Quick fixes, which regulate certain rules for cross-border transactions within the European Union, will take effect from September. The Court of Justice of the European Union (CJEU) has ruled in three interesting cases. You will find out more in the latest VAT news.
Amendments to the VAT Act
From 1 September 2020, after long delays in the legislative process, the rules for intra-Community trade in goods will be changed on the basis of the so-called quick fixes amendment to the VAT Act. Further legislative changes in the area of value added tax are not expected until 1 July 2021, when the procedures for selling goods to final customers should be significantly modified and new obligations for the so-called internet platforms should be introduced.
Upcoming instruction of the GFD
The General Financial Directorate is currently working on information that should describe selected aspects of the application of the new rules of the VAT Act valid from 1 September 2020. The material should thus outline the so-called quick fixes rules and comment on the changes that were incorporated into the VAT Act in addition to the quick fixes (exemption of exports of goods, rules for the transfer of goods, etc.).
Meeting of the Coordination Committee of the GFD and the Chamber of Tax Advisers of the Czech Republic
At the beginning of September, preliminary discussions took place within the Coordination Committee between the General Financial Directorate and the Chamber of Tax Advisers of the Czech Republic. The following topics were discussed: the application of the rule for the transfer of a business in the case of the supply of leased real estate, the correction of VAT on bad debts, and the possibility of claiming a tax deduction in respect of supplies related to goods intended for export. The view of the General Financial Directorate is always stricter than that of the proposers of individual contributions. The next round of negotiations will probably take place in November 2021.
Judgements of the CJEU
Ruling C‑215/19 Veronsaajien illustrates the complexity of VAT application to server hosting services (lease of special refrigerated and ventilated cabinets for storage and connection of servers, including their monitoring). According to the CJEU, such a service cannot be exempted as the lease of real estate and the place of performance is not governed by the place where the real estate is located. However, as the CJEU points out, its conclusions may not always apply, depending on the infrastructure in which the server cabinets are located.
In case C‑374/19 HF, the CJEU described the effects of thwarted investments on the right to deduct input tax and pointed out that certain categories of thwarted investments may have a different regime. However, we do not believe that the ruling would significantly affect the view on thwarted investments in the Czech Republic, the dispute in the case was to a large extent specific.
In case C-665/19 BAKATI, the Advocate General of the CJEU laid out his view on how VAT may be refunded on goods bought in the EU and exported to third countries in personal luggage. We believe that the relevant opinion largely corresponds to how the refund is regulated by the Czech VAT Act.