European Court of Justice
Right of deduction in case of cancelled acquisition of shares
By the planned acquisition of shares in the target company, potential acquirer’s intention was to provide the target company with management services and, on that basis, to carry out an economic activity. Such an activity gives rise to VAT deduction on expenditure relating to consultancy services and other services in connection with the planned acquisition although said acquisition wouldn’t occur.
The right to deduct is retained even if the intended economic activity of an active holding is not carried out and, therefore, does not give rise to taxed transactions or said holding is unable to use the goods or services which gives rise to a deduction in the context of taxable transactions by reason of circumstances beyond his control.
One may benefit from the right to fully and immediately deduct VAT paid on the services related to the preparatory acts, even if, ultimately, that economic activity, which is to give rise to taxable transactions, is not carried out (17/10/2018, C-249/17).
The E.U. Court of Justice repeats that the VAT paid in the course of the preparation of an economic activity may be deducted,even if ultimately that economic activity is not carried out, and confirms this applies to the VAT incurred on services connected to the acquisition of shares. Of course, it should be kept in mind that the intention of starting an economic activity should be confirmed by objective elements. However, another ECJ Court case (C-502/17) relating to the planned (and cancelled) sale of shares is pending. It is uncertain whether the Court will follow the same viewpoint considering the negative conclusions of the Advocate General of 6/09/2018.
FRANCE
Refund of French VAT to EU taxpayers established outside France
As article 15 of Directive 2008/9/EC was not transposed into French Law, it was possible for European taxpayers to introduce a VAT refund request later than the deadline appearing in the European legislation. This situation has been corrected by the French Decree of 8 October 2018 and as a consequence thereof the taxpayers now have to file their request by 30 September of year N+1 at the latest.
Electronic invoicing for supplies to public sector
As of 01/01/2019, the transmission of invoices in dematerialized form on the Chorus Pro portal becomes mandatory for small and medium-sized companies (10 to 250 employees) supplying goods or services to the public sector (state, local authorities, hospitals, public institutions, etc.).
This provision applies since January 2018 for mid-size companies (250 to 5,000 employees) and since 2017 for those with more than 5,000 employees. As of 1 January 2020, the obligation will also cover very small businesses (less than 10 employees).
ITALY
New reporting obligation as from 2019
On 01/01/2019, Italy will introduce a new reporting obligation, i.e. the monthly Esterometro. That declaration should include the transactions that are not covered by the e-invoicing and real time reporting system. Non-resident companies are however not subject to this new reporting requirement.
In parallel, the obligation to file a bi-annual Spesometro (overview of transactions), which currently applies to both resident and non-resident businesses, will be withdrawn.
This new obligation is widely contested in Italy and changes might still intervene in the near future.
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