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TaxTech – Oct1, 2019

TaxTech – Oct 1st, 2019

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France – Mandatory e-invoicing

France will oblige business to use electronic invoicing for B2B transactions starting in January 2023. This will include a pre-approval clearance of the sales e-invoices via the government’s Chorus Pro Portal before being sent to the customer. This is already in operation for B2G invoices.

France’s system follows the new rules that will apply in Portugal from 1 January 2020, and existing practices such as the SII rules in Spain and the e-invoicing systems in Hungary and Italy.

The withdrawal of paper invoices is included in the latest finance bill. The French are also proposing to introduce pre-completed VAT returns in 2023, based on e-invoices submitted

It is not yet clear how cross-border transactions or non-resident taxpayers will be treated.

More information can be found HERE.

United Kingdom – Importation after Brexit

The Brexit-date is getting near. Again. Different options are still open, and odds change by the day, but without having certainty, all business can do is to prepare for the worst. Which means that businesses will have to (re-)check if everything is in place for a hard Brexit. The biggest change for VAT is that good transaction between the UK and EU no longer qualify as intra-Community transactions, but ‘regular’ imports and exports.

The UK authorities released an update of the guideline for businesses that import goods into the UK after the Brexit.

Guidance can be found HERE.

European Union – Holding companies and VAT

One of the first questions for VAT is whether a company can be regarded a taxpayer or not, and thus in principle should charge VAT on its supplies, but at the same can deduct or recover input VAT on its purchases. Specifically for holding companies, who typically would only hold shares in another company, this questions is relevant, since lots of debate has already taken place how to qualify the activities performed by holding companies if any.

The European Court of Justice has judged many times on whether or not a holding company can be regarded to be a taxable person, and whether or not its activities are taxable or not. We found an interesting article in which the different ECJ cases are described.

The article can be found HERE.

Japan – Rate increased from 8 to 10 per cent on October 1, 2019

As of October 1, 2019, Japan will increase the consumption tax rate from 8 to 10 per cent. As with all VAT rate changes, questions arise how businesses should deal with transactions that are performed before the rate change, but invoiced and paid for afterwards or the other way around.

Japan has made it clear that for subscriptions, entrance fees and similar services that are to be performed or enjoyed after October 1, 2019, businesses must already charge the new rate of 10 per cent. Even if the payment is received before that date.

Japanese consumers are not happy with this, as can be read HERE.

United States – Import tariffs for European origin goods increased

The United States has been permitted by the World Trade Organisation (WTO) to implement additional tariffs on products of EU origin. The United States announced such increases already, as a response to government aid given by the EU to aeroplane manufacturer Airbus.

In the past couple of months, the relationship between the USA and the EU have known some incidents, including the implementation of the digital sales tax in France, which according to the US, mainly hits US-based online sellers and platforms.

The impact of the new tariffs is uncertain, EU sources expect additional duties on a range of goods worth between 5 and 7 billion US dollars. President Trump has threatened tariffs on 11 billion US dollars of goods. of the month.

More can be read HERE.

European Union – Judgments of the European Court of Justice

The ECJ gave its judgment in case C-700-17 (Wolf-Henning Peters). This case deals with the VAT exemption for medical activities.

The Court is being asked if the definition of ‘medical care’ is limited to ‘real’ medical activities, or if it also includes ‘related clinical activities’, where there is no direct relationship between a patient and a medical specialist.

Peters is a doctor, established in Germany, specialised in clinical chemistry and laboratory diagnostics. He provided medical care services to a company that, in turn, performed laboratory work for independent doctors, rehabilitation clinics, medical services and hospitals.

Peters did not submit a VAT Return because he considered that his services were exempt from VAT. The German tax office, on the other hand, considered that the VAT exemption only applies if there is a relationship of trust between the doctor and the person treated. This condition is not met for services provided by clinical chemists and laboratory doctors.

The European Court of Justice ruled that Peters’ activities do fall under the VAT exemption. A literal interpretation of the text of the VAT exemption does not exclude the activities of medical care services provided by a medical specialist in clinical chemistry and laboratory diagnostics.

A summary of the case can be found HERE.

See you in two weeks!

 

VATBox Tax Knowledge team

taxknowledge@vatbox.com

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