In an earlier MindLink article we wrote about proposals for amending the value added tax (VAT) framework. The proposals mandate e-invoicing in cross-border transactions and require changes to how EU sales lists are completed. The proposals also place responsibility for collecting VAT on platforms through which transactions are made in the accommodation and transport sector, and the one-stop shop (OSS) scheme is to be expanded.
A recent ruling from the Court of Justice of the European Union (CJEU) addresses the VAT treatment of electricity supplied to users of electric vehicles (EVs) through a third-party network. The original proceedings involved a German company contesting the Swedish tax authority’s decision on electricity supplied in Sweden. The CJEU ruling emphasises clarity in VAT treatment and reinforces adherence to the VAT framework. In this article, we summarise the key arguments and facts the CJEU considered in its ruling.
On 30 September 2024 the Latvian Supreme Court issued Ruling No. A420226518 after hearing a Latvian company’s appeal against a decision from the State Revenue Service (SRS) and a ruling from the Regional Administrative Court. The dispute was over the results of a tax audit that questioned the company’s right to deduct input VAT when acting as intermediary in cross-border transactions. The SRS viewed the transactions as fictitious because the original seller (two unrelated Latvian companies) and the end buyer (a related Lithuanian company) had allegedly entered into a secret agreement. The SRS said the company was aware of that agreement and engaged in documenting the transactions as an intermediary to reduce the amount of value added tax (VAT) and corporate income tax (CIT) payable to the government.
We have read conflicting opinions from the State Revenue Service (SRS) on how financing from the State or EU funds affects value added tax (VAT). Persons receiving such funding should consider this issue carefully and may have to seek SRS approval for VAT treatment. To help you navigate this complexity, we will offer some guidelines based on the assessment made by the Court of Justice of the European Union (CJEU) in its ruling C‑87/23 of 4 July 2024. The case involves a dispute between the Latvian Information and Communications Technology Association (LICTA) and the SRS.
To pick up where we left off last week, in this article we look at proposals for amending the VAT Act, which include a move to direct application of 0% VAT to diplomatic and consular offices, update the conditions for registering a fiscal representative with the State Revenue Service (SRS) and ease the terms of the special VAT scheme for imports. We will also look at the margin scheme for second-hand goods and exemptions available to non-domestic taxable persons suppling goods in temporary storage.
As you may know, approval of the national medium-term tax policy guidelines, which was supposed to take place by 1 April 2024, has been delayed considerably. It’s not known for sure yet whether and how this will affect VAT treatment in future. However, the Ministry of Finance has drafted proposals for amending the VAT Act, aimed at passing the EU directive to ease the administrative burden on small and medium enterprises (SMEs) and to improve the rules for applying 0% VAT and the margin scheme for second-hand goods, works of art, antiques and collectors’ items. The amendments are to come into force on 1 January 2025. This article explores what we see as key changes.
Estonia has drawn up new taxation plans that will considerably change the financial landscape for businesses and people from 2025. This article looks at the proposed defence tax and motor vehicle tax, as well as other significant tax increases affecting various sectors.
In early July 2024, the European Commission (EC) published its annual report on tax policies across the EU. Value added tax (VAT) is one of the most important taxes in the EU accounting for about 7.5% of GDP and 18.6% of total EU tax revenue in 2022. This article explores the EC’s VAT findings.
In this article, we will explore how the courts ruled on a tax audit where the State Revenue Service (SRS) claimed the company under audit had wrongly deducted input VAT and misapplied a ratio. Although the SRS did not approve the company’s adjustments to its VAT returns and did not refund the VAT it had overpaid, the courts found the penalty and interest charged by the SRS to be justified. This case highlights important lessons for companies to avoid similar problems in the future.
On 8 May 2024, the EU Council published updated proposals for amending the VAT directive (known as VAT in the Digital Age – ViDA). The amendments are to be passed at an ECOFIN meeting on 21 June 2024. It’s likely that the original deadlines will be postponed and the member states will have to pass some of the amendments into their national laws by 1 July 2027, some by 1 July 2028 and some by 1 July 2030. This article explores key changes and the timeline.
Whether a taxable person transfers a business or makes a contribution in kind in exchange for shares, this is typically treated as a transaction outside the scope of VAT. However, the Latvian VAT Act does not resolve this issue conclusively, and this assumption comes from a logical assessment of the rules that require adjustment to input VAT deduction. The latest case law of the Court of Justice of the European Union (CJEU) has weakened the impression that a contribution to share capital is always a supply outside the scope of VAT. This article explores a recent CJEU ruling.
In this article we explore Ruling C-606/22 from the Court of Justice of the European Union (CJEU) on the entitlement to a refund of value added tax (VAT) where the taxable person has applied a higher rate of VAT than what the law prescribes. This ruling is important because it explains how the VAT directive’s principles should be applied in practice where a cash-register receipt has been issued to the customer, which is practically impossible to amend in order to show the correct rate of VAT and to refund the overpaid tax to the customer.
The Value Added Tax (VAT) Act prescribes a special scheme for charging VAT on supplies of second-hand goods. These include a variety of tangible items, such as cars, machinery, office equipment, furniture and other goods that are fit for future use in the same form with no modification or after repairs and that are not works of art, collectors’ items or antiques. A taxable person selling second-hand goods will normally charge VAT on the full price. However, certain supplies of second-hand goods can be exempt from VAT or taxable under a special scheme on the difference between the acquisition cost and the selling price (a margin scheme for second-hand goods as per section 138 of the VAT Act). This article explores what conditions have to be met before section 138 can be applied and when an exemption is available.
Companies are sometimes unsure whether a transaction affecting them qualifies as the transfer of a business as a going concern (TOGC). This is a crucial question in identifying a number of potential risks, including VAT liabilities. If a TOGC has occurred, the transaction is not subject to VAT if the acquirer is registered for VAT and continues a business that does not involve asset stripping or liquidating the company.
