VAT News [December 2020]

The definition of intangible assets will probably change within the framework of the tax package. The VAT rate for municipal waste treatment for further use could be reduced to 15%. The Court of Justice of the European Union issued important VAT-related decisions. Read the last VAT News of this year to learn more.

Amendments to the VAT Act

Within the scope of the legislative changes connected with the forthcoming tax package, the definition of intangible assets should be modified for the purposes of the VAT Act. This could especially affect tax deduction according to the method of use or the area of internally developed assets. In addition, the VAT rate of municipal waste treatment for further use should be reduced to 15%.

Judgements of the CJEU

  • C-488/18 Golfclub Schloss Igling

In case C-488/18 Golfclub Schloss Igling, the Court of Justice of the European Union issued a rule that could affect the option given to non-profit organisations to exempt services closely linked to sport in accordance with the VAT Act. It is apparent that the correct setup of formal conditions according to statutes of the given entities (apart from the status quo) is essential.

  • C‑734/19 ITH Comercial Timişoara SRL, C-42/19 Sonaecom, C-791/18 Stichting Schoonzicht

Cases C‑734/19 ITH Comercial Timişoara SRL, C-42/19 Sonaecom and C-791/18 Stichting Schoonzicht are closely related to the VAT deduction claim in situations where purchased inputs were not used as expected (whether it is a definitely thwarted investment or a change in the use of the given inputs). On the one hand, the CJEU emphasises the right of the entrepreneur to take risks and not to bear the VAT value only due to their erroneous decisions; on the other hand, the CJEU accepts the idea that the related VAT deduction must be reduced during the first year of input use, if such use no longer constitutes a right for VAT deduction.

  • C-703/19 J. K.

In his opinion on case C-703/19 J. K., the Advocate General of the CJEU described how restaurant services should be viewed and differentiated from mere delivery of goods (food). This description suitably complements the information issued by the General Financial Directorate on this matter in June.

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