VAT News [March 2020]

What is new in the VAT legislation? What information has been issued by the General Financial Directorate (GFD)? How did the Court of Justice of the European Union (CJEU) decide on the VAT exemption in relation to services provided on a customer service line? The answers are provided by the latest VAT news.

Amendments to the VAT Act

The Ministry of Finance presented an amendment to the VAT Act to the external comment procedure; the amendment could fundamentally change the rules for the delivery of goods in the form of dispatch from next January. The amendment should mainly target imported goods up to the value of EUR 150 and goods sold within the European Union by third-country individuals. The amendment is only at the very beginning of the legislative process.

Another amendment to the VAT Act, which was supposed to introduce new rules to the intra-Community trade from 1 January 2020, has not yet been approved by the Chamber of Deputies.

Information from the General Financial Directorate

In the context of the reduction in the VAT rate for selected transactions from 1 May 2020, the GFD issued information commenting in more detail on certain areas. It comments on the application of the 10% tax rate to restaurant services, describes the conditions for applying this rate to digital publications or to the delivery of hot water via water mains. In all of these cases, the GFD advocates an extensive interpretation of the VAT Act, which in our opinion is not consistent with its literal wording.

Individuals from third countries who export purchased goods from the European Union should be refunded, under certain circumstances, the value added tax by the respective sellers according to Section 84 of the VAT Act. The new information of the GFD points out that the standard procedures may change as the customs authorities confirm the exit of goods from the European Union electronically.

Case law of the CJEU

In case C-48/19 X GmbH, the Court assessed a possible VAT exemption in relation to services provided on a customer service line. The customer could discuss his health condition with operators who then provided him with an appropriate health recommendation. According to the Court, the method of communication does not matter; services considered as medical care may be exempt from tax if general conditions of the VAT legislation are met.

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