International and EU VAT and ITX Newsletter - 1st edition
We have decided to start publishing monthly newsletters in Norway’s Tax Blog about EU VAT updates and other global indirect tax news. This is the first edition. Please contact us in our International Trade Group in PwC Oslo, in case you would like to discuss potential implications these updates may have in your business.
We have summarized a list of VAT and indirect tax news, proposed measures, legislative changes, etc. coming up from different countries in January and February 2021. For a more detailed overview of these or other updates in a particular country, we recommend reaching out to our team.
Since most of this information is described extensively in different sources, we have tried to summarize the most important details in our blog post in order to give you a general overview on international and EU VAT and indirect tax updates appearing last month.
Changes to the definition of supply of goods with installation for VAT purposes
- Germany’s Federal Ministry of Finance (MOF) published a letter on 10 October 2020 amending the definition of “supply of goods with installation” for German VAT purposes.
- Transitional period to apply the new definition clarified by the German authorities came to an end in January 2021.
- Under German VAT rules, if a non-resident entity is involved in a supply of goods with installation where the recipient is a German-based company, the tax liability shifts from the supplier to the recipient under the Reverse charge rule.
- After this amendment, situations where the supplier uses or assembles goods that are procured by himself does not qualify longer as “supplies of goods with installation”. Hence, reverse charge simplification for non-established operators would no longer be applicable in those situations, thus implying a VAT registration and reporting obligation.
- However, German authorities allow an exception to these principles only in the event there is a fixed connection between the item procured by the service provider and an item belonging to the service recipient, e.g. the installation of fixtures in a building, the installation of parts in a “production line” machine fixed on the ground, etc.
- It is therefore critical to analyze whether this new definition has an impact on supplies previously treated as “supply of goods with installation”, in order to make sure whether foreign suppliers could still benefit from the Reverse charge simplification.
Restriction of Tour Operator’s Margin Scheme (TOMS) to EU resident businesses only
- Under a Decree dated 29 January 2021, the German Federal Ministry of Finance has declared that TOMS is not applicable to tour operators established in a non-EU country and who do not have a fixed establishment for VAT purposes in the EU.
- As a result, non-EU tour operators (e.g. Norwegian and UK companies after Brexit) providing holiday and travel services in Germany will most likely have to register for German VAT purposes.
- Historically, the EU Commission viewed TOMS as being applicable to all qualifying businesses irrespective of where they were established. However, in 2014, the EU VAT Committee changed its approach and stated that the EU VAT Directive (articles 306 to 310) only applied to businesses established in the EU.
- Hence, non-EU businesses could be subject to VAT under the normal place of supply rules (e.g. where the service is supplied) instead of TOMS. Although, to date, no Member State has taken up this EU VAT Committee’s criterion (until now).
- Based on this Decree, Germany is now the first EU Member State to adopt this view and is doing so from 1 January 2021. However, there is no guidance at this moment on how the authorities intend to apply the Decree.
Selection of updates in Polish VAT rules / compliance obligations for taxpayers
- 0% VAT rate on prepayments for exports of goods: The goods will have to be exported within 6 months (previously, 2) after the end of the month when prepayment was received.
- EU VAT Quick Fixes: New guidance issued by Polish tax authorities in relation to rules for documenting intra-Community supplies of goods (VAT zero-rated) and proof of transport.
- Time limit for deduction of input VAT: Input VAT can be deducted on the month when the conditions are met or in one of the 3 following months (previously, 2).
- Deduction of input VAT on accommodation services: As of 2021, it will be possible to deduct input VAT on hotel expenses if costs are recharged to the final customer.
- Draft of new VAT regulation: Waiver of requirement for Norwegian entities to appoint a VAT representative in Poland. It is planned that the regulation will enter into force with effect from 1 January 2021.
Start of B2B electronic invoicing expected at the end of 2021 (voluntary until 2023)
- E-invoices will be a type of electronic invoices, issued and received via the central database of e-invoices - the National System of e-invoices (KSeF).
- The proposal bill will soon be submitted to public consultations in Poland.
- It is expected that e-invoice would benefit entrepreneurs in the following terms:
- By using an e-invoice, the taxpayer will be sure that the invoice has been received by the contractor.
- The taxpayer will be able to view its content each time. The e-invoice will not be damaged or lost. Reading the e-invoice will be simple and clear.
- For those who will issue e-invoices, Polish tax authorities will shorten the VAT refund from 60 to 40 days.
New GST/HST registration rules for foreign suppliers
- Canadian Government proposed at the end of 2020 several changes to the "GST/HST" regime to address the digitization of the global economy. These rules trigger new GST/HST registration obligations to foreign suppliers:
- Cross-border digital products and cross-border services: foreign-based digital businesses that supply digital products and services to consumers in Canada will generally be required to register for and collect GST/HST under a new simplified GST/HST regime starting July 1, 2021.
- Platform-based short-term accommodation: GST/HST will apply to all supplies of short‑term accommodation by private residential property owners that are facilitated through digital platforms.
- Goods supplied through fulfillment warehouses: new GST/HST rules will apply to transactions involving goods for sale that are located at fulfillment warehouses in Canada and sold to purchasers in Canada by (i) non‑resident vendors that sell directly to consumers in Canada on their own account, or (ii) online marketplace platforms that facilitate the sale of these goods by non‑registered vendors to consumers in Canada.
- The new rules explained above will apply to non‑resident vendors and online marketplace platforms whose annual supplies to consumers in Canada exceed CAD 30,000.
Electronic VAT compliance
E-filing of VAT returns in Czech Republic and Switzerland as from 1 January 2021
- Czech Republic: VAT returns, summary reports, and registration applications and notifications of registration changes are now required to be submitted electronically.
- Switzerland: As from 1 January 2021, VAT-registered taxpayers in Switzerland will have to file their VAT returns online under a new service (“TVA easy”). Paper filing will only be available upon a taxpayer’s formal request.
Real-time invoice reporting in Greece: Postponement of myDATA scheme
- On 31 December 2020, in a last-minute change, the Greek government once again postponed the go-live date of myDATA to April 2021. This announcement came as a great relief to Greek taxpayers who were concerned about being ready for the previous go-live date of January 2021.
- The implementation during the first quarter of 2021 will offer an opportunity for additional adjustments to the adoption of the new real-time reporting framework.
SAF-T implementation coming shortly in Romania
- The contract for implementing the SAF-T reporting method has been signed by Romanian tax authorities and it should be finalized by July 2021.
- In the upcoming period the Ministry of Finance will organize consultation sessions with different stakeholders. During these meetings different proposals regarding the obligation to submit SAF-T files will be proposed and discussed.
QR codes to be included in electronic invoices in Argentina
- In Argentina, it will be compulsory to include a QR code in electronic invoices that codifies the identification and content within the issued invoices.
Returned goods simplification for e-commerce transactions
- Italia has introduced a simplified procedure for the reintroduction under customs relief of goods previously exported, following sales made via an e-commerce platform.
- The aim is to simplify the procedures, considering the significant increase of (i) this kind of transactions and (ii) the activities carried out by the Italian Customs Authorities in the management of the export and re-introduction of goods practices.
- The authorization to apply this simplified procedure is subject to specific requirements. In case of acceptance, the operator is included in a special register called “e-commerce RETRELIEF (Returned goods - Relief from import duty)”.
Deferrals for Digital Services Tax (DST) payments for 2020
- Italy’s digital services tax (DST) became effective January 1, 2020. It was expected that, for FY 2020, the 3% tax must be paid by February 16, 2021 and a specific tax return must be filed by March 31, 2021.
- On 15 January 2021, the Italian Government deferred the forthcoming DST payment deadlines. For the first year of application of the Italian DST (FY 2020):
- The deadline for the payment of the DST for financial year 2020, which would ordinarily be due on 16 February 2021, is deferred to 16 March 2021.
- The deadline for the filing of the DST return for financial year 2020, which would ordinarily be due on 31 March 2021, is deferred to 30 April 2021.
- Italian tax authorities already approved the DST form, the related instructions and technical specifications for the telematic transmission of data, on 25 January 2021.
- While some technical details (e.g. forms and telematic transmission) are now clarified, certain items regarding DST’s interpretation remain unresolved. Italian tax authorities are expected to issue a circular letter in this regard shortly.
Gulf Cooperation Council countries
Oman - New decisions on VAT regime implementation, into force by mid-April 2021
- VAT registration threshold: Compulsory and Voluntary registration thresholds established at OMR 38,500 and OMR 19,250, respectively.
- Deadline for taxpayer's VAT registration: Progression in taxpayer's registration process depending on the volume of their annual sales:
- 1st tier: Between February 1st - March 15th, VAT applicable from April 16th.
- 2nd tier: Between April 1st - July 1st
Bahrain - New use & enjoyment rules for telecom services as from 1 February 2021
- For telecommunications requiring the customer to be physically present at a specific location, the place of use and enjoyment is that specific location (no change).
- For all other telecommunications services, the place of use and enjoyment is the place of residence of the customer (to be determined by the supplier by reference to the customer’s IP address, SIM card country code, billing address, etc.).
- Where any of these are in Bahrain, the place of residence will be Bahrain and services will be subject to VAT in the country, unless the customer provides satisfactory evidence to the supplier on the contrary. However, if the customer’s SIM card is issued in Bahrain, the place of supply cannot shift from Bahrain.
EU VAT e-commerce package
Customs formalities for low-value consignments under new VAT on e-commerce rules
- New Customs guidance concerning the import/export of low value consignments has been released by the EU Commission, which complement with examples and explanations on the customs rules the Explanatory Notes on VAT E-commerce rules.
- For additional information, please check the official Guidance issued by the EU Commission.
Jeg heter Espen Qvist og er advokat/partner i Advokatfirmaet PwC. Jeg leder PwC Norges satsning innenfor indirekte beskatning ved internasjonal handel. Til daglig jobber jeg med å bistå norske og utenlandske virksomheter med blant annet rådgivning, strukturering og spørsmål knyttet til rapportering av merverdiavgift og tilsvarende indirekte skatter i Norge og utlandet. Jeg har mer enn 20 års erfaring med arbeid knyttet til merverdiavgift og har også erfaring fra Skatteetaten.
Å ta steget ut og drive virksomhet også utenfor Norges grenser blir stadig kortere i takt med økt globalisering og den økende takten i den teknologiske utviklingen. Norske virksomheter som er involvert i kjøp og salg av varer og tjenester utenfor Norges grenser, vil måtte håndtere regelverk innenfor merverdiavgift og andre indirekte skatter, herunder toll og særavgifter i ulike land. Jeg håper mine refleksjoner og analyser kan gi deg økt kunnskap og en alternativ innfallsvinkel til ulike temaer enn hva tradisjonelle nyhetsbrev gir. Ta gjerne kontakt dersom du har spørsmål, kommentarer eller innspill.
My name is Espen Qvist and I am a lawyer / partner in PwC Tax and Legal Services. I am head of international indirect tax in PwC Norway and has been working with Norwegian and international indirect tax queries for more than 20 years. On a daily basis, I work with assisting multinational businesses with advice, structuring and issues related to handling VAT and corresponding indirect taxes in Norway, but mostly on countries abroad. He has advised a number of multinationals in specific transaction based VAT and cross border planning, mergers and acquisitions, restructuring and cross border transactions.
Taking the step out and conducting business also outside Norway's borders is becoming increasingly shorter in step with increased globalization and the increasing pace of technological development. Norwegian companies involved in the purchase and sale of goods and services outside Norway's borders will have to deal with regulations within VAT and other indirect taxes, including customs and excise duties in various countries. I hope my reflections and analyzes can give you increased knowledge and an alternative approach to different topics than what traditional newsletters provide. Feel free to contact me if you have questions, comments or suggestions.
Mitt navn er Per Kirknes og jeg jobber som advokat i PwC. Mitt arbeidsfelt er merverdiavgift og toll, med særlig fokus på internasjonale forhold og cross border transactions. Jeg har arbeidet i PwC siden 2010, og har også erfaring fra tollmyndighetene.
My name is Per Kirknes, and I am an Attorney at Law working in the indirect tax team in PwC Oslo. I specialize in international trade with goods, including domestic and international VAT issues, as well as customs and excise duties. My work is often related to cross-border transactions, including structuring of supply chains and analyses of intra-group transactions. I also provide advice related to specific customs issues like valuation, origin, classification and customs procedures. I have been with PwC since 2010. Prior to that I worked ten years with development of the Norwegian customs legislation in the Directorate of Customs and Excise.
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