In Germany, the much discussed fiscal stimulus package has been approved by the Federal Cabinet, paving the way for a reduction in the standard rate of value-added tax from 19 to 16 percent from July 1 to December 31, 2020, with the reduced seven percent rate also cut, to five percent, during the same period.
Bulgaria has followed Germany’s – previously unveiled – VAT reduction for the catering sector, with the Bulgarian Parliament had approved legislation temporarily reducing the rate of value-added tax in this area.
Under the measures, food served in catering outlets will be taxed at the nine percent reduced rate of VAT. However, alcoholic beverages served in restaurants will continue to be taxed at the 20 percent standard rate. This temporary regime will apply from July 1, 2020, until December 31, 2021.
For more information on this, and other topical … Read More »
The Irish Revenue has issued guidance on the tax treatment of the supply of emergency accommodation and the donations of gifts of goods or meals supplied in response to the COVID-19 crisis, outlining the application of the Capital Goods Scheme (CGS) to emergency accommodation. The CGS is a mechanism for regulating the amount of VAT reclaimed over the VAT-life, and aims to ensure that the VAT reclaimed reflects the use to which the property is put over its VAT-life.
Revenue said that, as a concessionary treatment, it will not apply the CGS “big swing” adjustment in cases where the change in the proportion of deductible use is a consequence of a capital good being diverted for use as emergency accommodation.
The guidance also explained the VAT treatment of donations of gifts of goods and meals. Generally, where a business donates goods free … Read More »
In an update on the COVID-19-related tax relief measures available to businesses, the German Finance Ministry announced that a regulation is being prepared to temporarily reduce the rate of value-added tax in order to assist the catering sector, and hopefully permit it to remain afloat in the new socially distanced era of eating out.
Under the proposal, food supplied in restaurants, cafes, and similar outlets will be taxed at the seven percent reduced rate.
Currently, food supplied for consumption on catering premises is subject to VAT at the 19 percent standard rate, while supplies of takeaway food are taxed at the seven percent reduced rate. The measure is expected to apply from July 1, 2020, until June 30, 2021.
For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look
The European Union has finalized regulations to complete the legislative framework for e-commerce reforms that will be implemented from 2021.
A new Regulation provides details for registration in the VAT One Stop Shop, including the Import One Stop Shop, and for the VAT One Stop Shop return.
Under plans initially approved by the Economic and Financial Affairs Council in November 2017, the EU will extend the existing mini one-stop shop (MOSS) from January 1, 2021.
MOSS was introduced alongside reforms in January 1, 2015, to simplify VAT compliance for firms that faced new rules obligating them to collect VAT on business-to-consumer (B2C) supplies of broadcasting, telecommunications, and electronic (BTE) services based on the location of the consumer, rather than the supplier.
MOSS is to be expanded from 2021 into a “One Stop Shop” (OSS), which will cover:
All B2C supplies of services, including by non-EU … Read More »
On February 14, 2020, AmCham EU, the representative body for American business in the European Union, wrote a request for greater transparency on the progress of the 2021 VAT e-commerce package and its implementation.
The reforms, agreed by EU member states on March 12, 2019, are intended to simplify VAT rules for goods sold online and introduce new obligations on online marketplaces to require them to contribute in the fight against tax fraud.
Under the changes, due to be implemented on January 1, 2021, online marketplaces will be considered to act as the seller when they facilitate sales of goods with a value up to EUR150 (USD162) to customers in the EU by non-EU businesses using their platform. The same rules will apply when non-EU businesses use online platforms to sell goods from “fulfillment centers” in the EU, irrespective of their value, … Read More »
Infringement proceedings have been launched against 14 EU member states for failing to implement the so-called value-added tax quick fixes.
The VAT quick fixes were included in Council Directive (EU) 2018/1910 of December 4, 2018. They are intended to simplify VAT compliance for businesses and strengthen and harmonize existing EU rules ahead of the introduction of more comprehensive reforms to EU VAT law scheduled for 2021.
The four short-term measures provide:
That the VAT identification number of the customer, allocated by a member state other than that in which dispatch or transport of the goods began, should constitute an additional substantive condition for the application of the exemption in respect of an intra-Community supply of goods.
For more uniform rules when determining the VAT treatment of chain transactions, including triangular transactions, clarifying in particular which party should benefit from zero-rated treatment;
New VAT rules for … Read More »
In Uzbekistan, the government confirmed recently announced changes to the country’s corporate income tax and VAT regimes in the 2020 Budget.
In line with an earlier announcement, the Budget included a cut to the VAT rate to 15 percent from 20 percent effective from October 1, 2019. The Budget also confirmed the Government’s plans to remove the flat rate VAT scheme for certain medium-sized enterprises.
Further, the Budget provided for an increase to the headline corporate tax rate from 12 percent to 15 percent.
Other measures included a reduction in the single social payment from 25 to 12 percent for state enterprises, and legal entities in which the state owns at least 50 percent of its authorized capital, and the introduction of a new tax system for individual entrepreneurs, who will newly pay a fixed tax rate based on their actual income.
For more … Read More »
In its latest Economic Survey of Switzerland, the OECD called for a rebalancing of the country’s tax mix, recommending shifting that mix towards more growth-friendly sources in order to help prepare the system for the impact of an anticipated wave of aging Swiss citizens.
The OECD observed that Switzerland “relies more on direct taxation and social security contributions than most other OECD countries, at two-thirds of revenues.”
It went on to suggest that government plans, to raise the VAT rate by 0.7 percentage points and reduce disincentives to work for second-earners in families, are steps in the right direction.
The OECD recommended that VAT exemptions and reduced rates should be “wound back” to finance lower personal income taxes, particularly on lower income earners. It added that the cantons could make more use of the recurrent taxation of immovable property and that there is … Read More »
On October 16, the European Commission published a proposal for a Council Implementing Decision enabling Italy to continue restricting the right to deduct input VAT on vehicles-related expenses.
On April 12, 2019, Italy had requested an authorization to continue to derogate from the EU VAT Directive by limiting to 40 percent the right to deduct input VAT charged on expenditure related to motorized road vehicles not wholly used for business purposes. The Commission said that the rate of 40 percent appears to reflect adequately the actual business use of such vehicles.
In addition, Italy requested an authorization to continue to derogate from the VAT Directive by exempting from VAT the use for private purposes of vehicles included in the assets of a taxable person’s business, where such vehicles are subject to a restriction of the right to deduct.
Italy was first authorized to … Read More »
The Japanese government finally went ahead with its plans to increase the standard sales tax rate. The Japanese authorities have been trailing the move for years now, with the potential last minute danger to the introduction of the measure, or the potential last minute savior of the Japanese economy (depending on your perspective) being the likely chilling effect of a sales tax hike on consumer confidence, and with the knock-on effect that is expected to have on spending.
Given the relative weakness of the Japanese economy over the last few years, with its concerns over the impact of an aging population on government receipts, this is a valid worry. However, the increase has now entered into force (following two previous delays), so let the dice fall where they may, economically speaking.
However, in order to mitigate the impact of the rate rise … Read More »