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 UNION COURT OF JUSTICE
Customs Value & Transfer Pricing (C-529/16, 20/12/2017)
The transaction value, which form the basis for the customs value, may not be determined taking into account a flat-rate adjustment made after the end of the accounting period, where it is impossible to know at the end of the accounting period whether that adjustment would be made up or down.
The Court stresses that Tax Authorities may not rely upon transfer pricing rules to assess the customs value a posteriori. The customs value is the taxable amount for Customs duties and import VAT purposes. VAT is due in principle on the price effectively received by supplier. That is the concept of “subjective value” consistently elaborated by the E.U.C.J.. The open-market value, which can be regarded as an effect of transfer pricing standards in terms of VAT, may be seen as the taxable amount only where the conditions of Article 80 EC-Directive 2006/112/EC are met.
Impact of discount on VAT recovery (C-462/16, 20/12/2017)
Discount granted by a pharmaceutical company to a private health insurance company results in a reduction of the taxable amount in favour of that pharmaceutical company. The fact that the direct beneficiary of is not the private health insurance company which reimbursed the insured persons but the insured persons themselves is not to affect the consequence regarding the taxable amount.
Where VAT was initially calculated on the price that is subsequently decreased, vendor is entitled to recover the overpaid VAT amount. That decision of the Court stresses that the concept of “price effectively paid” must be ascertained for the supplier regardless the beneficiary of discount. Similar situations prove to exist in many economic sectors involving complex schemes of distribution (food, automotive, home furniture etc.).
Bundled Supply & VAT Rate (C-463/16, 18/01/2018)
A single supply consisted of two distinct elements which would be subject to different rates must be taxed solely at the rate applicable to that single supply, even if the price of each element forming the full price can be identified.
The Court emphasizes the consequence of a bundled or single supply on the VAT rate. One may not artificially break down the price of a single supply in order to make a reduced rate applicable, where the principle element is standard-rated. Consistently the reduced rate may apply to the total price where the principal element is reduced-rated.
VAT Claim under 9th Directive – Deadline
The Supreme Court of France (04/12/2017) ruled that the deadline of 30th September may not be used by French Tax Authorities towards applicants belonging to another EU country to disallow claims of French VAT. This is due to the fact that such deadline was not transposed into French national law.
Business not established in France could consider applying for a VAT refund under the 9th Directive although the submission would be lodged beyond the deadline.
Intra-EU Listings – Threshold modified
Threshold for purchases have been changed since January 2018, i.e. € 100.000,00 for services and € 200.000,00 for goods.
VAT rates lift deferred
Finally the VAT rate will increased gradually as from 01/01/2019 and not in 2018.
Freight services – Implementation of Use & Enjoyment Rule
Where freight services are effectively used and enjoyed in Belgium, Belgian VAT is due although recipient is established outside EU (Royal Decree No. 57 with effect on 23/11/2017).
VAT on real estate properties rentals
Leasing of real estate properties is subject to VAT (Act of 13/11/2017) where both lessor and lessee are VAT-able persons. However, it is still possible to opt for the exemption provided several conditions are met