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Implications of Brexit for Customs and VAT Rules

Published: 19.03.2018 |

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In a press release of January 29, 2018, the Council of Europe announced the second set of additional directives on the negotiations detailing the position of the EU-27 (27 EU Members without the UK) regarding the transition period with respect to Brexit. These directives give the Commission the authority to initiate discussions with the UK on the terms of Brexit and establish a transition period, no longer than until December 31, 2020. During the transition period in the UK, full and constant application of the EU legislation is provided. However, the state will no longer participate in the EU administration and the decision-making process. On January 30, 2018, the EU Commission published a document warning the companies of the key challenges in the customs and VAT that they will have to be overcome when the United Kingdom is not a Member of the EU. If no other transition period is agreed between the EU and the UK, the European Customs and VAT regulations in the UK will no longer apply from March 30, 2019, as the UK officially announced its intention to leave the EU on March 29, 2017. This document provides a brief overview of the customs and VAT implications that will arise from...

Blocking of tax invoices in a new way: how will it be?

Published: 14.03.2018 |

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#Tax disputes #Taxation

In order to fulfil the requirements of the Law of Ukraine No. 2245-VII “On Amendments to the Tax Code of Ukraine and certain legislative Acts of Ukraine to ensure the balance of budget revenues in 2018” of 7.12.2017, the Cabinet of Ministers of Ukraine adopted the Resolution No. 117 of 21.02.2018 which approved: the procedure for suspending the registration of the tax invoice / calculation adjustments in the Unified Register of Tax Invoices; the operating procedure of commissions that take decisions on the registration of a tax invoice / calculation adjustments in the Unified Register of Tax Invoices or refusal of such registration; the procedure for considering complaints against decisions of commissions that take decisions on registration of a tax invoice / calculation adjustments in the Unified Register of Tax Invoices or refusal of such registration. What has been fundamentally changed? The first thing I want to note is that previously, only the business transaction that was reflected in the tax invoice was subject to monitoring. And now the monitoring of the tax invoice / calculation adjustment (hereinafter - the tax invoice) is carried out according to the following...

Questions and answers to the Inaccessibility of Deposits in ABLV Bank

Published: 05.03.2018 | news

On February 25, the Latvian bank ABLV Bank published supplementary information for the depositors on its official website in the form of the most common questions and answers to them. “What should the depositors and clients of the bank do, holding funds at ABLV Bank at the moment? At the moment, clients do not have access to their funds either in the branches or through the Internet bank. The card system of the bank is turned off, therefore the customers cannot pay by bank cards and cannot withdraw cash from ATMs. Customers can freely transfer securities from their accounts of financial instruments to the bank. What sum will be paid by the state to the bank’s clients? The state guarantees each client 100 000 euros in any Latvian bank. In case of the moment of inaccessibility of deposits, payments are made from the funds of the Deposit Guarantee Fund. ABLV Bank has enough liquid assets to return all sums paid from the Deposit Guarantee Fund! What funds of the bank’s customers are guaranteed payment? The guaranteed payment covers all deposits in any currency on all accounts, including time deposit accounts, current accounts, salary accounts, savings accounts,...

Reforming VAT Rules for Online Sales in the EU

Published: 02.03.2018 |

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#Legislation #VAT

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...

Swiss Financial Market Supervisory Authority Published Regulatory Guidance for ICO

Published: 26.02.2018 |

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#ICO #ICO #Tokens

The Swiss Financial Market Supervisory Authority has issued regulatory guidance on ICO. Switzerland is still on the list of the most popular jurisdictions for the organization and development of the activities that are related or based on blockchain, many of which are funded through ICO. In this regard, the Swiss Financial Market Supervisory Authority (hereinafter referred to as FINMA, the Authority) published regulatory guidance on February 16, 2018 determining the direction for future normative regulation in this field. In addition, FINMA has also clarified the expectations regarding the requirements for the requests relating to the application of the Swiss financial markets legislation in the context of the specific ICO projects. The document, entitled “FINMA Recommendations regarding requests on legislative regulation of Initial Coin Offering”, published on February 16, 2018, is a continuation of the initial recommendations on the legislative regulation of ICO, which were published in September 2017. The purpose of these recommendations of the Swiss Financial Market Supervisory Authority is to inform future and existing market participants about how FINMA intends to...

Changes in transfer pricing

Published: 21.02.2018 |

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#Tax disputes #Tax reporting

As we have noted earlier, numerous amendments to the tax legislation have been introduced by the Law of Ukraine No. 2245-VII “On Amendments to the Tax Code of Ukraine and certain legislative acts of Ukraine regarding ensuring the balanced budget income in 2018”. In this article, we want to highlight the changes that transfer pricing has undergone, namely the changes introduced by the above-mentioned Law in article 39 of the Tax Code of Ukraine. The first significant step has been the introduction of changes in the criteria that are applied by the Cabinet of Ministers of Ukraine in determining “low-tax” states (territories). If previously, one of such criteria has been the existence of a profit tax rate in the state (territory), which is 5 and more percentage points lower than in Ukraine (subparagraph 39.2.1.2, paragraph 39.2, article 39 of the TCU), but now, except for the low rate of income tax, those states (territories) “that provide economic entities with preferential taxation regimes or in which the features of calculating the tax base actually allow business entities not to pay corporate income tax (corporate tax) or pay it at the rate, which is 5 percentage...

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

Published: 19.02.2018 |

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#Legislation #VAT

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...

New Supreme Court, the first “new” legal positions: What to expect and what to hope for?

Published: 31.01.2018 |

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#Court #Tax disputes

Despite all the advantages and disadvantages of the judicial reform that is taking place in Ukraine, the legal community and business nevertheless have placed certain hopes on the new Supreme Court and its focus on the rule of law, as well as on the fact that when considering cases and forming legal positions, it will take into account the practice of the European Court of Human Rights. Such hopes were not groundless, as Article 6 of the Code of Administrative Procedure of Ukraine indicates that “the Court applies the principle of the rule of law, taking into account the jurisprudence of the European Court of Human Rights” (other procedural codes contain similar provisions). Part 1 of Article 36 of the Law of Ukraine “On judicial system and status of judges” states: “The Supreme Court is the highest court in the judicial system of Ukraine, which ensures the constancy and unity of judicial practice in the order and manner prescribed by the procedural law”. It's no secret that there have been absolutely opposite positions of the courts for many years regarding the application of tax consequences in that case when a court verdict (or only the director’s explanations) on...

European VAT On Providing Services

Published: 24.01.2018 |

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#Accounting #VAT

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...

Unblocking Tax Invoices: Will It Be the Same for Everyone?

Published: 17.01.2018 | blog

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#Tax disputes #Tax planning

Before New Year, our legislators traditionally adopt and publish numerous changes in the tax legislation. The change from 2017 to 2018 was no exception. Thus, on December 7, 2017, the Law of Ukraine No.2245-VII “On Amending the Tax Code of Ukraine and Certain Legislative Acts of Ukraine on Ensuring the Balance of Budget Revenue in 2018” was adopted and officially published on December 30, 2017 (newspaper “Golos Ukrainy” No.248 (6753) dated December 30, 2017). The Law provides for the numerous changes in the tax legislation. The most expected change for business, perhaps, was the abolition of the “blocking” of tax invoices from January 1, 2018, at least until March 1, 2018. It became possible in connection with the exclusion of clause 74.2, article 74, of the Tax Code of Ukraine, which provided for the continuous automated monitoring of tax invoices and adjustment calculations for compliance with the criteria for the risk assessment sufficient to stop the registration of such tax invoices/adjustment calculations. In addition, paragraph 201.16 Art. 201 of the Tax Code of Ukraine has also been amended, according to which (new edition) “registration of a tax...

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