Welcome to our monthly VAT News intended for companies having activities across the 28 Member States.
You will find here below updated information and schemes on a country-by-country basis.
E.U., Germany, Spain & Switzerland .
EUROPEAN COURT OF JUSTICE
Customs value of defective goods (X BV, C-661/15, 12/10/2017)
An importer may adjust the customs value declared upon importation where it is established that, at the time of release into free circulation, there was a manufacture-related risk that the goods might potentially become defective in use, and in view of this, the seller, pursuant to a contractual warranty towards the buyer, grants the latter a price reduction in the form of reimbursement of the costs incurred by the buyer in modifying the goods in order to exclude that risk.
The time limit for the price adjustment is three years. It is not necessary for the importer of record to prove that the goods were actually defective upon importation. Demonstrating the potential risk is sufficient.
VAT taxable basis of leasing (Lombard Ingatlan Lízing, C-404/16, 12/10/2017)
This case covers a financial leasing with definite transfer of ownership where the lessor may no longer claim payment of the leasing instalments because the lessor has terminated the agreement due to breach of contract by the lessee.
The Court states that such a situation is covered by the concepts of ‘cancellation’ and ‘refusal’ [article 90(1) of Directive 2006/112/EC]. As a consequence, the lessor may obtain a reduction of the VAT taxable basis, even if the applicable national law does not allow the taxable amount to be reduced in the case of non-payment [article 90(2) of Directive 2006/112/EC].
During the ECOFIN meeting of November 7, 2017, the EU Ministers of Finance did not reach a political agreement on the VAT e-commerce package. This topic will therefore be discussed again at the December ECOFIN. The European Commission’s proposal includes:
- A plan to make the major e-platforms (e.g. Amazon and eBay) liable for VAT fraud by suppliers established out of the EU;
- Simplifications to the existing MOSS regime (electronic services in B2C);
- Extension of the MOSS to the e-commerce of goods (in 2021);
- Removal of low value consignment relief for imported goods.
Once again, a project of the EU Commission faces reluctance from Member States which might seriously delay the simplification measures expected by the sector.
EU Commission requests Germany to align its VAT refund system with EU rules
The EU Commission has decided to send a letter of formal notice to Germanyfor violating the rules related to VAT refunds. Under national rules, a taxable person established in Germany applying for a VAT refund from another Member State via the German web portal can lose the right to a refund because Germany does not follow up on potential error messages from the Member State of refund. The EU Commission considers that Germany is also violating administrative cooperation rules. If Germany does not act within the next two months, the Commission may send a reasoned opinion to the German authorities.
The German Federal Ministry of Finance published a new decree introducing a simplified regime for call-off stocks, which can thus be regarded as giving rise to direct intra-EU supplies from the Member State of dispatch. According to the decree, the goods must already be paid for or there must be a binding order. Furthermore, the customer must have unlimited access to the goods. This new decree actually follows a decision of the German Federal Court (BFH 20/10/2016, V R 31/15; see our VAT News No 2/2017).
Reduced VAT rate extended
The following supplies are now subject to the reduced rate of 10% in Spain:
- The hotel services, camping and spa services, restaurant services and, in general, the provision of meals and drinks to be consumed on the spot ;
- Access to libraries, archive and documentation centres, museums, art galleries, theatres, circuses, bullfights, concerts, and other cultural events.
VAT registration threshold
For the calculation of the small enterprise threshold (CHF 100,000) under which a business is not obliged to register for Swiss VAT, it is no longer the turnover on the Swiss territory that has to be taken into account. As from 2018, one should indeed consider the worldwide yearly turnover in order to check whether the threshold is met or not.
Reverse charge will be applicable to supplies made by foreign business not VAT-registered also where recipient is not established in Switzerland provided it is registered for VAT purposes or the threshold of CHF 10.000 is exceeded.
VAT rates decrease
As from January 1st, 2018, the Swiss VAT rates will decrease down to 7.7% (standard rate), 3.7% (special rate) and 2.5% (reduced rate).