VAT alerts

News you can count on

CJEU confirms strict VAT exemption conditions for transport allocation in chain transactions 

26 February 2018

On 21 February 2018, the CJEU issued a ruling in another case regarding the VAT exemption for cross border chain transactions (C‑628/16 Kreuzmayer). In the case at hand, the third party in the chain (party C) had transported the goods.  The CJEU considered that in such case, the second supply should have been exempt from VAT, as it is an intra-Community supply.  Party C was therefore not entitled to deduct the input VAT that was incorrectly charged on the second transaction by Party B. The case reconfirms the importance of verifying the correct VAT treatment of incoming supplies, based on all information available.

EU publishes guidance on Brexit consequences for Customs and VAT

15 February 2018

In a 29 January 2018 press release, the Council announced a second set of supplementing negotiating directives detailing the EU27 (EU member state gathering without the UK) position regarding a transition period in relation to Brexit. These directives present a transition period that could not last beyond 31 December 2020.

Then on 30 January 2018, the EU Commission published a document giving businesses an early warning regarding key Customs and VAT challenges that they will need to tackle the moment the United Kingdom would no longer be a Member of the European Union. Unless a transitional period is agreed upon between the EU and the UK, the EU Customs and VAT rules will no longer apply in the UK from 30 March 2019.

European Commission proposal regarding new simplification measures for SMEs

22 January 2018

On 18 January 2018, the European Commission published a legislative proposal to simplify VAT compliance for small and medium-sized companies (‘SMEs’). It aims to create a modern, simplified SME scheme, introducing a new EU wide category of SMEs benefiting from administrative simplifications, and a broader and more flexible VAT exemption scheme, which remains based on national thresholds. The new legislation’s entry into force is foreseen for July 2022. 

EU proposal on more flexible VAT rates

19 January 2018

On 18 January 2018, the European Commission published a legislative proposal to allow Member States more flexibility when defining their national reduced or zero VAT rates. These changes’ entry into force is planned for 2022, in connection with the implementation of the definitive VAT regime for B2B cross-border supplies (previous coverage in VAT alert of 5 October 2017).

Boehringer Ingelheim CJEU case: Pharmaceutical manufacturer can reduce output VAT for rebates paid to third parties

12 January 2018

On 20 December 2017, the CJEU ruled in the Boehringher Ingelheim Pharma case (C-462/16) that a pharmaceutical company should be allowed to adjust its output VAT in relation to statutory rebates paid to private health insurance companies.

EU ECOFIN Council adopts VAT e-Commerce package

6 December 2017

On 5 December 2017, the European Council adopted legislative proposals made by the European Commission in December 2016 for a drastic change to VAT rules for online sales of goods and services in Europe (previous coverage in VAT alerts of 2 December 2016 and 8 November 2017). The package contains simplifications to the current Mini One Stop Shop (MOSS) regime for cross-border telecommunications, broadcasting and electronic services, as well as a switch to taxation at destination and simplified declaration through a One Stop Shop (OSS) for distance sales of goods. It also introduces a VAT liability for electronic interfaces (e.g. platforms) that facilitate supplies of (low value) goods imported from outside the EU or for sales made within the EU by non-EU based vendors.  The new legislation enters into force in phases, namely in 2019 and 2021.

European Commission releases proposal for enhanced administrative cooperation in VAT

4 December 2017

On 30 November 2017, the European Commission published a proposal to provide Member States with new tools to combat VAT fraud. This proposal amends Regulation (EU) n° 904/2010 of 7 October 2010 on administrative cooperation and combating fraud in the field of value added tax.

New VAT rules for logistic service providers

23 November 2017

From 23 November 2017, goods transportation in Belgium, performed for or invoiced to customers established outside the EU, is subject to new VAT rules. The transport of goods for a Belgian customer that partly takes place on non-EU territory is also subject to changed VAT rules.

EU ECOFIN Council delays decision on VAT e-Commerce package

8 November 2017

Shortly before the end of 2016, the European Commission published a legislative proposal for a drastic change to VAT rules for online sales of goods and services in Europe (VAT alert of 2 December 2016).  This proposal, as amended during the Estonian EU Presidency, was on the agenda of the 7 November 2017 Council with the aim of reaching a political decision. As there was no unanimous approval on the current proposal, this decision has consequently been delayed until the next meeting on 5 December 2017.

Belgian government unexpectedly abandons optional VAT on immovable letting

23 October 2017

As part of the ‘Summer Agreement’, the Belgian government announced at the end of July 2017 that it was to introduce a new optional regime applying VAT to standard immovable letting between businesses. Deloitte has learnt that this plan has been abandoned after government meetings during the weekend of 21-22 October 2017. Only an extension of the conditions to apply VAT on the letting of a warehouse facility has been maintained.

Requirement of compliant invoice for VAT deduction: Belgian tax authorities adapt guidance

18 October 2017

On 12 October 2017, the Belgian VAT authorities published a Circular Letter providing guidelines regarding the requirement of a compliant invoice, to ensure the right to deduct incoming VAT.

Automated collection of outstanding VAT debts

16 October 2017

In an attempt to harmonise the procedure for authorities’ collection of (tax) debts, a draft law to automate the collection of VAT debts is currently on the table.

Inspired by the automated collection procedure for direct taxes, the government proposes the introduction of a similar process for VAT debts.

European Commission releases proposals for reform of VAT system for intra-EU trade

5 October 2017

On 4 October 2017, the European Commission published details of its plan for reform of the EU VAT system. This is the first set of proposals of two (introducing the main principles), with the second set providing more details expected in Spring 2018. It puts forward a ‘definitive system’ that will replace the intra-Community supply regime introduced in 1993. While the proposals give an interesting view of what these reforms will look like, the ultimate impact on business will depend upon the detailed proposals. The proposals and related documents can be found on the Single VAT Area page of the Commission’s website.

VAT cases in CJEU: Cost Sharing Groups red carded in banking and insurance sector

22 September 2017

The financial services industry held its breath on 21 September 2017, when the Court of Justice of the European Union (CJEU) rendered its judgments in the VAT cases involving DNB Banka (C-326/15), Aviva (C-605/15), and EC vs. Germany (C-616/15). The Court ruled that the VAT exemption for cost sharing groups cannot apply in the banking and insurance sector.  With this judgment, the Court goes against accepted practice in many Member States, including Belgium. Importantly, the Court clearly prohibits Member States from applying the judgment retrospectively.

Changes made to VAT exemption for diplomats

02 August2017

Beginning 1 August 2017, an electronic control system for the VAT exemption available to diplomats in Belgium will apply. New legislation abolishes [FR/NL] the immediate exemption for covered transactions; instead, VAT will be applied to the transaction, and the diplomat will have to claim a refund of the VAT through an accredited company. This system should ensure greater legal certainty for vendors and retailers, and should reduce challenges by the tax authorities on the application of the exemption during VAT audits. A transition period is provided for until 31 December 2017, and the forms used to claim the immediate VAT exemption (Forms 450 and 451) will be abolished as from 1 January 2018.

European VAT reporting: SII goes live in Spain

26 July 2017

On 1 July 2017, the SII (Suministro Inmediato de Informacion/Immediate Supply of Information) legislation entered into force in Spain. SII requires taxpayers to submit VAT relevant transactional data, in a specific XML format and in close to real-time speed, to the Spanish tax authorities (AEAT).

There is much more to the SII framework than simply being a new reporting requirement. Given the immediate nature of the reporting activity involved, taxpayers have to implement a nearly fully automated SII process. While implementing their systems, taxpayers are exposed to a variety of challenges.

Belgium to introduce (optional) VAT on immovable letting

26 July 2017

Immovable letting has always been exempt from VAT in Belgium since the introduction of the VAT system. Within the framework of budgetary discussions, the Belgian government has decided to abolish this VAT exemption and introduce a regime allowing the landlord to opt to apply VAT to the immovable letting.

No agreement on e-publications reduced VAT rate proposal

26 June 2017

During the 16 June 2017 Ecofin meeting, EU Member States failed to reach an agreement on the European Commission’s proposal to allow Member State introduction of reduced VAT rates on electronic publications, bringing them in line with VAT rates applicable to their printed equivalents.

Stricter rules for VAT deduction on gifts

1 June 2017

On 29 May 2017, the Belgian VAT authorities published a Circular Letter on the VAT deduction rules for a number of situations where gifts are handed out for free. The distribution of free commercial gifts is strongly impacted. This stricter approach will also affect gifts offered within the framework of certain customer loyalty programs and employee rewards. Deloitte prepared a freely available hands-on impact assessment accessible via this link.

CJEU: “VAT exemption is not always limited to the final supply to the vessel operator”

10 May 2017

On 4 May 2017, the CJEU (Court of Justice of the European Union) issued its decision in the A Oy case.

The main findings of the case are that (un)loading cargo with vessels used for navigation across high seas can be exempt from VAT even if not invoiced to the vessel operator. The Court decided that (un)loading services can be exempt at an earlier stage (e.g. services provided by a subcontractor). (Un)loading cargo supplied to the holders of that cargo, such as the exporter or importer, may also be exempt.

Luxemburg VAT exemption for Independent Groups considered too broad by CJEU

8 May 2017

On 4 May 2017, the CJEU rendered its judgment in case C-274/15 European Commission v Luxembourg (Dutch | French | English). In essence, the European Commission challenged the Luxembourg VAT exemption as being incompatible with article 132(1)(f) of the EC VAT Directive 2006/112 on the following three points:

  • The Luxembourg VAT exemption is applicable to services provided by an Independent Group to its members, even when these services are used for the purposes of the members’ taxed transactions (these transactions should remain below a 30% threshold).
  • Under the Luxembourg VAT exemption, members who carry out taxable transactions can deduct the input VAT on invoices issued to the independent group.
  • Lastly, Luxembourg VAT legislation allows goods and services previously acquired in the members’ own name but on behalf of the independent group, then recharged by members to the independent group, to be considered as outside the scope for VAT purposes.

Ruling Commission’s Board temporarily not operational

5 May 2017

As covered by the press on the morning of 5 May 2017, the Ruling Commission’s Board is not operational until further notice.

This is due to a decision by the Council of State dd. 28 April 2017 annulling the appointment of the three French-speaking Board members, Matthieu Bataille, Serge Riga and Véronique Tai. This decision was triggered by an appeal introduced by José Vilain, a former member of the Board. This decision does not affect the appointment of the 3 Dutch-speaking Board members, Steven Vanden Berghe, Guy Giroulle and Luc Saliën.

Abolition of monthly advances payable by quarterly VAT filers: Royal Decree published

27 February 2017

A Royal Decree regarding the repeal of the prepayment requirement for quarterly VAT taxpayers in Belgium has been published on 23 February 2017 and will be effective as of 1 April 2017 (French | Dutch). As announced in the 20 January 2017 VAT alert, quarterly VAT filers will no longer need to complete VAT pre-payments currently due during the second and third month of each quarter. This is a significant reduction in pre-financing and administration for SMEs.

Prepayment requirement for quarterly VAT taxpayers abolished from 1 April 2017

20 January 2017

In Belgium, VAT taxpayers have to lodge either a monthly or a quarterly VAT return. A quarterly VAT return is possible if the annual turnover does not exceed EUR 2.5M. Furthermore, businesses filing quarterly VAT returns need to make two advance payments during the second and third month of each quarter, amounting to one third of the net VAT amount due for the previous quarter.

Customs & VAT: PLDA issues with foreign EORI numbers

16 January 2017

Since 7 January 2017, it is mandatory to use an EORI number for boxes 8 and 14 in the import document. Previously, these boxes were completed with the VAT number. For Belgian companies, the EORI number will be identical to their VAT number. Foreign companies however will have to use their foreign EORI number for boxes 8 and 14.

Fighting VAT fraud: Commission proposal on generalised domestic reverse charge mechanism

10 January 2017

On 21 December 2016, the European Commission proposed a temporary and optional generalised domestic reverse charge mechanism. The proposal is part of the Commission’s fight against VAT fraud, for which it set out measures in its VAT action plan of 7 April 2016. Pending the definitive VAT regime’s implementation, this amendment to the VAT directive would allow Member States particularly affected by VAT fraud to take temporary measures whereby VAT on domestic B2B supplies of goods and/or services would be due by the recipient instead of the supplier.

New VAT regime for Cost Sharing Associations: circular letter published

23 December 2016

As announced in the 1 April 2016 VAT alert, the VAT exemption applicable to services rendered by independent groups or cost sharing associations (article 44, §2bis of the Belgian VAT Code) was significantly changed from 1 July 2016.  At that point, the VAT authorities announced upcoming guidance through a Circular Letter, which would also contain a transition period until 31 December 2016.  This Circular Letter, with clarifications on the new conditions and formalities, has been published on the Belgian tax authorities’ website on 21 December 2016 (Dutch | French).  It confirms that the new rules are mandatory, without any further transition period, as of 1 January 2017.  This will require rapid action for taxpayers working under this regime to ensure they continue to benefit from the exemption in 2017.

European Commission proposes changed VAT rules for e-Commerce

2 December 2016

On 1 December 2016, the European Commission published its legislative proposal to drastically change the VAT rules for online sales of goods and services in Europe, over the 2018-2021 period. This proposal is part of the Digital Single Market Strategy, one of the pillars of the Juncker Commission policy. It aims to establish a single market wherein e-Commerce businesses have easier access to clients on a cross-border basis. One of the key difficulties which such businesses face is the complex VAT legislation for cross-border business activities. Furthermore, monitoring these business flows is not easy for tax authorities due to this complexity.

The proposal is partly based on a study conducted by Deloitte for the European Commission. Deloitte first took a snapshot of the economic importance of e-Commerce, as well as companies’ compliance with legislation and the monitoring by governments. Building on the analysis of the currently successful Mini One Stop Shop (‘MOSS’) for certain online services, Deloitte analysed which policy options were available to the European Commission to simplify the administrative framework for businesses, while ensuring that governments collect their revenue.

Minister of Finance Policy Note announces more simplification for VAT rules and more efficient VAT audits

21 November 2016

The Belgian Minister of Finance, Johan Van Overtveldt, recently submitted his general policy note on “Finances and the combat of fiscal fraud” for the year 2017 to parliament.

Luxembourg exemption for Cost Sharing associations too broad says Advocate General

11 October 2016

On 6 October 2016, Advocate General Kokott gave her Opinion in a pending case, following an action brought by the European Commission against Luxembourg (case C- 274/15) with respect to the exemption for Independent Groups (also known as “Cost Sharing Associations”).

Is a compliant invoice still important?

03 October 2016

On 15 September 2016, the ECJ issued a judgment in two cases which both related to VAT that has been deducted on the basis of non-compliant invoices. In Barlis (C-516/14), invoices for lawyer fees simply mentioned ‘legal services’ during a certain period, with some invoices missing the starting date. In Senatex (C-518/14), the VAT number of the supplier was missing.

New tolerance to exempt cafeteria income from VAT

27 September 2016

A number of taxpayers operating exempt services as per article 44 in the VAT code (i.e. hospitals, retirement homes, museums, etc.) can opt to exempt their cafeteria income from VAT if they qualify as “auxiliary”.

Recent changes in the VAT legislation

01 August 2016

The Belgian government recently approved a number of legislative changes to the country’s VAT code. Some changes merely align the VAT rules with current administrative practices, but others amend the VAT rules.

Tax authorities allow simplified proof of transport for Intra-Community Supplies

13 July 2016

A decision published on 12 July 2016 simplifies the proof of transport for Intra-Community supplies through the introduction of a so-called “destination document” as alternative evidence for the cross border transport of goods. In this document, the customer attests the arrival of goods in the destination Member State for VAT purposes.  It will serve as rebuttable proof of transport if certain conditions are met. This is a welcome relief measure for companies involved in EXW or FCA supplies who often struggle to gather sufficient transport documents to substantiate the VAT exemption for their supplies.

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