European VAT News – September 2020

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Austria

Austria has reduced the applicable VAT rate for certain services for the period 01.07.2020 to 31.12.2020. A reduced VAT rate of 5% applies to hospitality services (supply of food and beverages in restaurants, catering), the tourism sector (accommodation in hotels, campsites) and to art and cultural events (admission to theatres, cinemas, concerts), as well as to the sale of magazines and books.

Belgium

The Federal Public Service for Finance provided several clarifications regarding the VAT consequences of donations of medical equipment to certain institutions and donations of computers to Belgian schools, made between 1 March 2020 and 1 September 2020. Among others it has been clarified that a VAT exemption applies to the donation of medical devices and their accessories to humanitarian organizations.

Bulgaria

Bulgaria has reduced its VAT rate for the period 01.07.2020 to 31.12.2021 on the sale of books and magazines, as well as for hospitality services (restaurant, catering) to 9%. For the same period, certain products for babies and infants are also subject to the reduced VAT rate of 9%.

Bulgaria has also introduced an electronic register for call-off stocks. The obligation applies to all taxable persons in Bulgaria to whom goods are supplied via call-off stock from other EU Member States, as well as to Bulgarian taxable persons who themselves supply goods to other EU Member States via call-off stock.

Czech Republic

The Czech Republic has reduced the VAT rate for certain services due to the corona pandemic. From 01.07.2020, the reduced VAT rate of 10% applies to accommodation services, access to cultural and sporting events and to wellness/spa services.

As of 01.01.2021, the Czech Republic also plans to reduce late payment penalties on belated VAT payments.

Greece

The Independent Authority for Public Revenue has recently announced that the custom duties and import VAT exemptions applied on the imports of medical materials used to combat the COVID-19 pandemic will be extended until 31 October 2020.

Ireland

Ireland is reducing its regular VAT rate from 23% to 21% from 01.09.2020 to 28.02.2021. Which VAT rate applies, depends on the time of VAT accrual. Accordingly, VAT on local sales is incurred when the invoice is issued. An invoice must be issued, at the latest, by the 15th of the month following the supply of goods or provision of services.

Italy

The Italian Tax Authorities have recently clarified that the supply of medical services can only be VAT exempt when the following two conditions are reunited:
The Ministry of Health supervises the medical profession; and
The Medical profession is explicitly listed in the Ministerial Decree of 17 May 2002.

Poland

This 1 July, after a long wait, the Polish VAT Act was amended as part of a package of so-called quick amendments. The motto was to simplify and unify VAT settlements in trade in goods within the EU. At first glance, it can be said that the amendment involves several changes that simplify VAT settlements in international trade (e.g. as regards deliveries to foreign warehouses). However, particular vigilance is required from taxpayers regarding changes in supplies and acquisitions within the EU in the scope of the conditions for the application of the 0% rate to Intra-Community supplies and chain transactions.

Slovenia

The Slovenian government granted an extension, until 31 October 2020, to the VAT exemption and to the relief of import duties applicable to the supplies of certain goods used to combat the effects of the COVID-19 epidemic.

Spain

In order to mitigate the effects of the Covid-19 pandemic, the Spanish Government has announced, among other measures, that the temporary zero VAT rate applicable to supplies, imports and intra-community acquisitions of medical products and equipment, to be supplied to public entities, non-profit or social entities and health care facilities, has been extended until 31 October 2020.

UK

Similar to a number of EU countries, the UK has decided to temporarily reduce the applicable VAT rate on certain supplies of services. In the period 15.07.2020 to 12.01.2021, a reduced VAT rate of 5% applies to the following services: hospitability (restaurants and catering, excluding alcoholic beverages), culture/tourism (e.g. admission to theatres, circuses, zoos, amusement parks, concerts, no sporting events) and accommodation services (hotel, campsite).

In addition, the UK plans to extend the MTD reporting obligation to companies that have a turnover below the current registration threshold (GBP 85,000) but have registered voluntarily for VAT purposes. This obligation is to apply from 01.04.2022. These companies will then also be obliged to keep digital records and to ensure the “digital link” in their MTD reporting. The obligation to keep digital records and the “digital link” will apply to all other companies subject to the MTD as of 01.04.2021 (postponed by one year due to the corona pandemic, originally planned to apply as of 01.04.2020).

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