End of December is always a time of reflection, and setting goals for the new year. We therefore prepared an overview of the VAT highlights of 2020.
With more than 10.000 posts in this year, it is impossible to be complete, and we thus have only highlighted 1 topic per month, whereby we also looked at which posts were the most popular ones. Not just the number of views on the website, but also the posts that had most comments on LinkedIn, or were liked on Twitter.
Without further introduction, here we go.
On 1 January 2020, the EU Quick Fixes came into force. EU Member States were supposed to adopt the anti-fraud measures of the European Commission into their national VAT legislation. Do you still remember what the Quick Fixes are?
- Obligatory use of VAT ID number for intra-Community supplies;
- Minimum of 2 pieces of non-conflicting evidence for the transportation of the goods;
- Allocation of transport to first leg in supply chain;
- Simplification for consignment stock.
All posts on the quick fixes can be found HERE.
Brexit, Brexit, Brexit. We all heard enough of that in the past years, and now, as of 31 January 2020, the United Kingdom has really left the European Union. Politically, that is, because there is still a transition period until then end of the year during which the UK and the EU can negotiate ‘the deal’. Or not, in which case there would still be a No Deal result.
From a VAT point of view, the changes are not over dramatic: the UK becomes a non-EU country, which means that the supplies between the UK and EU Member States are no longer intra-Community transactions. The supplies of goods will become imports and exports again, just as was the case before 1993. The main change is that this results in additional customs administrative requirements. And companies will have to claim back foreign VAT via a different procedure.
All posts on the Brexit can be found HERE.
March and April 2020
Covid-19 came into the picture. Governments take measures to stop the spread of the virus, including closing or limiting business activities. Many countries announce that they will compensate these businesses, including through tax measures and reliefs. Measures include extension of filing and payment deadlines and specific reliefs the importation and supply of medical products.
All posts on Corona measures can be found HERE.
The European Court of Justice gave many judgments again this year. The Dong Yang case (C-547/18) was one that raised high expectations from many VAT enthousiasts. It was the ECJ case that was most viewed on www.vatupdate.com in 2020.
Where the opinion of the Advocate-General gave a clear overview of the considerations as to when and how a supplier can determine if a recipient has a fixed establishment or not, the ECJ takes a different approach. To the surprise, or perhaps frustration, of many, the ECJ is not really making a new statement, other than “a subsidiary is not (always and automatically) a fixed establishment of the head office. Duh, we knew that already, as DFDS was always regarded an exception already.
As mentioned in one of the many comments “the conclusions of the CJ appear more nuanced than the quite straightforward approach taken by AG Kokott”. And “Dong Yang Electronics shows that despite its recent codification in Article 11 of the VAT Implementing Regulation, the notion of fixed establishment is a ‘case law-born’ concept, which evolves as long as the case law of the CJ itself evolves.”
June and July 2020
In June, Germany announced a VAT rate change as per 1 July 2020! This news was by far the best viewed topic on www.vatupdate.com this year. Although many other countries also implemented measures to reduce the financial burdens for businesses and citizens through exempting or zero-rating specific supplies, applying the reduced VAT rate to different goods or services, and reducing or changing VAT rates, the announcement that Germany would reduce its VAT standard VAT rate from 19% to 16% was quite unexpected.
The rate change was only temporary. As of 1 January 2021, the standard VAT rate in Germany will go back to 19% and the reduced VAT rate will go back to 7%. Don’t forget to adjust your prices and to start using the ‘old’ tax codes again!
In Jluy, Ireland follows with announcing a VAT rate reduction per 1 September 2020. The standard rate of VAT is decreased from 23% to 21% for the period 1 September 2020 to 28 February 2021.
All posts on VAT rates and rate changes can be found HERE.
Besides it being a very hot summer here in the Netherlands and Belgium, whilst being ‘stuck at home’, due to the Corona virus, there was also some VAT news.
Businesses in India must prepare for e-invoicing. Under the new system, business transactions will be authenticated electronically by the portals maintained by the government. The system would enable complete trail of B2B transactions, eliminate fake invoices, control over fictitious ITC claims, real time data access by tax authorities and ultimately, the reduction of tax evasion significantly. The first phase to be implemented on 1 October 2020, the second phase on 1 January 2021.
The set-up sounds similar to what is done in Turkey, but also countries such as Brazil or Portugal, who are working on digitalization already for some time.
All posts on electronic invoicing can be found HERE.
The deadline for EU businesses for claiming back VAT in other EU Member States is 30 September. But VAT refunds was not the main topic in September. VAT reporting was covered in many posts this month. Mainly because countries are introducing and implementing more and more digitized VAT compliance and automation of VAT Return filing and controls. Poland required the new JPK_VAT (SAF-T) files, Hungary announced new requirements for its real-time invoicing system, and India introduced auto population of details in GST forms. As with e-invoicing, governments are gaining on (and often overtaking) businesses when it comes to collecting data and information on transaction level in real-time.
All posts on VAT reporting can be found HERE.
October 2020 was the first month that we had more than 100.000 views on www.vatupdate.com! It’s amazing that our ‘hobby’ of creating an archive with VAT news that we initially made for our own personal use has grown so fast in 2,5 years. Making this website is fun and educational.
Our goal is to publish VAT news, create awareness and increase knowledge about technical as well as compliance topics and create a community of VAT experts. Independent, fast, complete, free and easy to use. The latter means that with the update of the site in October, we introduced a broader search function. This allows you to filter by country, topic or date, and you can type your own free text, to search in our news archive with more than 30.000 posts.
Please let us know what you think of our site and how you think we can improve our services to you. We love to hear your feedback. You can send us an email HERE.
The European Commission published its explanatory notes on the new VAT e-commerce rules already on 30 September. But in November, we covered quite a lot of e-commerce news. The VAT Expert Group had something to say about it and many countries were announcing the new rules. Not just in the EU, but also other countries were busy on e-commerce, such as India, Russia and the United Arab Emirates.
The implementation of the new rules and the One Stop Shop system has been postponed until 1 July 2021, and we expect that in this will be a hot topic for many months to come.
All posts on e-commerce can be found HERE.
We end the year almost as we started it: Brexit. A new and separate ISO Country Code for Northern Ireland and finally, a few days before Christmas: a deal! Although details are not known yet, it seems that the United Kingdom and the European Union have agreed that no customs duties will be charged on the importation of goods from each other’s territory.
Although there will certainly be a lot of issues that must be dealt with, also after 1 January 2021, the fact that there is actually a deal might give this topic finally some rest. We believe that in many companies, Brexit projects have been started, cancelled, started again, postponed, restarted, optimised, changed, stopped and started again, many times.
Trends and outlook
Our expectations for 2021 are simple: E-commerce, Brexit and Corona will continue to fill our posts at least for a couple of months. And we will continue to give you the case law of the European Court of Justice as soon as it comes out.
For 2021 we will be providing you with daily VAT and other indirect tax news as usual. We do this with lots of enthusiasm and pleasure and fun. And in order to bring you the latest news, fast, easy and free, we will be updating the website soon, allowing you to help us with making VATupdate the number 1 VAT news website.
The update will give you the opportunity to become our Friend or Sponsor, or to advertise your company or campaign. If you are interested in the possibilities, please send us an email at [email protected]
We also wish to use this space to say Thank You to all our contributors who have helped us with collecting and explaining VAT developments around the world. And of course we thank YOU, our visitor. And we wish everyone a very happy, succesful and healthy 2021!