Welcome to our monthly VAT News 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.
Input VAT recovery – Statutory period of limitation
Up to day, input VAT could be recovered at the latest within the annual VAT return at the end of the second year following the year in which the VAT became payable.
Under the new regulation, input VAT has to be reported no later than in the annual VAT return of the same year where VAT is charged, i.e. VAT on purchases made in 2017 will need to be included in the 2017 annual return to be submitted by April 30th 2018.
This new regulation is already being challenged and amendments might arise. Updated information will follow if needed.
VAT rate increase
A recently published decree confirms that the Italian VAT rate should gradually increase up to 25% in 2018 and again in 2021 if budgetary goals are not met.
The online submission of the VAT returns has been mandatory since 02/05/2017.
As previously announced, the British Authorities have now confirmed they hold online platform jointly and severally liable for the UK VAT owed by resellers if they don’t meet their VAT requirements
(see HMRC notice here: https://www.gov.uk/guidance/vat-overseas-businesses-using-an-online-marketplace-to-sell-goods-in-the-uk#JSL).
Some platforms such as Ebay have already announced their full cooperation with the local authorities in order to have sellers register for VAT purpose and pay UK VAT.
After France, UK has set up the appropriate tools to tackle sellers not complying with (UK) VAT obligations.
Non-resident companies having reached the threshold of € 35.000 in distance selling should register for Vat purpose and pay local VAT.
In a recent notice, the French Authorities also remind that a D.E.B. (the so-called “Déclaration d’échange de biens”) should be filed for Intrastat purpose where the annual threshold of € 460.000 is reached.
Distance sellers should be aware that they have to meet the Intrastat requirements as well in the countries they operate.
EUROPEAN COURT OF JUSTICE (C-564-15, 26/04/2017)
Reverse charge – Undue payment of VAT by the purchaser to the seller – Right of deduction
The VAT Authorities may deny the right of deduction when VAT is not due, on the basis of an invoice including VAT where the said VAT is paid by the seller if the reverse charge mechanism is applicable.
However, to the extent that reimbursement of the unduly invoiced VAT by the seller to the purchaser proves to be impossible or excessively difficult, in particular in the case of the seller insolvency, the purchaser should be allowed to apply for reimbursement directly to the Tax Authorities.
Additionally, the principle of proportionality precludes Tax Authorities from imposing on the purchaser having paid VAT (instead of applying reverse charge) a tax penalty of 50% of the amount of value added tax, where those Authorities suffered no loss of VAT revenue and there is no evidence of tax evasion.
If you wish to discuss any of the above topics, please do not hesitate to contact us freely.