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Tag: #VAT

Reforming VAT Rules for Online Sales in the EU

Published: Olena Vydysh | 02.03.2018 | blog

On December 5, 2017, the European Council adopted amendments to the legislation regulating VAT rules for online sales of goods and services in Europe, developed by the European Commission a year ago. These legislative changes were adopted within the framework of the strategy of “single digital market” and aimed at simplification of the payment of VAT on purchases of goods and services on the Internet by the European consumers. The changes assume: simplification of the current Mini One Stop Shop (MOSS) mode for cross-border telecommunications, broadcasting and electronic services transition to taxation at the place of destination (location of the recipient) and simplified reporting through MOSS for remote sales of goods introduction of an obligation to pay VAT for electronic interfaces (for example, platforms) that facilitates the delivery of low-value goods imported or sold in the EU by the suppliers from outside the EU Since the new legislation consists of a two-tiered package of measures, it comes into force in two phases: in 2019 and 2021. From 2019, the changes will touch the MOSS system. There is an exception that allows micro-enterprises of the EU to pay for the...

Government Approved the Rate on Installment Plan on VAT Payment for the Import of Production Equipment

Published: Ролан Бондарец | 23.02.2018 | news

On February 21, 2018, the Resolution of the Cabinet of Ministers of 7.02.2018 No. 85 came into force, approving the procedure for granting an installment plan for VAT payment when importing the equipment for own production into Ukraine (hereinafter - Procedure) in accordance with clause 65, subsection 2, section XX of the TCU, No.2245-VIII of 07.12.2017. The Procedure provides that in order to receive an installment plan for the payment of value-added tax, when importing equipment into the customs territory of Ukraine, the payer is obliged to submit an application to the customs office, which form must be also approved by the above-mentioned resolution. The application must specify the term of the installment plan, name, quantity, cost and code of the the UCG FEA of the imported equipment, its location, the purpose of importation, the CFEA of the payer, etc. The payer must attach the following to the application: business project, business plan or other document with a detailed description of the technological process (with economic calculations) and expected performance; available conclusions of state bodies, expert institutions, organizations, state standards and...

European VAT on Provision of Electronic, Telecommunications Services, as well as Television and Radio Broadcasting Services

Published: Olena Vydysh | 19.02.2018 | blog

The format and methods of delivery of many goods refer them to the category of services, especially if they are transmitted over the Internet, such as e-books, music downloads, streaming of content. The regime of VAT for this particular subcategory of services provided electronically has undergone significant changes lately. In this blog, we will consider the requirements of the current European legislation, and we will try to cover the coming changes in this area in the next ones. In accordance with the European legislation, came into effect from January 1, 2015, telecommunications, television and radio broadcasting, as well as electronic services, are subject to VAT at the location of the client, whether it is a business or a consumer, located in or outside the EU . However, in order to ensure the correct taxation of these services, the supplier needs to determine the status of his client (whether he is a VAT payer), as well as his location. The easiest and most reliable way to define whether a customer is a business or a consumer is to ask him for a VAT number. Suppliers can check the VAT numbers of their customers using the website of the VAT Information Exchange System...

MFU Has Developed a Draft Resolution for the Operation of VAT Risk System

Published: Ролан Бондарец | 13.02.2018 | news

The Ministry of Finance of Ukraine has developed a draft Resolution on the further operation of the VAT risk system. This mechanism is a necessary measure aimed at the prevention of VAT embezzlement schemes and uninterrupted process of automatic VAT refund. We remind that in December last year, the work of the VAT risk system was suspended in order to develop a coordinated effective solution which would not entail new risks. So, the MFU together with the SFS have developed and agreed upon a decision that was made public on the official website of the Ministry on February 9, for public discussion. Now the draft Resolution is under consideration of people’s deputies of the Tax and Customs Policy Committee. It includes the following changes: In order to reduce the cases of suspension of the registration of tax invoices, a “cutoff criterion” of 3% and a threshold of the volume of supply for the month of 500 thousand UAH are established. Earlier, the coordination of evaluation criteria continued for some time, that allowed some payers to use a fictitious loan. It is proposed the SFS to establish criteria for risk assessment for a prompt response. In order to ensure the...

European VAT On Providing Services

Published: Olena Vydysh | 24.01.2018 | blog

The companies which have customers in the European countries have to determine the state in which their income is subject to VAT and related consequences with respect to the indirect tax. The supply of “services” is defined as something that is not a “commodity”. Each supply of services should be analyzed in the light of the rules of the place of delivery in order to ensure the right accounting of VAT by the right person in the proper jurisdiction. It is especially important on making global sales that may lead to VAT obligations, and the rules of the place of delivery are the starting point for this. As in the case of goods, there are different rules for determining the place of delivery (as well as, accordingly, the place of their taxation) for the services provided to the business (B2B) and services to the end user (B2C). As a general rule, the provision of B2B services is taxed at the location of the client. In this case, the customer must provide the VAT number to the service provider, otherwise such a transaction is considered as B2C. If the client is a resident of a third country (not EU Member State) and does not have a European VAT number, he must provide...

EU Mitigates the Rules of Taxation for Small Business

Published: Dmitriy Batrakov | 24.01.2018 | news

The European Union announced its intention to expand the powers of Member States with respect to changing the rates of VAT and mitigating the rules of taxation for small businesses. These changes are only part of a large-scale plan on revision of the European VAT system aimed at creating a single VAT zone. We remind that the general rules of VAT in the European Union were agreed in 1992. According to the European Commission, they became obsolete and, in addition, too limited. The EU Commissioner for Taxation, Pierre Moscovici, noted: “Today we are taking another step towards the creation of a single VAT zone in the European Union with simplified rules for our Member States and, in particular, companies. These proposals will give EU countries greater freedom with regard to application of preferential VAT rates to specific products or services. At the same time, they will enable to reduce the number of bureaucratic mechanisms for small enterprises engaged in cross-border activities, thereby contributing to their growth and job creation”. The Commission proposed to give EU Member States the opportunity to introduce certain benefits, along with a standard VAT rate of at least...

Cyprus Imposes 19% VAT on Building Land

Published: Olena Kamenetska | 19.01.2018 | news

From January 2, 2018 in Cyprus, the new VAT Law has entered into force, providing for changes in the main VAT Law No.95(I)/2000. The document introduces VAT at a standard rate for the sale of building land, as well as leasing/rental of business premises on the conditions specified in the law. It also introduces the reverse charge mechanism for VAT-subject supplies of land and property under a loan restructuring/force-sale arrangement, which will mostly influence financial institutions. Imposition of VAT at the standard rate of 19% on building land The standard VAT rate of 19% will be applied in the following cases: transfer of ownership; transfer of indivisible land portion; transfer of ownership via contract or sale agreement or agreement which specifies that the ownership will be transferred in the future or leasing agreement with buyout option. The above shall apply to non-developed building land which is meant for the construction of one or more structures in the course of carrying out a business activity. More clarifications are still needed for the application of the law, such as the circumstances whereby a transfer is not considered to be a part of a person’s economic...

Rules for Choosing the Place of Taxation On Selling Goods

Published: Olena Vydysh | 10.01.2018 | blog

The next issue, which we suggest to figure out during the consideration of the European VAT system, is the place of taxation on delivering goods. This issue is decisive for the companies that have a large number of counterparties in Europe, when planning their trading activities. The EU Directive 2006/112 /EU defines different rules for determining the place of taxation for each type of transactions: supply of goods intra-Community acquisition of goods importation of goods supply of services For the supply of goods, VAT is levied at the place of delivery depending both on the way of supply and the nature of the goods themselves: If the goods are not sent or transported, the place of taxation will be the location of the goods at the time of delivery. For example, if an Austrian company after renting a car in Austria from a German company decides to purchase this machine, Austria will be the place of delivery, and VAT will apply in Austria. If the goods are dispatched/transported by the supplier, the customer or a third person, the place of delivery (and accordingly the taxation) will be the country where the goods were at the beginning of the dispatch/transportation. For...

Ministry of Finance Reforms Institution of Financial Liability for Tax Violations

Published: Ролан Бондарец | 30.11.2017 | news

Recently the Ministry of Finances of Ukraine, together with the experts from the interactive tax platform TaxLink, has developed a bill “On Amendments to the Tax Code of Ukraine regarding the improvement of the prosecution system for violation of tax laws”. The essence of the document is to reform the liability for tax violations provided by the current legislation. First of all, the bill introduces more effective mechanisms for the settlement of tax disputes in cases when the violation of tax law happened not due to the fault of the payer. In addition, it is proposed to introduce the principle of fault liability of taxpayers which is inherent in all branches of Ukrainian legislation, in contrast to the current liability of the payer without fault. Therefore, the last one will be considered guilty if found guilty that he was able to comply with the relevant rules and regulations, but did not take the necessary measures for this. In this regard, when considering the verification materials by the supervisory authority, the documents of the taxpayer may be subject to the examination that show his due diligence. Another significant innovation is the introduction of the system of...

Spain increases the burden of the corporate tax

Published: Sergey Panov | 06.12.2016 | news

The government of Spain declared growth of a budget income on December 2, that will increase tax revenues from corporations. In spite of the fact that recently created government decided to leave the 25 percent corporate tax rate untouched, Spain will limit the corporate tax deductions. They will contribute the most part of 7 billion euros in the new income at which the government is aimed. The Budget imposes new limits on loss carry backs and restrictions for use of the pecuniary losses connected with shareholdings in the companies located in "tax harbors or in the territories with not appropriate level of a tax" in number with other changes. New measures of the corporate tax, as expected, raise the additional amount of 4.65 billion euros in revenue for the government. Besides, real estate value will be updated for property tax to increase revenues. Also, the government intends to lift a number of "guilty" taxes, including on alcohol, tobacco, and sweet drinks. Other changes are directed on modernization VAT and the fight against fraud VAT. It includes a new reporting system of the VAT in real time which announced in 2014. Taxpayers will be obliged to report about transactions...