NEWS & UPDATES

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Online market VAT changes in the pipeline for when Britain leaves EU Single Market

May 2020 : The Government has announced a consultation that could significantly impact the VAT accounting treatment for online marketplaces and possibly delivery agents. The issue is part of the alignment of how EU and non-EU goods will be treated after the UK leaves the EU Single Market and Customs Union on 1 January 2021. It is being proposed that for online consumer sales by overseas suppliers via a marketplace (such as Amazon or eBay) the obligation to account for VAT will shift from the supplier to the marketplace.

Where a marketplace is not used but the goods are sold directly to UK consumers from the seller’s own website, the seller will remain responsible for the VAT. However, HMRC is looking at ways in which the delivery agents (such as Royal Mail, DHL, UPS, etc) can police the VAT system and ensure that their overseas customers are registered and accounting for VAT correctly.

Italy withdraws VAT rise to 25%

14 May 2020 : Italy has withdrawn a planned increase in its standard VAT from 22% to 25% on 1 January 2021. The plan was for the current standard rate of 22% to rise to 25% in January 2021, and then to 26.5% in January 2022.

There would also have been an increase in the reduced rate of 10% to 12% in January 2021. The increase had originally been scheduled in the 2019 Budget Law for 1 January 2020.

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Germany

5 June 2020 : The German Government has announced guidance of the temporary VAT rate cut from 19% to 16% from 1 July until the end of 2020. The reduced VAT rate is also to be cut from 7% to 5%. Restaurant, café and other catering services will enjoy a VAT rate cut from 7% to 5% between 1 July 2020 and 30 June 2021.

France : Appointment of a tax representative

10 September 2019 : Since your company is established outside of a European Union Member State, you must appoint a tax representative, who must be a taxable person liable for VAT established in France, and who is known to the tax authorities. You must provide a power of attorney, signed by your company and your representative, which authorises the representative to file claims on your behalf (see the example in form no. 3560 B).

You should be easily able to find the contact details for a tax representative in an online telephone directory.

Your representative must be approved by the VAT refund department.

To obtain this approval, your representative must submit a written request to the department, together with your appointment and his or her acceptance. The representative must:

  • Commit to paying VAT on your behalf in the case where you have received an undue reimbursement.
  • Be impeccably honest in matters of taxation.

The granting or refusal of approval will be notified in written form to your representative. This approval may be withdrawn at any moment if the representative fails to fulfil his or her personal obligations, or if he or she habitually submits refund claims that contain errors, or which run counter to the legislation in force.

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EU : The European Commission proposes to delay the 2021 VAT e-commerce package and OSS to July 2021.

The European Commission has proposed that the implementation of the 2021 VAT e-commerce package, which was due to come into force on 1 January 2021, should be delayed until 1 July 2021 in light of the global Covid-19 pandemic. At this time, the European Parliament is yet to agree the new start date. The European Council will then ratify this.

The new VAT measures includes the expansion of the Mini One Stop Shop (MOSS). 

This currently applies to business-to-consumer (B2C) supplies of telecommunications, broadcasting and electronic (TBE) services in the EU. Under the new One Stop Shop (OSS), this will include the distance sale of goods and any other services supplied B2C in the EU. In addition, abolishing Member State distance selling thresholds. Instead replaced with a new €10,000 EU wide threshold.

Also included as part of the package is the abolishment of the €22 VAT exemption for the import of low value consignments: and the introduction of the Import One Stop Shop (IOSS) for non-EU businesses.

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