A payment is not always treated as a consideration for services that are subject to VAT. To establish a taxable supply, there must be a direct link between the service and the consideration received for it. There is no direct link between a payment and the service if it is impossible to predict whether the consideration will be received. In its ruling C-713/21 (Finanzamt X) of 9 February 2023, the Court of Justice of the European Union (CJEU) assessed whether 50% of horse race cash prizes that is assigned to a stable owner should be treated as a consideration for a service chargeable to VAT. This article explores some of the legal niceties examined in the CJEU’s new ruling.
Cashback is one of consumer incentive programmes that are currently popular with manufacturers and wholesalers. This could involve a manufacturer (or a wholesaler) refunding a certain amount of money to the end consumer for buying goods they have manufactured (distributed). The refund may be a fixed price for a particular product or expressed as a percentage of the purchase value. A cashback may also occur as a discount coupon distributed by the manufacturer, which the end customer uses with the retailer, who then seeks reimbursement from the manufacturer. This procedure directly stimulates the end consumer’s choice because the manufacturer’s discount reaches him directly instead of being accumulated in the chain of traders. With many companies expanding their business beyond Latvia, a discount may also be granted to customers in other member states. This article explores whether a cashback made by the manufacturer (wholesaler) to the end customer affects the VAT payable by the manufacturer (wholesaler).
On 8 December 2022 the European Commission (EC) published proposals for amending the VAT directive (2006/112/EC) and Council Implementing Regulation (EU) No 282/2011. The proposals are designed to modernise the EU VAT system in the digital age, make it work for companies, and render it more resilient against fraud. The proposals also aim to address VAT issues caused by the platform economy.
There are various programmes out there aimed at increasing a company’s sales by raising the productivity of its employees joining the programme, by increasing customer loyalty etc. Cross-border programmes are also implemented in Latvia, and their tax issues are very topical as well as complicated. This article explores employee incentive programmes in the light of a recent VAT ruling from the Court of Justice of the European Union (CJEU).
Deducting input VAT, particularly on capital goods, is based on their intended use for taxable supplies. Intentions sometimes fail to materialise, raising the question of whether the taxable person becomes liable to repay the VAT deducted earlier. This question was handled by the Court of Justice of the European Union (CJEU) in Ruling C-293/21 of 6 October 2022. This time the CJEU examined the need for adjustment if the taxable person did not use the acquired goods and services for making taxable supplies because the shareholder decided to liquidate the company. This article explores the CJEU’s findings and their practical implications.
A hire purchase is different from a lease in terms of various economic risks and VAT treatment. Although the customer is allowed to pay the purchase price by instalments, the supplier is liable to calculate and pay VAT on the entire amount of the transaction. This VAT treatment is not new, yet we have had to deal with situations where a taxable person has missed this important difference or finds it difficult to determine what kind of transaction is in fact taking place. This article explores key differences between the two transactions for VAT purposes.
To pick up where we left off about “contributions in kind” and VAT last week, this article explores a less common form of business – limited and general partnerships that make a “contribution in work” under a partnership agreement.
Every now and then corporate groups decide to undertake a strategic restructuring of their assets, including a transfer of assets to one or more group companies for financing another activity. Using a contribution in kind to increase a company’s share capital raises a number of important legal and tax issues. In this article we will explore whether a contribution in kind attracts VAT, as well as assessing the need to adjust the input VAT deducted on the contribution and the right to deduct the input VAT on services acquired for the contribution, such as expert valuation services and legal advice.
Latvian taxable persons may recover VAT paid on goods and services acquired in other EU member states. This is done under Council Directive 2008/9/EC, i.e. VAT is refunded to taxable persons that are not doing business in the member state of refund but are doing business in another member state. Latvian taxable persons may apply for a VAT refund from other member states for 2021 by 30 September 2022.
On 19 July 2022 the Regional Administrative Court ruled on a case in which a taxpayer sought compensation for a loss and non-pecuniary damages resulting from an unlawful audit decision issued by the State Revenue Service (SRS) and overturned by the court. This article explores what losses (expenses) the court considers reimbursable and what the court evaluates in determining whether particular expense items can be reimbursed.
The first article of our NFT series presented an overview of NFTs and analysed the Spanish tax authority’s finding that NFT is a service supplied electronically between its creator and the customer. This article explores how to determine what national VAT should be charged on NFT supplies and where the place of supply of electronic services is.
Non-fungible tokens (NFTs) have really taken off in recent years. While it might seem this technology has emerged very recently, Kevin MacCoy and Anil Dash created the first known NFT, Quantum, back in 2014. More interest in NFTs didn’t arise until six years later, when the NFT market value reached US$250 million. The market interest in NFTs grew in 2021, when US$41.3 billion was invested in the NFT market over a span of six months. Yet despite such an impressive growth in popularity, we often hear questions like what is NFT, where is it used, and how would it be taxed? This series of articles explores the idea of NFT and the VAT treatment of NFT transactions in the EU.
