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Value Added Tax

Value Added TaxValue added tax is an indirect tax on purchases of goods and assets by individuals and companies. This is another area....

Value added tax is an indirect tax on purchases of goods and assets by individuals and companies. This is another area where a lot of changes have been made during the past few years.

Value Added Tax

Taxable transactions:

  • VAT is levied on the sale of goods, the provision of services and the import of goods from outside the EU.

Rates:  

As from 13 January 2014, supplies of goods and services that are currently taxable with the standard VAT rate of 18% will be taxable with 19% and the reduced rate of VAT, which applies to hotel and restaurants, will be increased from 8% to 9%.

Examples of supplies that will be subject to the reduced rate of 9% as from 13 January 2014 include:

  • Restaurant and catering services
  • Hotel and tourist accommodation etc

Please note that the supplies of goods and services that fall under the zero VAT rate, are exempt from VAT or subject to the reduced VAT rate of 5%, will continue to have the same treatment for VAT purposes after 13 January 2014.  

Transitional provisions: Under certain conditions, taxable persons may have the right to choose which VAT rate to impose on the supply of goods affected by the changes in the VAT rate. These are as follows

  • When goods are supplied before 13 January 2014 and the payment is made and/or the invoice is issued after 13 January 2014, then the taxable person may apply the VAT rate of 18%
  • When a deposit is received before 13 January 2014 and the goods are supplied and/or the invoice is issued after January 2014, then the taxable person may apply the VAT rate of 18% only on the amount of the deposit received
  • In relation to the provision of services and where part of the service is provided before 13 January 2014 and part of the service is provided after 13 January 2014, the taxable person may charge 18% VAT for the part of the work that was performed before the change in the VAT rate and charge the new VAT rate (19%) for the part of the work that will be performed after the change in the VAT rate

Obligations of the taxable persons that are affected by the above changes: As per the provisions of the legislation, all taxable persons need to undertake a stock count of the products affected by the above VAT rate changes. The stock count needs to be both quantitative and qualitative. The stock count needs to take place at the end of the business day prior to the change in the VAT rates  

Credit notes for invoices issued before the VAT rate changes: In the case where credit notes are issued after 13 January 2014 and relate to invoices issued before that date, the VAT rate that should be applied to those credit notes is the rate that was applicable at the time of supply of the goods or the provision of service.

Registration:

The registration threshold for VAT purposes is 15,600 euro. For intra-community acquisitions of goods the registration threshold is 10,251 euro.

Filing and payment:

  • The deadline for the submission of quarterly VAT returns is the 10th of the second month following the relevant period.
  • Payments of VAT must be made by the same date.