECJ whether the simplification for triangulation acc to Art 25 Austrian VAT Act (Art 141 VAT Directive) is still applicable although the invoice only contains a reference to a triangular transaction but not a reference to Reverse Charge (Supreme Administrative Court 08.04.2021 Ro 2020/13/0016).
• In case a taxpayer purchases computers and licenses from a company which was engaged in VAT fraud, the tax administration cannot deny the right to deduct input VAT solely on the ground that IT trade is a “vulnerable sector” without proving that the recipient knows or should have known about VAT fraud (Supreme Administrative Court 27.01.2021 Ra 2020/13/0068).

BULGARIA

Amendments to the VAT Act/Fiscal Code

As of 1 July 2021

• Implementation of the European VAT e-commerce package (State Gazette Nr. 104/8.12.2020).

CZECH REPUBLIC

Tax authorities’ practice

• As of 1 January 2021
  • Taxable persons established in Great Britain and Northern Ireland are entitled for VAT Refund according to the 13^th VAT Directive as the principle of reciprocity is fulfilled (https://bit.ly/3zz16bd).
• As of 1 July 2021
  • Czech Financial Administration issued a release on the implementation of the European VAT e-commerce package which states that although the required amendments to the VAT law have not yet been approved due to delays in the legislative process, taxpayers may apply the new rules including the OSS relying on direct effect of EU VAT legislation (https://bit.ly/2USi2L6).
• The exemption from customs duties and VAT for imports of goods necessary to combat the consequences of the COVID-19 pandemic for state entities, charities or charities and rescue services has been extended until 31 December 2021 (https://bit.ly/3zClKr2).

Amendments to the VAT Act/Fiscal Code

• The tax exemption for the supply of specific COVID-related goods (e.g. face masks, respirators) has been extended until 31 August 2021 (Decision of Ministry of Finance).
• From 14 April 2021 until 31 December 2022
  • Tax exemption for supplies of diagnostic medical devices and COVID-19 vaccines (Decision of Ministry of Finance).

GERMANY

Tax authorities’ practice

• Place of supply rules in connection to the admission to educational events:
  • The condition of “being generally accessible to the public” was removed for the application of the special place of supply rule for admission to an event for B2B transactions (Art 53 VAT Directive). Now only the “physical presence of the recipient” remains as condition.
  • For the admission for a taxable person to an online seminar the general B2B place of supply rule applies (circular of the Ministry of Finance dated 09.06.2021 – III C 3 – S 7117-b/20/10002 :002 https://bit.ly/3y7AKwL).

HUNGARY

Jurisdiction and finance administration

• As of 1 July 2021
  • A non-EU established supplier has to appoint a fiscal representative in order to make use of EU-OSS with Hungary as Member State of Identification for distance sales of goods which are transported from a Hungarian stock to other EU Member States (https://bit.ly/3kY6kcu).
  • Returned goods to the Hungarian stock from distance sales of goods carried out before EU-OSS was applied (i.e. before 1 July 2021) have to be reported in form of a self-revision to the previous VAT returns (https://bit.ly/3kX0pUY).
• As of 1 August 2021
  • The (temporary) VAT rate of 5 % on take away foods introduced due to the COVID-19 pandemic will be abolished (https://bit.ly/3i34tkI)

POLAND

Amendments to the VAT Act/Fiscal Code

• As of 1 July 2021
  • Changes concerning SAF-T files were published which cover mainly the clarifications of the use of markings in SAF-T filed e.g.
    • Cancelling of the obligation to use the marking for obligatory split payment procedure (MPP) and introduction of codes related to e-commerce package;
    • The fiscal receipt considered as a simplified invoice will not be reported in SAF-T file separately;
    • Clarification of the scope of the goods covered by some GTU codes (https://bit.ly/3eWImug).
  • Implementation of the European VAT e-commerce package (https://bit.ly/3rydBkB), however the regulations concerning the templates of documents and VAT refunds are still subject to legislative procedures (draft of regulation concerning applications for reimbursement of value added tax charged in a Member State of the European Union other than the Republic of Poland https://bit.ly/3zsCr8e, draft of regulation concerning the refund of tax on goods and services to certain entities https://bit.ly/3kX3BzW).
• As of 1 October 2021
  • Planned introduction of National e-invoicing System. The system will provide issuance, sending and reception of structured electronical invoices. The invoices will be stored in central invoices register. Using the system will initially be voluntary, but if the European Commission accepts it, some taxpayers will be required to issue invoices via the system (https://bit.ly/3xa12gh).
  • Implementation of SLIM VAT 2 package (https://bit.ly/2V9PFI3) – changes concerning e.g.:
    • Clarification of regulations regarding chain transactions,
    • Enabling the person settling the tax on the import of goods, directly in the tax declaration, to make a correction, if he did not settle the correct amount of tax in the original declaration;
    • Extending the time to use bad debt relief and extending its application;
    • Facilitating the deduction of VAT on cars used for business activities by extending the deadline for submitting information on incurring the first expenditure on a vehicle;
    • Enabling the deduction of VAT after the expiry of the deduction deadline “on an ongoing basis” – extending the number of settlement periods in which the taxpayer will be able to deduct by correcting the declaration;
    • Allowing (optionally) the possibility of submitting a consistent declaration of the supplier and the buyer on the choice of real estate taxation in a notarial deed;
    • Regulating the issue of releasing funds transferred from a closed VAT account to the so-called technical account
• As of 1 January 2022
  • The issue of TAX-FREE documents in electronic forms is required for supplies to non-EU travelers who are entitled to refund the VAT. These changes will require the use of online cash registers, as the tax free document should be attached with the cash register receipt (https://bit.ly/2USu5Ia).

Tax authorities’ practice

• Guidelines concerning the SLIM VAT Package (see VAT Newsletter for third quarter 2020 for detailed information) including the interpretation of new regulations and many examples of the application of the provisions were published (https://bit.ly/3kXo1cm).
• Guidelines concerning e-commerce package are expected to be published in third quarter 2021.

Case law

• Although Poland has not implemented the regulation on VAT grouping yet, according to the Supreme Administrative Court the lack of provisions in domestic law does not exclude the interpretation with reference to the jurisprudence of the ECJ. Thus, services provided from a Polish branch to the main establishment which is part of a VAT group in another Member State may not qualify as out of scope but as taxable services provided to the VAT group (https://bit.ly/3i6bxNw).

ROMANIA

Tax authorities’ practice

• As of 22 March 2021
  • New regulations concerning the procedure for de-registration as well as for re-registration for VAT purposes for taxpayers who present a high fiscal risk (Ordinance of ANAF No. 393/2021).

SERBIA

Amendments to the VAT Act/Fiscal Code

• As of 1 July 2021
  • The transfer of business or parts thereof is tax exempt provided that the business unit can be run by the acquirer for business activity independently.
  • Reparation services within the warranty period performed without renumeration are considered to be carried out for business purposes and do not qualify as deemed self-supply.
  • Solely goods/services listed in Government Decree will be considered as supply from construction area, for which reverse charge is applicable, provided that the value is above RSD 500,000.00 (approx. EUR 4,240.00).
  • If the invoice is issued on the same date when the supply is performed, only the invoice date and not the date of supply shall be mentioned on the invoice (VAT Rulebook, Official Gazette RS, No. 37/2021).

Tax authorities’ practice

• As of 6 May 2021
  • Funds recovered by the buyer in a settlement for agricultural machinery which becomes defective during use and leads to the interruption of operations are considered as compensation for damages (not subject to VAT) and not as a reduction of the purchase price (Ruling of Ministry of finance No. br. 011-00-417/2021-04).

Case law

• Foreign companies are entitled to a VAT refund concerning invoices issued by third party supplier related to vehicle repair services to customers of the foreign company as warranty holders (Supreme court Verdict No. Uzp 87/2020 since 30.11.2020, published in 2021).

SLOVAKIA

Amendments to the VAT Act/Fiscal Code

• As of 1 July 2021
  • Implementation of the European VAT e-commerce package (https://bit.ly/3iMZUdA).

Planned amendments to the VAT Act/Fiscal Code

• As of 15 November 2021/1 January 2022 (currently in legislative process)
  • Obligation of taxpayers to notify their bank account numbers used for their business to Tax Administrator which will be also available for the public on the tax authority’s website;
  • Liability of the customer for paying VAT will be extended to cover also the cases when the consideration for the supply is paid to another bank account (i.e. not publicly listed bank account);
  • Customers may pay VAT directly to the tax office in case of doubts about their supplier (i.e. that the supplier would not pay all or part of the tax amount in question) in order to avoid joint liability;
  • Rating of taxpayers by Tax Administrator providing benefits for fulfillment of tax obligations (e.g. reduction of the fee for a binding opinion, reduction of fines and longer deadlines for response to the Tax Administrator etc)  (https://bit.ly/3i0ODam).

Tax authorities’ practice

• New Guidance has been issued concerning:
  • Inland Recapitulative Statement;
  • VAT rules for bad debts relief regime;
  • Correction of the supplier’s taxable amount;
  • Correction of the customer’s deductible VAT (https://bit.ly/3BMMg2T; https://bit.ly/3x4o7kB).

SLOVENIA

Tax authorities’ practice

• The entrance fee for a concert performed via the Internet (live streaming, download) qualifies as consideration for an electronic service for which the special place of supply rule for electronically supplied services (Art 58 and 358 VAT Directive) as well as the standard rate (22 %) is applicable. This should also apply for broadcasts and events in the fields of politics, culture, art, sport, science and entertainment (https://bit.ly/3y852iK).