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2013 - 2017 Archive
Bringing you the latest news on VAT
Input is your Deloitte guide to everything related to VAT in Luxembourg.
New VAT rules for online businesses
On 5 December 2017, the European Council adopted new VAT rules for online businesses. The new rules reinforce the taxation of goods and services in the country of the non-taxable customer and the use by the businesses of the mini “one-stop” shop (MOSS), i.e. a web portal existing in each EU member state. Additionally, the new rules align the treatment of goods and services purchased online and impose new obligations to online platforms.
VAT & Costs Sharing Exemption
On 21 September 2017, the Court of Justice of the European Union (CJEU) has delivered the rulings on three cases regarding “independent group of persons” (IGP) regime. This regime allows the sharing in a VAT free manner of services such as administrative, accounting or IT ones between persons who could not or only partly recover VAT on their costs. It is thus often used by the financial sector. These rulings substantially narrow the scope of the IGP and prohibit the financial sector to use it. It is therefore necessary that Luxembourg introduce the VAT group regime (unité TVA), already in use in several other Member States.
Independent Group of Persons: Decision of the Court of Justice of the European Union
On 4 May 2017, the Court of Justice of the European Union (the Court) rendered its judgement in Case C-274/15 European Commission v Luxembourg. In this judgement, the Court essentially upholds the infraction proceedings brought by the Commission against Luxembourg and declares that the Luxembourg legislative regime determining the application of the VAT exemption for independent groups of persons does not comply with the VAT Directive. The decision of the Court is in line with the conclusions of the Advocate General (AG) which were released on 6 October 2016.
Opinion of the Advocate General in Case C-650/16
The exemption for services supplied by an independent group of persons is not limited to the (para) medical sector.
The objective of this exemption is to prevent the application of VAT to supplies of shared services by an “independent group of persons” to its members, which would normally be unable, or only partially able, to deduct the VAT charged to them. In this way it enables the pooling of resources through a centralizing entity to be performed in a VAT neutral manner.
Status of Special Limited Partnership (SCSp) and its General Partner (GP)
On 8 February 2017, the Luxembourg Private Equity Association has released important communication regarding the VAT status of the Special Limited Partnership (SCSp) and its General Partner (GP).
Real estate changes as of 1 January 2017
EU regulation regarding the place of supply of services connected with immovable properties for VAT and the abolition of the obligation to register a rental agreement.
VAT changes as of 1 January 2017: increase of penalties and joint liability of persons in charge of management
The tax reform introduces substantial increases of penalties applicable in case of infringement of the VAT law. It also introduces a joint liability of the persons in charge of management. These changes are applicable as of 1 January 2017.
European Commission proposes changed VAT rules for e-Commerce
The European Commission published on 1 December 2016 its legislative proposal to drastically change the VAT rules for online sales of goods and services in Europe, over the 2018-2021 period.
The proposed rules still have to be adopted by the European Council, which is foreseen in the course of 2017, before they can be implemented on national level.
Independent Group of Persons: Opinion of the Advocate General of the Court of Justice of the European Union
The European Commission has raised a challenge toward Luxembourg’s transposition of the VAT exemption provided for services of independent group of persons (IGP) under Article 132(1)(f) of the EC VAT Directive 2006/112. This exemption is also often referred as the cost-sharing exemption.
Director fees: Circular of the Luxembourg VAT Authorities published
Luxembourg VAT is applicable on these services when they are located in Luxembourg by virtue of the place of supply rules. As a consequence, not only director services rendered by a Luxembourg director are subject to VAT (at the normal VAT rate of 17%) but it also means that VAT has to be self-assessed by each company considered as a taxable person and receiving such services from a non-Luxembourg director, based on the so-called reverse-charge mechanism.
Mandatory change of filing platform for VAT returns – eCDF
As from 1st January 2017, the use of the eCDF platform will be mandatory for the filing of periodic and annual VAT returns. The eCDF platform has been accessible for the filing of the VAT returns from the beginning of this year and throughout 2016 taxpayers have had the option to file their VAT returns either through the eCDF or through the eTVA platform. This option is not available in respect of EC Sales Lists, however, which can currently only be filed though the eTVA platform.
Director fees - 2016 VAT & TAX update
The Luxembourg VAT Authorities recently confirmed that Independent Director services fall within the scope of VAT. Therefore, it means that their services are VAT taxable (17%) if rendered to Luxembourg entities and if no VAT exemption applies. This position affects many Directors who considered (based on the market practice) that their services were “out of the scope” of VAT.
On 9 December 2015, the Court of Justice of the European Union (CJEU) delivered its decision in the Fiscale Eenheid X NV case (C-595/13) regarding the criteria to be used to determine whether certain entities and services are eligible for exemption from VAT as being services of management of investment funds1. In its decision, the Court only partly follows the conclusions of A.G. Kokott, as per her opinion released on 21 May 2015. This decision addresses the limits to the scope of the fund management exemption and may have a direct impact on how this VAT exemption is applied in practice.
1Article 135.1.g. of the EU VAT Directive 2006/112 implemented in article 44.1.d) of the Luxembourg VAT law
On 11th November 2015, the VAT Committee published guidelines regarding the VAT treatment applicable to crowdfunding transactions. Nowadays, crowdfunding is becoming more and more popular and it is often seen as a space of freedom, safe from the usual legal and tax rules applicable to more traditional funding, thanks to its “participative” character. Despite this perception, however, these legal and tax rules do remain applicable and the publication of the VAT Committee guidelines regarding crowdfunding on 11th November 2015 is a useful reminder of this.
On 22 October 2015, the Court of Justice of the European Union (CJEU) ruled in the Hedqvist case (C-264/14) that exchange of the virtual currency bitcoins for conventional currencies are VAT exempt. This decision ends uncertainties regarding the VAT regime, avoids substantial VAT costs, ensures a level playing field in the EU and waives a threat on the competiveness of the EU industry in this global activity.
CJEU ends reduced VAT rate on e-books - CJEU Case C-502/13
VAT exemption on the management of Funds – CJEU Case C-595/13
VAT rates for real estate as of 1 January 2015 – further guidance from the Luxembourg VAT authorities
Increase of the Luxembourg VAT rates as of 1 January 2015
ECJ Case : C–464/12 – ATP PensionServices A/S. Defined-contribution pension funds benefit from the VAT exemption on management services.
Increase of the standard VAT rate in Luxembourg - ECJ Case C-464/12 ATP PensionServices A/S - Summary of joined ECJ cases C 249/12 and C-250/12.