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EU VAT e-commerce package postponed until 1 July 2021
24 July 2020
Following the proposal of the European Commission on 8 May 2020 (see our alert of 12 May 2020), the Council of the European Union on 22 July 2020 formally agreed to delay the entry into force of the VAT e-commerce package by six months. The new rules, under which all B2C sales of goods to EU consumers will be taxed in the destination Member State, now will apply as from 1 July 2021 instead of 1 January 2021. This gives Member States and businesses more time to prepare for the necessary changes.
European Commission announces measures for fair and simple taxation supporting Europe’s recovery strategy
22 July 2020
On 15 July 2020, the European Commission adopted a Tax Package consisting of three initiatives: a detailed Action Plan with 25 distinct actions to make taxation simpler, fairer and better attuned to the modern economy over the coming years, a proposal for changes to the Directive on administrative cooperation in the field of taxation, and a Communication on good tax governance. The majority of the proposed changes will impact VAT legislation and the obligations of businesses in the field of VAT.
CJEU advocates broad application of VAT on early termination fees
9 July 2020
On 11 June 2020, the CJEU confirmed that amounts received by an economic operator after an early termination of a service contract that requires a customer to comply with a tie-in period, are considered as remuneration for a supply of services, and therefore subject to VAT. This is also the case where the early termination charge is less than the amount that the provider would have received if services would have continued for the remainder of the contract.
CJEU confirms broad interpretation of “transport by or on behalf of the supplier” for distance sales rules
25 June 2020
On 18 June 2020, the Court of Justice of the European Union (CJEU) ruled that, in applying the distance sales rules, even a supplier’s mere recommendation of a transporter on its website can constitute “transport by or on behalf of the supplier”. Consequently, the supplier has to pay VAT in the non-taxable customer’s country, rather than in their own.
VAT filing extensions and exemption from late payment interest
22 June 2020
The Belgian VAT authorities will grant VAT taxpayers automatic filing extensions for the periodical VAT returns and European Sales Listings relating to the months of June and July, or the second quarter of 2020. In addition and under certain conditions, taxpayers can obtain an exemption from late payment interest should they make a delayed payment of VAT return balances for these periods (Dutch | French).
VAT e-commerce Package: European Commission proposes delayed entry into force
12 May 2020
As part of a broader postponement of EU taxation measures following COVID-19 related difficulties currently faced by businesses and Member States, the European Commission has proposed to delay the entry into force of the VAT e-commerce package by six months. The new rules, under which all B2C sales of goods to EU consumers will be taxed in the destination Member State, will apply as of 1 July 2021 instead of 1 January 2021. This will allow Member States and businesses more time to prepare for the necessary changes.
VAT on service supply: subsidiary not a fixed establishment of foreign based parent by default
11 May 2020
In a recent case, the Court of Justice of the European Union confirmed that a subsidiary does not automatically qualify as a fixed establishment of a foreign based parent. A service provider should determine the recipient of its service based on commercial and economic reality, without being obliged to investigate whether the relationship between the parent and its subsidiary may qualify as a fixed establishment (Dutch | French).
New guidance on intra-Community VAT regime and Quick Fixes
7 April 2020
On 3 April 2020, the Belgian VAT authorities published a new circular letter that provides a comprehensive overview of the practical application of the VAT rules for intra-Community supplies of goods (Dutch | French). It is a comprehensive, 270 page overview of administrative positions developed since 1993 in this field, including a detailed overview of the EU VAT Quick Fixes, which came into force on 1 January 2020 (VAT alert of 30 September 2019).
New circular letter regarding the VAT treatment of tour operators and travel agents
7 April 2020
On 24 March 2020, the Belgian VAT authorities published a new circular letter regarding the VAT treatment of tour operators and travel agents (Dutch | French). This circular letter replaces the old guidance on this subject.
The main changes brought by the new guidance relate to the invoicing process of tour operators and travel agents.
The new practical rules will in principle need to be implemented by the travel sector for new bookings as of 1 April 2021.
COVID-19: General VAT credit refund possibility
30 March 2020
On 29 March 2020, the Belgian tax administration published an additional measure to support the liquidity of businesses following the COVID-19 outbreak. The new measure consists of a generalised possibility for VAT registered businesses that submit monthly VAT returns to request a refund of their credit VAT balance through the February 2020 VAT return.
The tax authorities published an update announcing the above measure, adding that the return would need to be submitted by 3 April 2020 at the latest.
COVID-19: No VAT due on donated medical equipment and protective gear
17 March 2020
On 24 March 2020, the Belgian VAT authorities published new guidance clarifying that no VAT is due, as a self-supply, on medical equipment and protective gear donated to hospitals by VAT registered businesses.
In principle, when supplying goods for free, VAT taxpayers who deduct VAT on purchases or production costs of said goods should make a correction and pay output VAT in the form of a so-called self-supply. This obligation is now temporarily waived for supplies made between 1 March and 30 June 2020, under specific conditions explained in a new circular letter (Dutch | French).
New statistical reporting obligations for large VAT Groups
22 January 2020
From 2020, additional statistical reporting obligations apply to members of a large VAT Group, i.e. one with an annual turnover of at least EUR 15 Million reported in VAT returns. A breakdown of information contained in the VAT Group’s VAT return will have to be reported at legal entity (i.e. member) level to the National Bank of Belgium (NBB) to allow more accurate statistical accounts (Royal Decree of 11 December 2019). The first declaration through Onegate, the NBB’s electronic portal, is due by 20 April 2020 for first quarter figures.
New monthly VAT refunds for “starters” and a stricter filing deadline for monthly VAT refund requests
16 December 2019
On 11 December 2019, the Belgian VAT Authorities published a Circular Letter (Dutch | French) providing guidelines on the possibility for taxpayers at the start of their economic activity (so-called “starters”) to request a refund of their outstanding VAT credit on a monthly basis, taking into account certain conditions and formalities; this during a period of two years. The new monthly VAT refund regime will enter into force as of 1 January 2020.
Non-EU companies can no longer act as exporter from the Netherlands as of 1 April 2020
20 November 2019
Dutch Customs will soon implement the requirement for companies to be established in the EU, for the latter to be able to operate as exporter for customs purposes; this in accordance with the updated definition of ‘exporter’ in the Union Customs Code Delegated Act (“UCC DA”).
Last year’s update of the UCC DA, and of Article 1(19) in particular, consequently prohibits the reporting of a non-EU established company as ‘exporter’ of goods in Box 2 of the customs export declaration.
Subsidiaries only deemed VAT Fixed Establishment of foreign based entities if there are abusive practices - CJEU Advocate General
15 November 2019
A preliminary question referred by the Polish courts to the Court of Justice of the European Union (CJEU) underlines an important issue on the concept of VAT fixed establishments for internationally active businesses (pending case ‘Dong Yang’, C‑547/18). Advocate General Kokott delivered her Opinion in this case and took a clear stance against certain tax authorities’ approach in considering a dependent but legally autonomous subsidiary as a fixed establishment of its foreign parent company. She invited the Court to provide a clear answer to this question.
Brexit deal | Indirect tax implications
18 October 2019
The UK Government and the EU have released a new draft Protocol on Ireland/Northern Ireland and Political Declaration, which, amongst other things, sets out the UK Government’s policy on the Customs Duty and VAT implications for Northern Ireland of a Brexit deal with the EU.
It should be noted that this Protocol, along with the rest of the draft Withdrawal Agreement, is subject to approval at a special session of UK Parliament sitting this Saturday 19 October 2019. At present, it is by no means certain that the Withdrawal Agreement will be approved.
Once the Withdrawal Agreement is approved by the UK Parliament, it will also need to be approved by the EU Parliament. Further to the approved Agreement, there will be a transitional period where the current rules apply until at least 31 December 2020, with an option to extend until 31 December 2021 or 2022.
Post-Brexit, Customs and regulatory checks and tariffs, where applicable, will apply on goods moving between the UK and the EU. From a VAT perspective, supplies of goods between the UK and the EU will be treated as exports and imports. This note deals with special exceptions to the above, which have been proposed in relation to Customs Duty and VAT provisions applying to Northern Ireland.
Explanatory notes on EU VAT Quick Fixes published
30 September 2019
On 26 September 2019, the European Commission published a draft version of the Explanatory Notes in relation to the so-called ‘quick fixes’.
As from 1 January 2020, several ‘quick fixes’ will impact the current VAT system for B2B intra-community supplies.