Compliance Category: Informations sur le taux de TVA/G(S)ST

Initiative Bill for Groceries

Inflation in the current market has a direct correlation with fluctuating VAT rates.  

The Netherlands has submitted an Initiative Bill, which would seek specifically to amend the OB Act 1968 and the BES Tax Act.  

Through this modification, it is expected that foodstuffs will then be included under Table 11 of the 1968 OB Act for 12 months after having come into force, which effectively means the application of a nil VAT rate under Article 9, paragraph 1, part b, OB Act 1968.  

The Netherlands is a compliant territory for Tungsten Network and we support all valid VAT rates in the country.  

 

Revised VAT rates for books and newspapers

Sweden has revised the VAT rate for books and newspapers to 6%.  

Certain conditions apply, including that the publication cannot be solely or mainly devoted to advertising, and cannot consist mainly of moving images or audible music.  

Sweden is a compliant territory for Tungsten and we support all valid VAT rates in the country. 

Broadening of goods subject to reduced rate

In Portugal, the following goods and services will now be subject to the reduced rate of 6%:  

  • Canned fish and molluscs when the content of fish is at least 50%  
  • Vegetal butter, drinks, and yogurts  
  • The sale or repair service of bicycles. The sale of spare parts of bicycles, however, will be subject to the standard VAT rate (23%)  
  • Access to direct broadcasting of concerts, theatres, amusement parks, museums, cinemas and similar events  
  • Sale and installation of specific heaters and boilers that work with biomass  
  • Pellets and briquets made from biomass.  

Portugal is a compliant territory for Tungsten Network and we support all valid VAT rates in the country.  

VAT rate extension

As inflation continues to surge across Europe, it is becoming more discernible that government responses are centred predominantly around their fiscal structures.  

Ireland’s fiscal policies, specifically its VAT rates, have taken on the following accommodations to allow for inflation:  

  • Temporary reductions on gas and electricity from 13.5% to 9%, will be extended to 31 October 2023;  
  • The temporary reduction on VAT on tourism and hospitality, from 13.5% to 9%, will be extended to 31 August 2023. 

These VAT cuts will come at some cost to the Irish government- 115 million Euros and 300 million Euros respectively, underlining the strategic value attached to government’s decision when implementing revised tax rates.   

Exemption for supplies for victims of Turkey and Syria earthquake

While 2022 and the start of 2023 has seen an explosion of fiscal-related policies specifically pertaining to an environmental agenda, fiscal policies intrinsically can also be linked to humanitarian disasters. Most discernibly, we saw this exemplified during the pandemic.   

Similarly, we can expect to see countries enact similar policies in respect of the recent earthquake in Turkey and Syria, which has sparked a significant humanitarian disaster in the region. Germany is at the forefront of such policies, and it has announced specific exemptions for victims of the earthquake.   

You can read more about the exemptions in Germany’s publication here.  

Revised VAT rates – further guidelines

Tungsten is mindful of the upcoming VAT rate changes in Switzerland, expected in January 2024. 

While the VAT rate change may appear superficially straightforward, there are more practical and complex considerations that come with the introduction of new tax changes, such as when VAT rate are to be applied, etc.  

The Swiss government has published a comprehensive publication including information relating to the application of the new VAT rates, which can be accessed here.  

While the VAT rate change may appear superficially straightforward, there are more practical and complex considerations that come with the introduction of new tax changes, such as when VAT rate are to be applied, etc.  

The Swiss government has published a comprehensive publication including information relating to the application of the new VAT rates, which can be accessed here.  

New SLIM 4 2024 package announced

Poland is a compliant territory for Tungsten Network, and we regularly monitor tax rate changes in the country with a view to ensuring our solution supports valid VAT rates in the country. Tungsten recently commented on the anti-inflation shield 2.0 measures in Poland, established largely in response to rising inflation in the country. The measures within this included tax rate changes, which were constantly subject to fluctuation given the unpredictable economic position of both Poland and the wider European market.  

Slim 4, a further set of tax measures, is similarly expected to churn further VAT compliance reforms in the country. No specific details as of yet have been announced as to the content of the package, but Tungsten will monitor any tax rate revisions that will be contained within it.  

Putting the VAT implementation on track

Qatar and all other GCC member states signed the Gulf Cooperation Council VAT Framework Agreement in November 2016. It calls for all Gulf states to introduce VAT and to establish national VAT laws in accordance with it.   

Qatar has previously planned to introduce the VAT regime in 2022, however this was pushed back due to inflation and financial complications caused by Covid-19. As the world recovers from Pandemic, Qatar is considering plans to implement a 5% VAT regime in the course 2023.  

VAT rate revisions

The ongoing inflation crisis has a direct correlation with the VAT rates that countries deploy.  

Germany has introduced the following VAT rate revisions: 

  • Temporary VAT reduction to 7% on energy supplies- specifically gas supplies, as well as supplies of heat via a heating network, effective 1 October 2022 to 31 March 2024 
  • Restaurant and catering services were subject to a reduced rate since the start of the Covid pandemic. The reduced rate of 7% has now been extended until 31 December 2023 
  • Subject to certain conditions, certain photovoltaic systems and their main components will be zero-rated from January 2023.  

Such policies serve to illustrate how societal issues and seismic events, such as inflation and the Covid pandemic, dictate VAT rates both in Europe and globally. 

Germany is a compliant territory for Tungsten Network and our e-invoicing solution supports all valid VAT rates in the country.  

 

Revised tax rates

The Polish government, via Ordinance No. 28048/2022, has introduced the following VAT modifications: 

  • The goods subject to 0% have now been altered; 
  • Specific goods subject to the 8% VAT rate, including those relating to soil fertiliser and soil product supply and acquisition, were due to have the 8% VAT rate expire as of 31 December 2024. For now, this VAT rate expiry date has been removed. 

 

Please refer to the Ordinance for further details.  

Extension of VAT exemptions for specific goods and services

Law 31651 in Peru has permitted VAT exemptions for a whole host of goods and services. The following list covers some of the goods and services afforded with new VAT concessions:

  • Sale or import of certain goods (certain fish and vegetables)
  • Public transportation services, with a few exceptions
  • Cargo transportation services
  • Live cultural shows

Law 31651 was due to expire on 31 December 2022 but has now been extended to 31 December 2025.

VAT and indirect tax measures in State Budget 2023

Law 31/2022, dated 23 December 2022 on the General State Budget for 2023, introduced multiple VAT changes, alongside other modifications. Changes include:

  • Amendments to the reverse charge on certain property related transactions and supplies of waste and scrap plastic and textiles;
  • changes to ‘use and enjoyment’ provisions;
  • new rules on claiming VAT bad debt relief.

‘Use and enjoyment’ provisions typically refer to the rule that determines the place of supply of a service, based on the use of such a service.

Royal Decree Law 20/2022, dated 27 December 2022, extends, until 31 December 2023, the 5% VAT rate on certain supplies of electricity, and supplies of natural gas, briquettes and pellets from biomass, and wood for firewood used as fuel.

The VAT rate on several basic food products has been temporarily reduced from 4% to 0%, and from 10% to 5% on olive and seed oils and pasta until 30 June 2023 (subject to certain conditions).

Finally, specified existing reliefs relating to Covid crisis have also been extended until 30 June 2023.

Extension of Covid – related measures

 

Countries are treading a delicate line as they endeavour to balance the costs incurred during covid and a post-covid recovery.

Despite the sharp decline of Covid and its impact, it is still seen to play an influential role in the fiscal measures countries execute.

The Canary Islands is still factoring Covid as part of its tax framework as it announced it will extend the reduced rate on face masks and gloves until 30 June 2023.

VAT proposed overhaul

We expect 2023 to be a critical year for countries signalling their intent to re-structure their VAT rates, as we enter a post-covid era and countries look to solidify their economic position after multiple volatile years in the financial sector, which was compounded by inflation in 2022.

The tax expert committee in Norway is exploring an overhaul of the VAT system in the country as we know it today.

Key points being discussed include:

  • The abolishment of reduced VAT rates and VAT exemptions – which intend to be replaced with a flat rate of 25%
  • The inclusion of the public sector in the VAT system
  • Digital services becoming subject to VAT.

These proposals are significant and will have profound implications for the fiscal VAT structure in Norway. Feedback via public consultation has been requested, which is expected to conclude in April 2023.

Norway is a compliant territory at Tungsten and we will follow developments, including the tax expert committee’s response to the public consultation. Our e-invoicing solution will support any new VAT rates confirmed by the Norwegian government.