VAT newsletter – third quarter 2022

Austria

CASE LAW

• Triangular transaction
  • The simplification for triangular transactions (Art 3 Para 8 and Art 25 Austrian VAT Act) also applies in case the intermediary is registered for VAT purposes, but not established in the Member State of destination (Federal Tax Court 1.6.2022, RV/2100150/2019).
• No input VAT deduction for sale and sale back (Sec 12 Para 1 no 1 lit a Austrian VAT Act)
  • Goods invoiced by a taxable person to another taxable person with VAT and reinvoiced on the following day back without inspection or physical handing over, the purpose of the transaction is to provide financing assistance and not to carry out a supply of goods.
  • Due to the lack of a supply of goods, no input VAT deduction exists (Federal Tax Court 21.6.2022, RV/2100164/2018).
• No safety-net acquisition in the country of departure (Art 3 Para 8 Austrian VAT Act)
  • An iC supply to a purchaser, who communicates the VAT ID number of the Member State of departure, does not result in a safety-net acquisition for the purchaser in the Member State of departure (Supreme Administrative Court 29.6.2022, Ro 2021/15/002).
  • Note: Please note a timely decision of ECJ of 7 July 2022, according to which – and contrary to the decision above – a safety-net acquisition according to Art 41 however may be taxed in the Member State of departure (ECJ C-696/20 Dyrektor Izby Skarbowej w W 7.7.2022).
• Period for the deduction of input VAT (Sec 12 Para 1 and Sec 20 Para 2 Austrian VAT Act)
  • The right to deduct input VAT requires a supply of goods or services and a proper invoice that complies with VAT regulations.
  • The right to deduct input VAT can be exercised in the period in which the two requirements are fulfilled cumulatively for the first time.
  • If the invoice date (e.g. 2014) differs from the date of the invoice receipt (e.g. 2015), the input VAT can only be claimed in the year of the receipt (in this case 2015).
  • Note: The decision is in contradiction to the more favorable tax authorities’ practice, which allows an input VAT deduction already at the time the invoice is issued (Federal Tax Court 15.7.2022 RV/2100130/2022).

Bulgaria

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• Supplies of financial services
  • A draft bill amending Article 46 of the VAT Act foresees the possibility for the management of alternative investment funds to be exempt from VAT (https://www.parliament.bg/bg/bills/ID/164249).

Croatia

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• As of 1 October 2022
  • The supply and installation of photovoltaic panels (used for producing electricity) as well as solar panels for systems that produce thermal energy (for water heating or living space heating) will be subject to a VAT rate of 0 % in the case such installation is made on private dwellings, housing and public and other buildings used for activities of the public interest. The general VAT rate of 25 % will continue to apply to the mere supply of solar panels without installation.
  • The supply of heat from heating stations and the supply of firewood, pellets, briquettes and wood chips supplied up to 31 March 2023 will be subject to a reduced VAT rate of 5 % (Official Gazette 113/2022: https://bit.ly/3DcCcBI).

Czech Republic

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• Amendment to the CZ Excise Tax Act was approved, which prolongs the reduction of the excise tax by CZK 1.50/liter on diesel until the end of 2023 (https://www.zakonyprolidi.cz/cs/2022-286).

CASE LAW

• The organisation of a promotional event may fall under the TOMS regime with no right to refund/deduct input VAT on subcontracted supplies (SAC 10 Afs 179/2020-56 https://bit.ly/3gQbS8I).

Germany

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• Input VAT refund (planned)
  • The input VAT refund for foreign companies shall be precluded if they have been erroneously charged VAT by domestic companies for tax-exempt export supplies or intra-Community supplies (Sec 18 Para 9 Sentence 3 German VAT Act).
• As of January 2024 (planned)
  • Payment service providers are obliged to make certain records of payments in the case of cross-border payment services and to transmit this data to the Federal Tax Office (Implementation of Council Directive (EU) 2020/284 of 18th February 2020 amending Directive 2006/112/EC) (Sec 22g German VAT Act).

Hungary

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• As of 28 July 2022
  • The rules for money-back or cash-back type of promotions, with the consequence that the supplier may decrease its tax base, are extended for the case when the supplier provides the repayment not to the end user but to third person provided:
    • the end user is not eligible for VAT deduction
    • the repaid sum is part of the tax base of the sold goods/services (but not necessarily the same sale if the VAT rate is identical)
    • the seller has the necessary documentation at hand on the repayment (Section 77 (4a) of the VAT Act).

TAX AUTHORITIES’ PRACTICE

• Distance sales from third countries to end users
  • In case of distance sales from third countries the end users might be subject to double taxation, if the IOSS ID number of the seller is not provided in time of the import procedure. As a temporary measure the HTA allows for a refund of the VAT in form of a self-revision in the IOSS system until all postal service providers will be able to communicate their IOSS ID number electronically in the required format. A self-revision is not necessary, if the sale and refund happened in the same reporting period (2022/5 Adózási kérdés).
• Definition of complex services
  • In case of event organisation services, the HTA elaborated a definition of complex services and several services provided by one service but not as a package. In case of complex services, the main feature of the service decides the applicable VAT rate and the deductibility depends on the fact if it was provided to the taxable business activity or not. If it is part of a complex service, items of different VAT rate (e.g. catering services 5 %) will share the same VAT rate as the main feature (event organisation service 27 %) (2022/7 Adózási kérdés).

Poland

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• As of 1 January 2023
  • Implementation of SLIM VAT 3 package with new regulations i.a.:
    • unifying the rules of applying the exchange rate for corrective invoices
    • cancellation of the requirement to have an invoice documenting intra-Community acquisition as a condition for the input VAT deduction
    • changes in VAT sanctions (https://legislacja.rcl.gov.pl/projekt/12362752).
• As of July 2022
  • The Polish Ministry of Finance announced the launch of pre-consultation regarding assumptions for digital platform owners regarding the implementation of the Council Directive (EU) 2021/514 (“DAC7”). The draft assumptions provide sanctions for non-compliance (https://bit.ly/3DBAmvo).
• Planned as of 2024
  • Legislation implementing the provisions on the European Central Electronic System of Payment Information (CESOP). There will be an obligation for payment service providers to keep quarterly records of payment recipients and cross-border payments (https://bit.ly/3TF1gYR).

TAX AUTHORITIES’ PRACTICE

• Sale of NFT in exchange of cryptocurrency
  • The sale of NFT tokens in exchange for cryptocurrency is a mutual, equivalent transaction, and there is a direct legal relationship between the activities of the taxpayer and the activities of the purchaser. Therefore, such a transaction is a supply of services subject to VAT (Individual ruling of 29 August 2022, ref. 0111-KDIB3-1.4012.346.2022.7.ICZ; https://bit.ly/3NaappU).

CASE LAW

• The supply of tooling for the production of goods that are the subject of iC supply of goods constitute a separate service
  • The supply of the tooling with which the products are manufactured and later supplied to the EU territory, while the tooling itself does not leave Poland at all, is not a composite supply treated as iC supply. If tooling does not leave Poland, it should be considered as a taxable domestic supply (Supreme Administrative Court of 29 June 2022, ref. I FSK 164/19; https://orzeczenia.nsa.gov.pl/doc/A735C80414).
• The assignment of receivables is not subject to VAT (Reverse Factoring)
  • If the entity, in connection with the purchase of receivables due, only pays the price for the purchased receivables, reflecting their economic value, but is not entitled to any remuneration from the assignor, such activity does not constitute a supply of services and is therefore not subject to VAT.
  • Thus, the transaction of transfer (assignment) of a monetary claim to the other entity (assignee), based on a purchase agreement with the seller (assignor), who is the original creditor, or another person entitled to dispose of the claim, is not an activity subject to VAT (Voivodeship Administrative Court of 23 September 2022, ref. VIII SA/Wa 357/22).

Romania

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• As of 1 January 2023
  • The VAT rate for hotel accommodation, rental of camping sites, restaurant and catering services will be increased from 5 % to 9 %.
  • The VAT rate for non-alcoholic beverages containing added sugar/sweetening as well as flavoured non-alcoholic beverages (falling under NC 2202 10 00 and 2202 99) will be increased from 9 % to 19 %.
  • A new threshold of 600,000 RON has been introduced for the application of the 5 % rate for the supply of housing (already mentioned in the VAT Newsletter Q1 2022) (GO 16/2022 amending the Romanian Fiscal Code and introducing tax measures).
• Up to 31 December 2029 and 2031
  • The reduced VAT rate of 5 % for the supply of wood for use of firewood (in certain conditions) is applicable until 31 December 2029.
  • The reduced VAT rate of 9 % for supplies of certain chemical fertilisers and chemical pesticides which are regularly used in the agricultural production is applicable until 31 December 2031 (GO 16/2022 amending the Romanian Fiscal Code and introducing tax measures).

Slovenia

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• From 1 September 2022 to 31 May 2023
  • Temporarily reduced VAT rate of 9.5 % is applied for electricity, natural gas, district heating and firewood with the intention to mitigate the rise in energy prices (Official Gazette of RS no. 114/2022, August 31, 2022; https://www.uradni-list.si/_pdf/2022/Ur/u2022114.pdf).

Slovakia

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• As of 1 January 2023
  • The reduced VAT rate 5 % will only be applicable for rental housing (https://bit.ly/3fcJxt0).
• Planned as of 1 January 2023
  • Cancellation of the VAT registration obligation of taxable persons who exceed the registration turnover solely from specific VAT exempt supplies (e.g. insurance and financial services).
  • Concerning the correction of VAT due to bad debts, customers with outstanding payments (overdue for more than 90 days) shall be obliged to correct the input VAT originally claimed.
• Planned as of 1 January 2024
  • With aiming to combat VAT frauds in e-commerce, new obligations for payment service providers have been introduced. If there are more than 25 cross-border payments in a quarter made to the same recipient, providers are obliged to keep records of cross-border payments and to provide the reports to the Financial Directorate on a quarterly basis.