VAT Newsletter – fourth quarter 2023

Attached please find the VAT newsletter for the fourth quarter 2023 highlighting the latest developments in the field of VAT in Austria, Bulgaria, Croatia, Czech Republic, Germany, Hungary, Poland, Romania, Serbia, Slovakia and Slovenia.

Austria

CASE LAW

• Invalid VAT number harms triangulation (Art 25 Para 4 Austrian VAT Act)
  • The simplification rule for triangular transactions cannot be applied if the recipient’s VAT ID number is invalid, as this leads to an incorrect invoice and the material requirements are not met (Federal Tax Court, 26.6.2023, RV/7104948/2019).
• VAT refund procedure (Sec 12 and Art 7 Austrian VAT Act)
  • The VAT refund procedure does not apply if VAT is issued on an invoice although the transactions could have been treated as tax-exempt intra-Community supplies, because there is a risk that VAT will be refunded twice if the invoice is subsequently corrected (Federal Tax Court, 1.8.2023, RV/2100240/2021).
• Tax exemption for private educational institutions (Sec 6 Para 11 lit a Austrian VAT Act)
  • Private educational institutions for children can only apply the tax exemption according to Sec 6 Para 11 lit a if they pursue an objective comparable to public schools and have a proof of official certification within the meaning of Sec 1 no. 7 and 9 UStBLV from anywhere in the EU (Supreme Administrative Court, 6.9.2023, Ro 2021/15/0021).
• Requirements for the TOMS regime (Sec 23 and Sec 6 Para 1 no 11 lit a Austrian VAT Act)
  • Various services in a bundle offered by a language school (e.g. German course including accommodation, excursions and museum visits) do not qualify as single supply of services that may fall under TOMS regime (Supreme Administrative Court, 20.9.2023, Ra 2021/13/0150).

Bulgaria

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• As of 1 January 2024
  • Precision of the provisions governing the adjustments upon destruction, shortages and retirement of goods.
• As of 1 January 2025
  • Increase of the threshold for mandatory VAT registration from BGN 100 000 to BGN 166 000 (Link).

Croatia

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• As of 1 January 2024
  • Taxable persons have the right to reduce their output VAT based on performed supplies in cases of inability of partial or full collection of receivables, when more than one year has passed since the receivable due date and further conditions are fulfilled (such as suing the debtors or initiating enforcement procedures, informing the Croatian Tax Authorities of the performed corrections etc) (Link).

Czech Republic

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• As of 1 January 2024
  • Amendment to the VAT Act which is part of the Consolidation and austerity Package is final with the following amendments:
    • Two reduced VAT rates (15 % and 10 %) are merged into one single reduced VAT rate (12 %).
    • Certain goods and services are moved from reduced VAT rate(s) to standard VAT rate.
    • Supply of books is considered as a VAT exempt supply.
    • Limitation of the right to tax deduction for vehicles with a value of more than CZK 2 Mio (Link).

CASE LAW

• Invoice corrections (Credit notes) rejected by the recipient cannot be used for the reduction of the original taxable amount and lead to criminal offence of tax evasion (Decision of the Supreme Court 3 Tdo 952/2022, Link).

Germany

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• As of 1 January 2024
  • Extension of the VAT exemption for the management of all alternative investment funds under Sec 1 Para 3 KAGB (Alignment with the VAT regulations in other EU member states such as Luxembourg) (Sec 4 no 8 lit h German VAT Act).
• As of 1 January 2025
  • Mandatory electronic invoicing for B2B transactions where both supplier and recipient are based in Germany (Sec 14 German VAT Act) (Drucksache 20/9341 dated 15 November 2023).
    • However, invoices can still be issued in paper or unstructured electronic form during a transitional period until 31 December 2026 (Sec 27 Para 39 no 1 German VAT Act).
    • Transition period for small taxable persons with a previous year’s turnover of less than EUR 800,000 until 31 December 2027 (Sec 27 Para 39 no 2 German VAT Act).
  • Classification of certain invoice formats (XStandard/ ZUGFeRD) and EDI procedure (see letter from the German Ministry of Finance dated 2 October 2023).

Hungary

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• As of 1 January 2024
  • For activities relating to immovable property, reverse-charge applies if the activity is subject to authorisation or notification to the authorities. By the new rule the service provider must make this declaration if the work requires a license or notification to the authority (Act CXXVII of 2007 – on Value Added Tax 142. § (1) b).
  • Launch of the new electronical VAT return system (eVAT) for all VAT-registered tax-payers (established and non-established) in Hungary, which will be voluntary until 2026 (Act CXXVII of 2007 – on Value Added Tax 184. §).
• As of 1 January 2025
  • The place of supply of online-events for B2C will be deemed to be where the non-taxable person using the service is established (Act CXXVII of 2007 – on Value Added Tax 43. § (3).
  • A reseller established in Hungary may use margin taxation even if he acquires the work of art directly from a taxable person who is not a reseller, provided that the standard tax rate applies to the supply or import of the works of art, collectors‘ items or antiques (Act CXXVII of 2007 – on Value Added Tax 220. §).

Poland

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• As of 1 July 2024
  • Changes to the information contained in the JPK_VAT file (Polish VAT SAF-T), which aims to align the file with the mandatory e-invoicing where all B2B invoices will be issued in the National e-Invoicing System (KSeF) from 1 July 2024 (Link).

TAX AUTHORITIES’ PRACTICE

• The provision of online services related to the sale of language courses offering expert support does not qualify as an electronic service because it requires the active participation of people. The place of supply of online language teaching services (B2C) depends on the actual location of the experts providing the courses (Link).

CASE LAW

• Different VAT rates on the same product
  • The provisions of the VAT Directive allow applying two different reduced VAT rates to supplies of goods or services belonging to the same category, since there are differences in the preparation and consumption of the goods (ECJ C-146/22 YD v. Dyrektor Krajowej Informacji Skarbowej, Link).
• Removing the taxable person from the register
  • Removing the taxable person from the register of active VAT taxpayers does not require any judicial proceedings (I FPS 3/23 – Resolution of the Supreme Administrative Court, Link).

Romania

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• As of 1 January 2024
  • Mandatory e-invoicing for all B2B transactions with a 3-month grace period for the application of fines (Law 296/2023 with amendments to the Fiscal Code and Government Ordinance 120/2021).
  • Increase of VAT rates from 5 %/9 % to 9 %/19 % for food and beverages, green energy solutions, construction services, entertainment and sports services etc (Law 296/2023 Law 296/2023 with amendments to the Fiscal Code).
  • Persons who have obtained an authorized economic operator certificate („AEO“) can no longer defer the payment of VAT to customs only on the basis of AEO (Government Emergency Ordinance 115/2023).

MEASURES FOR COMBATING VAT FRAUD

• E-seal for carriers and e-TRANSPORT monitoring
  • Introduction of new systems for monitoring of (i) national transport of goods solely on the Romanian territory (Law 296/2023) and (ii) international road transport of goods via RO e-Transport (Government Emergency Ordinance 115/2023).

Serbia

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• As of 1 September 2024
  • VAT payers are obliged to electronically report the VAT calculated in the previous phase of supply and importation (Official Gazette of the Republic of Serbia” – issue No. 92/23, dated 27 October 2023).
• As of 1 January 2024
  • The deadline for record of output VAT within the system of electronic invoices is shifted from 15th of the following VAT period to 10 days after the end of the VAT period (Official Gazette of the Republic of Serbia” – issue No. 92/23, dated 27 October 2023).
  • Taxable persons are obligated to submit a VAT evidence book of all supplies related to goods carried out abroad in the personal luggage of travellers within 7 days of conclusion of each VAT period (Official Gazette of the Republic of Serbia” – issue No. 96/23, dated 2 November 2023).

Slovakia

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• As of 1 July 2024
  • VAT deduction from iC acquisitions even without an invoice, provided the iC acquisition can be proved with other documents.
  • Decrease of the threshold for issuing simplified invoices to EUR 400 excl VAT.
  • The place of supply for virtual events to taxable persons will be determined according to the general B2B rule.
  • Increase of standard VAT rate to 22 % and abolishment of most reduced VAT rates.

TAX AUTHORITIES’ PRACTICE

• Methodical guidelines regarding the rules for the supply of gas, electricity, heat and cold related to the import of these goods, place of supply, fixed establishment (branch) of a foreign person and person liable to pay VAT (Link).
• Update of the guidelines regarding the taxation of the supply and acquisition of new vehicles within the European Union (Link).

Slovenia

AMENDMENTS TO THE VAT ACT/FISCAL CODE

• Since 2 September 2023
  • Introduction of a special lower VAT rate of 5 % for supplies of specific kind of goods (e.g. typed fire engines, special protective and rescue equipment, tools for performing firefighting tasks), which is only applicable for supplies to public or volunteer fire brigades (Official Gazette RS no. 95/2023, on September 1, 2023 Link and no. 98/2023, September 15, 2023 Link).