TaxTech – Dec 10th, 2019

European Union updates

Global overview

European Union – Status update on Quick Fixes

In December 2018 the EU Council adopted three short legislative acts aimed at adjusting some of the EU’s VAT rules in order to fix four specific issues pending the introduction of a new VAT system.

The Quick Fixes aim to reduce the risk of VAT fraud, especially in cross-border transactions. The European Commission introduced new rules regarding the use of the VAT ID number for intra-Community supplies, the determination of the intra-Community supply in chain transactions, the necessary evidence for applying the VAT zero-rate and simplification of the call-off stock rules.

The Quick Fixes are to be implemented by the EU Member States into their national legislation by January 1, 2020, however not all EU Member States are there yet.

An overview of the current status of the implementation of the new rules by the EU Member States can be found HERE, and HERE

European Union – Changes in Combined Nomenclature

Nowadays, customs duties are hot, since the USA, China and the European Union are not only threatening to increase tariffs but also actually do it.

The European Union publishes an update of the changes to the so-called ‘Combined Nomenclature’ every year. The latest update, effective January 1, 2020, has just been published and includes changes that have been agreed upon at an international level over the last year. For example, chapters 84, 85, and 90 (mainly dealing with technology products), have been modernised and simplified.

More information and a link to the updated document can be found HERE.

European Union – Treatment of educational events

Earlier this year, the European Court of Justice explained in the Srf konsulterna-case (C-647/17) that an organisation that organises accounting and management courses in the form of seminars for its members is providing educational services. These educational events are subject to VAT in the country where they take place.

The case has worried quite some people, as the judgment results in many event-organisers to register for VAT abroad, in the EU country where they organise their events.

The EU VAT Committee has published its considerations on this case, based on questions raised from Sweden. The Committee describes, amongst other things, questions such as the length of a course of training to qualify as an ‘event’, and if training or course is still an event if it has been customised to the customer’s wishes.

Even though the VAT Committee does not give its opinion (yet), it’s worthwhile reading it. The full document can be found HERE.

Argentina – Withholding of VAT on e-commerce transactions

Argentina has been renewing its tax system over the past years. Most recently, it has introduced new rules regarding the withholding of VAT and income tax on e-commerce transactions.

The new rules apply to parties that manage electronic payments and collections on behalf of third-party services, including through the use of mobile devices and/or any other electronic devices, including virtual ones.

The new rules effectively became applicable for payments processed from November 19, 2019.

More information can be found HERE.

China – Draft legislation new VAT rules

China issued a draft consultation paper concerning VAT as an initial step in the process of elevating the status of the VAT rules in China to a legislative format and harmonising the rules for both goods and services. Currently, many VAT rules in China are based on Bulletins, but it lacks a national VAT Law.

The consultation process for the VAT legislation is open until December 26 2019, after which time it is expected that the draft VAT law ultimately would be considered and approved by the National People’s Congress. The effective date for the VAT law changes is not stated, but it is expected to be submitted to the National People’s Congress in early 2020, after which draft implementation laws could also be prepared.

More information can be found HERE.

Germany – Public transport remains subject to the standard VAT rate

In most EU countries public transport is subject to VAT. Rates then vary from zero-rated up to standard rate.

In Germany, public transport rail fares for journeys of less than 50km are subject to the reduced VAT rate, with the remainder taxed at the standard VAT rate.

In April 2019, the German Minister for Transportation announced that he wanted to apply the reduced VAT rate on all rail transport. However, this month, a proposal to achieve this was voted down by the Upper House of the German parliament (Bundesrat). The German States represented in this house were concerned that they would be fiscally disadvantaged by the measure.

More information on the German decision can be found HERE.

Bahrain – Reverse charge

The VAT rules in Bahrain were implemented on January 1, 2019. The Bahrain tax authorities are informing taxpayers quite well, but some topics are always more difficult to grasp than others.

One of these topics includes the Reverse Charge mechanism, whereby the purchaser of certain services or goods is liable for reporting the VAT due on the transaction. In Bahrain, the reverse charge mechanism applies to the supplies of services and goods by a non-resident supplier to a resident taxpayer in Bahrain, also referred to as the import of services and goods.

More information on the reverse charge mechanism in Bahrain can be found HERE.

Global Overview

Global Overview

Comparative analysis on tax systems in 190 economies

This annual study from PwC and the World Bank Group compares national tax systems.

Now in its 14th edition, this year’s study looks at how advances in technology make paying taxes easier. With 15 years of data and comparative analysis on the tax systems in 190 economies, this study lets you see the impact of digital innovation around the world.

The study can be found HERE.

Technology Industry Outlook

Read an interview with Paul Sallomi, Deloitte’s Global, Technology, Media & Telecommunication industry leader, which discusses how cloud computing and artificial intelligence will once again dominate the technology headlines the coming yeat and 2020 could be a breakout year for edge computing.

The interview can be found HERE.

Happy Holidays from all the people here at VATBox.

Success and happiness for you and your loved ones.

Will see you again on January 7th 2020!


Remco Dewaerheijt

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