VAT Newsletter – first quarter 2023

Austria

CASE LAW

As of 1 January 2023

• Triangulation scheme is applicable under certain conditions even if more than three parties are involved in the chain transaction (AbgÄG 2022).

Safety-net acquisition in chain transaction

• The Supreme Administrative Court confirms the opinion of the tax authorities, according to which the first supply in a A-B-C chain transaction is the supply with transport in case the intermediary collects the goods from the first supplier in the country of departure under condition FCA and transports them to the final customer in the country of destination under condition DDP.
• If the intermediary uses the VAT number of the country of departure, he carries out a taxable safety-net acquisition in that country without the right to deduct input VAT.
• However, a taxable safety-net acquisition does not apply in case the first (cross-border) supply was not treated as an exempt supply (Supreme Administrative Court, 19.10.2022, Ra 2021/15/0034).

Denial of input VAT deduction and tax exemption in case of VAT fraud

• Both, the right to deduct input VAT as well as the tax exemption for iC supplies must be denied, if the supplier knew or should have known, that the transaction at hand is related to VAT fraud.
• For fraud-prone sectors (e. g. supply of mobile phones), an increased diligence of a businessman is required (Federal Tax Court, 14.11.2022, RV/2100739/2016).

Bulgaria

AMENDMENTS TO THE VAT ACT/FISCAL CODE

As of 1 January 2023

• The reduced VAT rate of 9 % is now applied permanently for certain goods and services (e.g. books, newspapers, child foods) (State Gazette Nr 102/23.12.2022, https://bit.ly/3LVGqUh).

Croatia

TAX AUTHORITIES’ PRACTICE

As of 1 January 2023

• Due to the introduction of the EURO in Croatia, the relevant adjustments were made to the legislation, with the amounts in HRK being converted into EURO using the fixed exchange rate 1 EUR = 7.5345 HRK.
• With the changes in the VAT Regulation, the corresponding declarations (VAT return, recapitulative statements and others) were also adjusted.
• In addition, the VAT declaration has also been adjusted with a new line for supplies with a VAT rate of 0 % (from October 2022, the supply and installation of photovoltaic panels (for electricity production) and solar modules for systems for the production of thermal energy (for hot water or residential heating) are subject to a VAT rate of 0 % (https://bit.ly/3ZozF0q; https://bit.ly/40KVgkB)
• The Croatian Parliament has prepared further amendments to the VAT Act, which will extend the application of the reduced VAT rate of 5 % for supplies of natural gas and heating from thermal stations as well as wood supplied until 31 March 2024 (currently the reduced VAT rate of 5 % is applicable to natural gas and heat from heating stations, including related fees as well as supply of firewood, pellets, briquettes and wood supplied up to 31 March 2023).

AMENDMENTS TO THE VAT ACT/FISCAL CODE

Until 22 February 2023

• Obligation to provide information about prices of goods for which the reduced VAT rate is applicable via the ePorezna application (https://bit.ly/40qwN4o).

Czech Republic

AMENDMENTS TO THE VAT ACT/FISCAL CODE

As of 1 January 2023

• Cancellation of the Electronic Cash Register System (EET) (112/2016 Col., 458/2022 Col., https://bit.ly/42Muavg).
• Reduction of penalties for breaches of obligations related to VAT Control Statements (only applicable for natural persons and limited liability companies with only one natural person as a member; 366/2022 Col; https://bit.ly/3zmLBF3).
• Extension of the deadline to reply to requirements concerning VAT control statements in case of incompleteness or inaccuracies from 5 to 17 calendar days (366/2022 Col; https://www.zakonyprolidi.cz/cs/2022-366#).

As of 13 February 2023

• Amendment to the Excise Duty Act implementing Council Directive (EU) 2020/262 regards the extension of the Excise Movement and Control System (EMCS) and the abolishment of the obligation to appoint a tax representative for foreign taxable persons carrying out distance selling of goods subject to excise duty (373/2022 Col., https://www.zakonyprolidi.cz/cs/2003-353).

As of 1 January 2024 (planned)

• Introduction of a new notification obligation for payments abroad mediated by payment service providers (Parliamentary printout no. 385; https://bit.ly/3nAoQec).

CASE LAW

There is no transfer of the right to dispose and thus no supply of goods, if Company A purchased mobile phones from company B and authorised company B to sell them to third parties, while company A had no possibility to influence the legal fate of the goods (Decision of Supreme Administrative Court 8Afs 206/2020-64, https://bit.ly/3TURmmQ).

Hungary

AMENDMENTS TO THE VAT ACT/FISCAL CODE

As of 1 January 2023

• Construction and installation services are subject to the domestic reverse charge mechanism if they involve creating, expanding, demolishing, transforming, or otherwise changing real estate or its purpose, and if they require an official license or a notification to any authority (https://bit.ly/3JVqdf0).

Poland

AMENDMENTS TO THE VAT ACT/FISCAL CODE

As of 1 April 2023

• SLIM VAT 3 package will enter into force (https://bit.ly/3zilejU).

As of 1 January 2024

• Introduction of new reporting obligations for payment service providers and digital platforms (https://bit.ly/3JXyUFX; https://bit.ly/3JO8yWG).

As of 1 July 2024

• The use of the national e-invoice system will become mandatory (https://bit.ly/3nrpf2G; https://bit.ly/3LVH305).

TAX AUTHORITIES’ PRACTICE

Conditions for the constitution of a VAT group

• A branch of a foreign company can be a member of a VAT group in Poland, even if the foreign company is a member of a VAT group in its country of residence as well (Individual ruling of 18 January 2023, ref. 0112-KDIL1-3.4012.385.2022.2.MR; https://bit.ly/3KhwoeP).

VAT exemption for the sale of virtual currencies

• The sale of virtual currency units constitutes a supply of service, which is exempt from VAT in case the place of supply is in Poland (Individual ruling of 13 January 2023, ref. 0113-KDIPT1-2.4012.767.2022.2.KW; https://bit.ly/3KjM0Pb).

CASE LAW

A VAT invoice issued prematurely is not an “empty invoice”

• An invoice issued prematurely cannot be considered as an “empty invoice”, as long as it documents an actual transaction, but the supply is delayed due to the pandemic. In this case, a corrective invoice can be issued (Judgement of the Voivodeship Administrative Court in Bialystok of 28 December 2022, ref. I SA/Bk 458/22, https://orzeczenia.nsa.gov.pl/doc/4A2B1925FB).

Correcting invoices settled under reverse-charge in case of retroactive registration of the supplier

• If the conditions for the application of the reverse-charge are met and thus the tax liability is transferred to the recipient, the supplier is exempt from his tax liability. A subsequent registration of the supplier does not transfer the tax liability back to the supplier (Judgment of the Supreme Administrative Court of 15 November 2022, ref. I FSK 95/19, https://orzeczenia.nsa.gov.pl/doc/6AF0FBACC7).

Serbia

AMENDMENTS TO THE VAT ACT/FISCAL CODE

As of January 2023

• The scope of foreign entities which are not obliged to register for VAT has been extended to include entities which sell goods that are in customs storage (Official Gazette of the Republic of Serbia No. 138,
  12 December 2022).
• If for supply of goods or services between related parties the consideration is lower than the market value and the recipient is not entitled to fully deduct input VAT, the VAT base is the market value of the goods/services (the amount, a recipient of goods or services would pay to an independent supplier in Serbia) (Official Gazette of the Republic of Serbia No. 138, 12 December 2022).

Slovakia

AMENDMENTS TO THE VAT ACT/FISCAL CODE

As of 31 January 2023

• No obligation to VAT registration for taxable persons only carrying out tax-exempt activities when exceeding the threshold of EUR 49,790 in the preceding 12 calendar months (https://bit.ly/3G0na4j).

Slovenia

TAX AUTHORITIE’S PRACTICE

Obligation to calculate VAT upon cessation of taxable economic activity and adjustment period for fixed assets

• The Slovenian Financial Administration clarified the obligation to calculate VAT following the cessation of taxable economic activity and the correction period for fixed assets.
• For the retention of goods, for which the input VAT deduction was possible, the VAT must be calculated regardless of whether the adjustment period has already expired.
• In case of an old immovable property, no VAT is to be calculated on the retention of the goods. Furthermore, in case the input VAT deduction adjustment period has not yet expired, the taxable person must adjust the input VAT deduction for the remaining period.
• The tax base is the purchase price of the goods or similar goods, determined at the time the goods are retained (Explanation of the Financial Administration no. 4230-358/2022-1 from 25 November 2022 and 3 February 2023: https://bit.ly/3nlTdF8).