News in VAT - change in rates, further amendments
Change in VAT rates from 1 May 2020
Although the final stage of electronic records of sales (EET) has been suspended, the respective amendment of the VAT act, reclassifying selected performance into the second reduced tax rate took effect as of 1 May 2020. A number of these changes will only effectively apply, as the economy will gradually be eased.
Application of the second reduced 10% VAT rate newly applies to the following commodities:
- electronic books, brochures, leaflets, newspapers, magazines on physical media, in which promotion does not exceed 50% of content;
- electronically provided books, brochures, leaflets, newspapers, magazines etc., to which, as goods on physical media, the second reduced VAT rate of 10% applied, including their disclosure;
- potable water (only potable water suppled through the water supply system, including hot water made from potable water);
- treatment and distribution of water through networks, collection and purification of sewage waters (water fees and tap fees);
- food services including catering and serving of beverages, excepting alcoholic beverages (among which draught beer in barrels above 10 litres represents an exception, to which the 10% rate will also apply);
- lending of books, brochures, leaflets, newspapers, magazines etc.;
- cleaning services and window cleaning in households;
- home childcare, care for the elderly, for sick and handicapped citizens;
- repair of footwear, leather products, clothing and textile products;
- bicycle repair;
- hairdresser and barber services.
The VAT rates on beer and restaurant services are currently the most interesting for the media. In this context, we would like to point out that the second reduced rate cannot be applied in case of take-away consumption, which is considered a supply of goods, on which therefore the first reduced tax rate of 15% applies (with the exception of alcohol). In the case of alcoholic beverages, the basic tax rate applies always, the only exception being the above-mentioned draught beer among restaurant services.
Amendment with planned effect from January 2020
The implementing amendment on intra-Community supplies (parliamentary print no. 572), which implements for example new rules for supplies to consignment warehouses or for proving exemption in case of supplying goods to another EU member state, has not been approved yet (it is currently proposed as an item for the 3rd reading at the Chamber of Deputies).
The information from the General Financial Directorate therefore continues to apply, granting direct effect to the respective stipulations of the directive, while it is still possible to proceed according to the applicable, i.e. the current, stipulations of the VAT act.
Amendment with planned effect from January 2021
At the same time we would like to point out another amendment of the VAT act, which is being prepared, this time (for now) with expected effect as of 1 January 2021, which the Chamber of Deputies will begin to debate (parliamentary print no. 867).
This amendment again primarily implements a new EU directive for the area of VAT (Council Directive (EU) 2017/2455 and 2019/1995). In these aspects, the amendment mainly brings changes in the concept of sending goods (cross-border supplies of goods for persons not liable to tax), for which a unified limit is set for transfer of the place of performance to the country of the customer, and at the same time the use of the simplified one-stop-shop scheme for tax collection is enabled. It will also be possible to use this simplified regime for sending goods from third countries to the EU, while exemption of low-value goods import from VAT is being cancelled. The draft also stipulates some special rules for operators of e-commerce portals, who do not sell goods themselves. For all declarations that are part of the one-stop-shop scheme, the deadline for their submission is moved to the last day of the subsequent month following after the end of the taxable period, i.e. the calendar quarter, and the rules for corrections change.
The draft amendment also brings some other arrangements, however, beyond the scope of necessary implementation of Union regulations. According to our opinion, the main one is the newly stipulated obligation to return the applied VAT deduction in case of deregistering in a situation, when the taxable performance has not been paid by the time of cancelling registration, although the due date has already passed.
We will inform you about this amendment in greater detail in one of the upcoming issues of our newsletter.
If you have any questions or if we can be of assistance to you in these matters in any way, please, do not hesitate to turn to us, of course.