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  • BDO Indirect Tax News - Issue 4/2022
Article:

BDO Indirect Tax News - Issue 4/2022

24 October 2022

Original content provided by BDO

BDO Indirect Tax News focuses on issues of practical importance in the field of VAT and similar indirect taxes, such as GST. Experts from all over the world provide first-hand information on recent developments in legislation, jurisdiction and tax authorities’ opinions and directives.

 

The Court of Justice of the European Union has been asked to rule on the VAT status of a member of the board of directors of a public limited company and the VAT treatment of remuneration in the form of “percentage fees.” The EU VAT directive is silent on the VAT treatment applicable to company management, resulting in a patchwork of rules on the VAT treatment of company board members’ activities, as member states resort to different provisions in the directive to address this issue. Both parties raise compelling arguments in the case so it will be interesting to see where the CJEU decision lands.

In other news from Europe:

  • The CJEU has ruled that if a taxpayer fails to exercise its right to claim input VAT within the applicable domestic statute of limitations period (even advertently), the domestic rules governing VAT recovery cannot be used to take the deduction;  
  • Belgium has clarified the VAT treatment of the provision of furnished short-stay accommodation; 
  • The turnover threshold for VAT registration in the Czech Republic is being doubled;  
  • VAT compliance rules in Poland are being simplified;  
  • Spain has introduced mandatory e-invoicing for businesses and the tax authorities have issued a ruling on the VAT treatment of the sale/transfer of NFTs, concluding that they should be deemed to be a supply of electronically provided services subject to the standard VAT rate if the place of supply is in Spain; and  
  • The UK has revised its approach to compensation/early termination payments and now generally treats them as subject to VAT on the grounds that they constitute additional consideration for the underlying supply.  

In the Asia-Pacific region, India is proactively taking steps to become a USD 5 trillion economy; the Mauritius tax authorities have been granted expanded powers to allow them to deem a person to be registered for VAT purposes if the person is required to register for VAT but fails to do so and to publish details of VAT-registered and noncompliant persons; the New Zealand parliament is debating a broad-based proposal that would apply GST to the provision of short-stay accommodation, transportation and food delivery services via digital platforms and deem the platform operator to be the supplier for GST purposes. In advance of upcoming GST rate changes, the Singapore tax authorities have released guidance that addresses a variety of issues, including rules for transactions that span the dates of the rate changes.

State-level marketplace facilitator rules in the U.S. should be taken into account by facilitators considering doing business or currently operating in the country due to an evolving landscape of laws and compliance responsibilities. 

As noted in our Bytes column, countries worldwide continue to grapple with inflationary pressures and spiralling energy prices, with governments reducing VAT rates and customs and excise duties to relieve the burdens on their populations. Aruba has deferred the introduction of a VAT regime for at least a year and instead has decided to increase the turnover tax rate.

In this edition: 

  • Aruba: Implementation of new VAT regime postponed
  • Belgium: New VAT rules for hotel services and rental of furnished accommodation
  • Czech Republic: Threshold for mandatory VAT registration to increase
  • Egypt: Changes to VAT rules include some relaxations
  • European Union:
    • Luxembourg: CJEU to rule on VAT treatment of director fees
    • Netherlands: CJEU clarifies Dutch rules on VAT deduction via the adjustment mechanism
  • India: Strategy to become a USD 5 trillion economy
  • International: Indirect tax bytes
  • Mauritius: Tax authorities publishing information on VAT payers
  • New Zealand: Measures proposed to bring operators of electronic marketplaces within the scope of GS
  • Poland: VAT simplification measures under consideration
  • Singapore: IRAS publishes guidance on GST rate change and transitional rules
  • Spain: 
    • NFTs treated as electronically supplied services for VAT purposes
    • General e-invoicing obligations to apply to B2B transactions
  • United Kingdom: New approach to VAT treatment of compensation/termination payments
  • United States: Watch out for marketplace facilitator compliance obligations

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