EP reports regarding the special scheme for small enterprises and measures to strengthen administrative cooperation

The European Parliament has published its final reports regarding the special scheme for small enterprises and regarding the amended proposal regarding measures to strengthen administrative cooperation in the field of value-added tax.

Romania – European Court of Justice Case, C-69/17 – Input VAT paid before and after a reactivation of a VAT number

The ECJ has held that Member State cannot refuse the right to deduct input VAT on the sole ground that:

• - an acquisition took place when a taxable person had its VAT number revoked and
• - the respective invoice was issued when the VAT number was reactivated.

Administrative cooperation between the European Union and Norway

The agreement on administrative cooperation, combating fraud and recovery of claims in the field of value added tax between the European Union and Norway, has entered into force on 1 September 2018.

Taxation of rental income

The State Secretary for Finance has published clarifications regarding rental income, indicating that VAT is only due where a tenant, acting as a VAT entrepreneur, rents out (part of) his home to persons staying for a short period, in the context of his hotel, pension, camp or holiday business. In that case, the reduced VAT rate of 6% applies.

“Local authorities and similar bodies” guidance update

The guidance notice on “Local authorities and similar bodies” has been updated by HMRC. The update includes information regarding the calculating method of VAT attributable to exempt supplies is updated, new rules on occasional breaches of the insignificance test as well as updated contact details for HMRC.

VAT exemption on the sale of fixed assets and intangible assets

The Tax Agency has published a statement regarding the transfer of assets purchased without the right to deduct input VAT, indicating that assets held as inventory should not be excluded from the exemption. Furthermore, certain services (e.g. intangible assets) should equally be included.

VAT exemption for travellers residing outside European Union

The Portuguese tax authorities have clarified that purchases from non-EU residents are VAT exempt when the following conditions are met:
- The private purchaser is resident outside the European Union;
- Until the end of the third month upon the transfer, the goods are transported outside the European Union in the personal luggage;
- Together with the goods, the purchaser has available the respective invoices, which must contain:
   o the identity and domicile or habitual residence of the purchaser;
   o the reason of exemption;
- The purchaser has an identification document, the electronic proof of registration and the boarding pass demonstrating the departure from the EU.

Grant of easements subject to regular VAT rules

The Federal Tax Court has held that the grant of easements for consideration by farmers and foresters does not fall under the flat rate scheme for farmers.

Supreme Court ruling on a VAT Group’s right to reimbursement

The Supreme Court has held, for supplies made by a group, the right to the VAT refund belongs to the representative member of the VAT group. (Taylor Clark Leisure Plc [2018] UKSC 35).

VAT Guidance in absence of Brexit deal

HMRC has published guidance on VAT for businesses in the event that there is no Brexit deal. Should there be no agreement when the UK leaves the EU, this document informs business about the VAT implications for supplies between the UK and EU Member States, detailing several specific situations.

Indirect tax measures package

Effective from 1 January 2019:
- the treatment of vouchers will be brought in line with the EU VAT Voucher Directive (2016/1065), indicating that VAT must be charged on each transfer if, upon the issue, the VAT treatment attributable to the underlying supply of goods or services can be determined with certainty and
- the main rule of the place of supply will be applicable to certain electronic services rendered to a non-taxable person by a provider established in the EU, unless the tax payer opts for the application of the special rule.

Simplification VAT Rules for digital economy

Effective from 1 January 2019, entities providing broadcasting, electronic or telecommunications services in Finland will be able to choose to be subject to VAT in their country of establishment, when the value of supplies performed in Finland during the ongoing and the previous year is not higher than EUR 10,000.