During the ECOFIN meeting of 05/12/2017, the EU Ministers of Finance reached an agreement on the VAT e-commerce package for B2C business. The European Commission’s proposal will be applicable gradually from 2019 and to 2021 and includes:
· A plan to make the major e-platforms (e.g. Amazon and eBay) liable for VAT fraud by suppliers established outside of the EU;
· Simplifications to the existing MOSS regime (electronic services in B2C);
· Introduction of a new threshold of € 10.000 for very small vendors and deletion of previous thresholds regarding distance sales;
· Extension of the MOSS to the e-commerce of goods or “distance selling” (in 2021)
· Removal of low value consignment relief for imported goods.
EUROPEAN COURT OF JUSTICE
Invoice Information: Address of Supplier (C-374/16 & C-375/16, 15/11/2017)
The requirements relating to invoice information must be interpreted strictly since it is not possible for Tax Authorities to lay down more stringent requirements than those under the VAT Directive. The Court has stressed repeatedly that the deduction of input VAT must be allowed if the substantive requirements are satisfied, even if certain formal conditions are not complied with. As a result, Tax Authorities may not make the recovery of input VAT conditional upon that the address where the issuer of an invoice carries out its economic activity must be indicated on the invoice.
The VAT registration number should be regarded as a key information to identify contracting parties. The invoice remains valid although the address is not the place where the activity is run. Again the Court put the emphasis on the principle that substance prevails over form. Tax Authorities are still reluctant to align with that ECJ case law principle.
Concept of New Building (Kozuba Premium Selection, C-308/16, 16/11/2017)
This arrest covers the concept of “new building”. Supply of new building can be subject to VAT or exempted from VAT, largely depending on domestic rules, i.e. rules of the EU country where the property is situated. The entitlement to recover input VAT levied on building construction or acquisition usually impacts the profitability of any real estate project. The Court stressed that the concept of “new building” cannot be totally construed by Member States. New building includes also building that was subject to substantial modifications intended to modify the use or alter considerably the conditions of its occupation.
Deferred payment of import VAT
A new deferment of import VAT will be applicable as from 01/01/2018. Importations of tangible items from outside of the EU into Finland can be done under the coverage of a reverse charge mechanism.
In practice, importers with a Finish VAT registration will be allowed to pay import VAT in their VAT return. Doing so the cash flow inconvenience entailed in the common procedure with payment at the custom clearance will disappear.
Electronic invoices will be mandatory in contracts executed with any French public entities also for middle-sized companies.
The so-called “Spesometro” can be filed with on a semi-annual basis for 2018 as well.
New Customs Bill & Post Brexit Deferment of UK Import VAT
On 01/04/2019, United-Kingdom will be no more part of the EU as a result of the British exit. That’s why a new Customs Bill has been drafted by the UK Government. The Bill provides for a totally national Customs regime, which is nonetheless largely in line with current EU law, and it is the intention that the UK’s Customs regime will continue to operate essentially in the same way as it does today.However it would allow for divergence from EU law where the UK thinks it is crucial to do so, or where it believes that there is a benefit to deviate from it and such deviation is consistent with any arrangements made between UK and the EU. Such arrangements will of course depend on the outcome of negotiations with EU. In addition, the UK considers introducing a deferment procedure of UK import VAT to help UK importers with their cash flow situation.