Proposed tax rate changes

The busy fiscal trajectory continues this year in Romania.  

The Romanian Tax Administration, ANAF (Agentia Nationala de Administrare Fiscala), is proposing a VAT rate increase in line with the following: 

  • Soft drinks: an increase from 9 to 19% 
  • In the hotel industry: the delivery of food and non-alcoholic beverages would increase from 5% to 9% 

Tungsten Network continually reviews its solution in Romania and supports all current valid VAT rates in Romania.  

Potential VAT reduction on fruits and greens

2022 has seen multiple countries adopting fiscal measures with a distinctly ‘green’ agenda. Such initiatives demonstrate that the VAT framework is intrinsically linked to broader social programmes.  

Belgium is following the lead of its European neighbours in engineering markedly ‘green’ measures.  

To this effect, the Green Party in Belgium has put forward a proposal to remove VAT on fruits and greens, citing, among other arguments, the spiralling cost of living fuelled by inflation.  

Proposed VAT rate increase

We previously communicated that Switzerland is proposing to increase its VAT rates.

To this effect, Switzerland will hold a further referendum to determine whether the VAT rate increase will be implemented.

Tungsten Network is monitoring any tax rates changes in Switzerland. Switzerland is a compliant market at Tungsten and our solution will support any new tax rates introduced by the Swiss government.

Tax rate changes from 1st July 2022

Greece is introducing a considerable number of tax rate changes from 1st July 2022. These are summarised below.

For the following goods, the rate is set at 6% until 30 June 2022 but will change to 24% from 1st July 2022:

  • Protective masks and gloves for medicine (to protect against viruses and prevent the transmission of diseases – hospital and private use)
  • Soap and other preparations for personal hygiene
  • Antiseptic solutions, antiseptic wipes and other antiseptic preparations
  • Denatured ethyl alcohol which is intended as a raw material to produce antiseptics
  • Pure ethyl alcohol of undenatured agricultural origin with an alcoholic strength of 95%, available bottled for retail sale.

The following goods are currently set at 13% until 30 June 2022 ; this rate will be extended until 31 December 2022:

  • Non-alcoholic beverages. The rate of tax on goods of these tariff classes was previously set at 13%.

The following items are set at 13% until 30 June 2022 and will be set to 24% starting from 1st July 2022:

  • The introduction of objects of art, collections or antiquities
  • The delivery of specific objects of the artistic value

Relating to specific services, rates can be observed as per the following:

  • Movie tickets are set at 13%
  • Tickets for theatrical performances and concerts for which the tax rate is set at 6%
  • The carriage of persons and their luggage are set at 13%
  • Tickets for zoos set at 13% currently
  • The operation of cafes, cafes, patisseries, restaurants, steakhouses, wineries and other related businesses, with the exception of entertainment establishments, with the exception of the supply of beverages containing alcohol in any proportion are also set at 13%.

All the above-mentioned services receive the extension until 31 December 2022.

Extension of reduced VAT rates

Inflation continues to soar across Europe, driving governments to address their fiscal operations and enact temporary VAT cuts.

Considering rising inflation across the country, Italy has further extended the temporary VAT reduction on gas until 30 September 2022.

Extension of VAT rate reductions

Anti-inflationary shield 2.0 was introduced to reduce the VAT on certain products and therefore reduce the burden on taxpayers considering recent inflation, which continues to spiral unabated across Europe.

The initial timeline for the reduced VAT rates in Poland within this initiative was due to expire on 30 June 2022. This has now been extended to 31 October 2022.

Potential upcoming VAT changes

The fiscal trajectory in 2022 has been a busy one for Romania as it grapples with a partial e-invoicing mandate and multiple tax rates changes.

The Ministry of Finance has opened a consultation which proposes an increase in tax rates from 1st January 2023, in line with the following:

  • Fizzy drinks reclassified from 9% reduced VAT rate to standard 19% rate
  • Hotel and similar short-term accommodation raised from 5% to 9% reduced rate
  • Catering services, cafés and restaurants reclassified from 5% reduced rate to 9% for food and non-alcoholic drinks
  • 5% reduced rate on a range of small dwellings.

Romania is a compliant territory in Tungsten Network and we will continue to monitor and support any new tax rates in the country. The Tungsten Network Web Form portal currently supports all valid VAT rates in Romania.

Extension of reduced VAT rate in the tourism sector

Over the past 2 years, we have seen many countries reduce VAT rates in the tourism sector. As we transition globally to a post-covid era, many countries are continuing to deploy such reduced rates.

Uruguay will continue deploying the reduced rate of 9% for certain tourist activities from 30 April 2022 to 30 September 2022, further to Decree No. 140/022.

Extension of certain VAT rates

Portugal’s 2022 budget has been approved in Parliament.

Amongst measures such as transposing certain VAT Directives for EU purposes and amending VAT compliance-related deadlines:

  • The reduced rate of 6% (5% in Madeira and 4% in the Azores) has been extended for:
    • Certain dairy-free products;
    • Repair services for domestic appliances;
    • Delivery and installation of certain solar panels.

This extension is due to expire on 30 June 2025.

VAT rate changes to combat rising inflation

Bulgaria has been deploying a range of fiscal measures to combat spiralling inflation in the country. In the past few months, Bulgaria has extended reduced rates and applied zero-rate VAT on certain products to reduce the burden on taxpayers.

The Bulgarian government has acknowledged the effect of rising inflation on taxpayers and has responded accordingly with an anti-crisis fiscal package.

Significant fiscal measures within the package include:

  • VAT on bread reduced to 0%;
  • VAT on heating, hot water and natural gas for household consumers to 9%;
  • An increase in the VAT threshold registration – from BGN 50,000 to BGN 100,000.

The Bulgarian government has now accepted a bill to increase the VAT registration threshold in the country. Currently, the VAT registration threshold is set at BGN 50,000 (or 25,500 Euros).

The proposed VAT registration threshold would increase in line with the following:

  • 1st January 2023: BGN 100,000 (c. 51,300 Euros)
  • 1st January 2024: BGN 166,000 (c. 85,000 Euros)

New VAT-R form

There have been some significant changes on the VAT-R form in Poland.

The VAT-R is the form necessary to initiate VAT registration in Poland. Further to the two changes above, the form will now include the option to indicate that a particular taxpayer is part of a VAT group. The form also allows taxpayers to select whether financial services are taxed, or whether they are exempt from taxation.

An English version of the form is also available.

The new form came into effect from 1 July 2022. A transitional period has allowed taxpayers some flexibility and meant that the previous version could be used until 31 June 2022.

Saudi Arabia will consider reducing VAT “ultimately”

Saudi Arabia introduced VAT at a 5% rate in 2018. This was later tripled to 15% in 2020 to shore up finances hit by low oil prices, when the COVID-19 pandemic hit global demand.

The Saudi government has spent 1 trillion Riyals from the national reserves in the last five years. At the recent World Economic Forum 2022, the Minister of Finance, Mohammed al-Jadaan stated, “We will ultimately consider cutting the VAT but at the moment we are still replenishing the reserves”.

Additionally, the Minister has pointed out that the Kingdom is in the final stages of drafting its fiscal sustainability policy, which ensures the reverses do not fall below a certain percentage level of GDP.

Further extension of VAT rates on certain products

The post-Covid recovery appears to be slow in nature, as reflected through the extension of reduced rate many countries are deploying.

Greece has announced a third extension of the VAT rate on certain products, from 24% to 13%. These products include:

  • coffee;
  • transport;
  • non-alcoholic drinks;
  • cinemas;
  • gyms and dance schools; and
  • tourism packages.

The VAT rate was first reduced on 30 June 2020, and subsequently extended on 1 October 2021 and again on 30 June 2022.

The reduced rates are expected to last until 1st January 2023.

Potential 22% rate

Country VAT rates are under constant revision and review. The High Council of Finance in Belgium has indicated that it is contemplating increasing the VAT rate to 22%.

This is by no means definitive, but Tungsten Network will keep up to date with any developments and incorporate any new rates in our system.

Extension of reduced VAT rate for hospitality and tourism

As Europe enters a post-Covid recovery era, countries are conscious of the balance between promoting a return to previous rates and retaining reduced rates. Recent events in Ukraine and rising food costs have hampered the progress of countries who had hoped to return to pre-Covid fiscal measures.

To this effect, Ireland has extended the reduced VAT rate for hospitality and tourism through February 2023. This was initially scheduled to expire on 1 September 2022.

Tungsten Network supports all valid Irish rates on our portal.