VAT Newsletter – second quarter 2023

The VAT newsletter for the second quarter 2023 highlighting the latest developments in the field of VAT in Austria, Bulgaria, Croatia, Czech Republic, Hungary, Poland, Serbia, Slovakia and Slovenia.

Austria

AMENDMENTS TO THE VAT ACT/FISCAL CODE

Tax liability due to invoicing to non-taxable persons (Sec 11 Para 12 Austrian VAT Act)

• Based on ECJ decision C-378/21 P-GmbH, a taxable person does not owe an incorrectly invoiced VAT amount in case the invoice was issued exclusively to non-taxable persons, who are not entitled to deduct input VAT.
• The prerequisite for the waiver of the tax liability is that there is no threat to VAT revenue (AbgÄG 2023).

No extinction of the VAT liability (Sec 26 Para 1 Austrian VAT Act)

• The extinction of the customs debt for goods unlawfully imported into the customs territory of the EU according to Art 124 (1) e Regulation No 952/2013 does not result in the extinction of the (import) VAT debt (AbgÄG 2023).

CASE LAW

Input VAT deduction for travel costs (Sec 13 Para 3 Austrian VAT Act)

• Foreign taxable persons, who are not subject to domestic income taxation, cannot claim the flat-rate input VAT deduction of travel costs paid to their employees.
• The input VAT deduction for travel costs may only be exercised based on invoices actually received (Federal Tax Court, 10.1.2023, RV/2100615/2022).

Invoice adjustment despite limitation of assessment (Sec 11 Para 12 and Sec 16 Para 1 Austrian VAT Act)

• The correction of an erroneously issued invoice (for which VAT is due to invoicing) can even be made if the limitation period for assessment has already expired.
• This is because the original tax assessment remains unaffected due to the ex-nunc effect of the invoice correction (which is possible for an unlimited period of time) according to Sec 16 Para 1 Austrian VAT Act (Supreme Administrative Court, 15.12.2022, Ro 2019/13/0034).

Bulgaria

TAX AUTHORITIES´PRACTICE

Definition of immovable property

• A removable construction may be deemed as immovable property for VAT purposes when significant efforts, qualified personal with special profession skills or significant time and financial resources are needed for the removal of the construction (Written statement of the Directorate of the Central Department of the National Revenue Agency Nr. 26-В-126/ 23.3.2023, http://bit.ly/3XTVkOQ)

Croatia

AMENDMENTS TO THE VAT ACT/FISCAL CODE

As of 1 April 2023

• Extension of the reduced VAT rate of 5 % for certain suppliers of gas and heating until 31 March 2024 (c.f. VAT Newsletter first quarter 2023) (Amendments to the VAT Act published in Official Gazette 33/2023: https://bit.ly/44tSD9b).

Czech Republic

AMENDMENTS TO THE VAT ACT/FISCAL CODE

As of 1 January 2024 (planned)

• Parliamentary print out no. 488 – Consolidation and austerity Package with following amendments affecting the VAT:
  • Two reduced VAT rates (15 % and 10 %) are proposed to be merged into one single reduced VAT rate (12 %).
  • Certain goods and services are proposed to be moved from reduced VAT rate(s) to standard VAT rate.
  • Supply of books is proposed to be newly considered as a VAT exempt supply.
  • Limitation of the right to tax deduction for more valuable vehicles (more than CZK 2 Mio) (https://bit.ly/44sRsa4).

TAX AUTHORITIES’ PRACTICE

As of 1 January 2023

• Introduction of guidelines concerning tax obligations for taxable persons providing passenger transport services via mobile applications (e.g. UBER, BOLT, LIFTAGO) (https://bit.ly/3XUAChC).
• Introduction of guidelines concerning tax obligations for taxable persons providing accommodation services via internet platforms (e.g. Airbnb, booking) (https://bit.ly/3K10IKh).

CASE LAW

• According to the decision of the Supreme Administrative Court (SAC) the limitation period for the assessment of output VAT and the limitation period for claiming input VAT deduction are different periods.
• Actions, such as tax audits, which interrupt the period for the assessment of output VAT have no effect on the running of the period for claiming input VAT deductions. The period for claiming input VAT deductions shall be final and shall not be renewed or interrupted (Decision of Supreme Administrative Court 10 Afs 189/2021 – 40, https://bit.ly/3OiBR7j).

Hungary

AMENDMENTS TO THE VAT ACT/FISCAL CODE

As of 23 May 2023

• The reduced tax rate of 5 % for “hop on hop off” passenger transports is only applicable to service providers which enable only electronic payment for their passengers (https://bit.ly/3PY1Vpl).

TAX AUTHORITIES’ PRACTICE

• In case taxable persons purchase goods (irrespective of for business or private purposes) from other EU Member States, they must tax and declare the acquisition in the Recapitulative Statement (https://shorturl.at/dqMNR).
• As of third quarter 2023 (planned)
  • Introduction of an e-receipt system to reduce tax administration and to increase data awareness of the customer. The customer generates an e-receipt by scanning a QR code via an app, which is then automatically uploaded to the Receipt Store of the Tax authorities (https://shorturl.at/afQS8 (E-nyugta pdf)).

Poland

AMENDMENTS TO THE VAT ACT/FISCAL CODE

As of 1 July 2023

• Amendments to the SLIM VAT 3 package with further simplifications came into force
  • Increase of the limit of the value of sales (from EUR 1.2 million to EUR 2 million) for the classification as a small taxpayer;
  • Removal of the requirement to hold an invoice for iC acquisitions of goods when deducting input VAT;
  • New rules for determining the exchange rate of correcting invoices issued in foreign currencies (https://sejm.gov.pl/Sejm9.nsf/PrzebiegProc.xsp?id=1A33C1B3AC0EE7DEC12589570031F8A5).

TAX AUTHORITIES’ PRACTICE

No VAT liability arising on receipt of reservation fee

• A reservation fee that fulfills a compensation function for damage incurred is not subject to VAT (Individual ruling of 2 May 2023, ref. 0114-KDIP4-1.4012.157.2023.1.PS, https://shorturl.at/rzDVW).

CASE LAW

No input and output VAT for goods/services acquired for use of staff

• According to the decision of the Supreme Administrative Court (SAC) a taxable person who purchases goods/services exclusively for the use of his staff acts as a private person.
• Both the acquisition and supply of goods and services to employees without consideration are thus out of scope of VAT with no right to deduct input VAT (Judgment of the Supreme Administrative Court of 6 April 2022, ref. I FSK 239/20, https://shorturl.at/chlF5).

Branch services to head office are provided between separate taxable persons

• Services provided by a branch in Poland to its head office in Ireland that is a member of a VAT group constitute services provided between two separate taxable persons (Judgement of the Voivodeship Administrative Court in Gliwice of 29 March 2023, ref. I SA/Gl 971/22, https://shorturl.at/ftC09).

Serbia

AMENDMENTS TO THE VAT ACT/FISCAL CODE

As of February 2023

• Further definition of the terms “amount of consideration (considered to be at market value)”, “independent supplier” and “similar goods/services” in the context of related party transactions have been published (c.f. VAT Newsletter Q1 2023) (“Official Gazette of the Republic of Serbia” No. 07/2023, dated 31 January 2023).

Slovakia

TAX AUTHORITIES’ PRACTICE

As of 31 December 2023

• The transaction “sale and leaseback” will be treated as a provision of financial service from the lessor to the lessee, which falls under the tax exemption of Section 39 of the VAT Act. This will apply to contracts concluded after 31 December 2023 (https://shorturl.at/cjqOP).

As of 1 April 2023

• Amounts whose payment has a direct economic link to the supply of goods and services under a contractual agreed terms and conditions represent the supply of goods or services for remuneration, regardless of the description of such amounts as penalty, fee, refund, compensation, etc. The same shall apply in the case of early cancellation of a contract on the basis of which there is or has been a repeated supply of goods or services (https://shorturl.at/stGS8, https://shorturl.at/ahwOZ).

Slovenia

AMENDMENTS TO THE VAT ACT/FISCAL CODE

As of 18 April 2023

• Amendments on Act on Tax Verification of Invoices were published:
  • A taxable person has to hand over the issued invoice to its customer (and not only on his request).
  • The form of the invoice can be either in paper or in electronical form.
  • The prescribed fine for the customer who does not take over the invoice is set at EUR 40. For legal entities and sole proprietors who do not issue an invoice, fines range from EUR 1,500 to EUR 75,000, and for their responsible persons from EUR 800 to EUR 5,000 (https://shorturl.at/cqvz5).