Compliance Services

Inflation in the current market has a direct correlation with fluctuating VAT rates.  

The Netherlands has submitted an Initiative Bill, which would seek specifically to amend the OB Act 1968 and the BES Tax Act.  

Through this modification, it is expected that foodstuffs will then be included under Table 11 of the 1968 OB Act for 12 months after having come into force, which effectively means the application of a nil VAT rate under Article 9, paragraph 1, part b, OB Act 1968.  

The Netherlands is a compliant territory for Tungsten Network and we support all valid VAT rates in the country.  

Sweden has revised the VAT rate for books and newspapers to 6%.  

Certain conditions apply, including that the publication cannot be solely or mainly devoted to advertising, and cannot consist mainly of moving images or audible music.  

Sweden is a compliant territory for Tungsten and we support all valid VAT rates in the country. 

In Portugal, the following goods and services will now be subject to the reduced rate of 6%:  

• Canned fish and molluscs when the content of fish is at least 50%  
• Vegetal butter, drinks, and yogurts  
• The sale or repair service of bicycles. The sale of spare parts of bicycles, however, will be subject to the standard VAT rate (23%)  
• Access to direct broadcasting of concerts, theatres, amusement parks, museums, cinemas and similar events  
• Sale and installation of specific heaters and boilers that work with biomass  

• Pellets and briquets made from biomass.  

Portugal is a compliant territory for Tungsten Network and we support all valid VAT rates in the country.  

As inflation continues to surge across Europe, it is becoming more discernible that government responses are centred predominantly around their fiscal structures.  

Ireland’s fiscal policies, specifically its VAT rates, have taken on the following accommodations to allow for inflation:  

• Temporary reductions on gas and electricity from 13.5% to 9%, will be extended to 31 October 2023;  
• The temporary reduction on VAT on tourism and hospitality, from 13.5% to 9%, will be extended to 31 August 2023. 

These VAT cuts will come at some cost to the Irish government- 115 million Euros and 300 million Euros respectively, underlining the strategic value attached to government’s decision when implementing revised tax rates.   

The UK Plastic Packaging Tax, introduced in April 2022, showcased the UK’s initiative to deploy fiscal policies to serve the wider environmental agenda.   

More specifically to the north of the country, Scotland is now planning to introduce a Deposit on Returned single-use containers Scheme (DRS).   

The scheme will apply to single-use drinks containers. On purchase, a small deposit will be paid (20p), which will then be returned once the empty bottle or can is returned, thus incentivising the need to recycle.   

While seemingly simplistic, there are more complicated fiscal elements which need to be considered as part of the scheme, specifically, the VAT element associated with the scheme. Questions raised include the need to consider whether the extra charge will also need to consider VAT- or whether VAT will only become relevant if the original container was subject to VAT.  

We are expecting further clarification from Her Majesty’s Revenue and Customs (HMRC) in the Spring Budget but as per current timeframes, the scheme is set for an implementation date of August 2023.   

Tungsten will monitor requirements in respect of the scheme and consider our obligations in respect of it.  

Streamlining a cumbersome VAT process is often a central objective when drafting VAT laws. We have seen this recently in both Greece and Italy, who are offering re-filled VAT returns.   

Slovakia is introducing a new VAT law, which similarly aims to simplify the VAT process for taxpayers.  This will take effect from 1 April 2023 and will aim to make the VAT process more accessible and equitable for all taxpayers.   

Slovakia is a compliant territory for Tungsten and we will monitor any further e-invoicing changes in the country.  

Croatia’s e-invoicing drive has, to some extent, been overshadowed by its neighbouring countries, where plans for mandate implementations are developing with some speed. However, this month has marked a significant step in the digitisation of Croatia’s fiscal procedures, specifically with respect to e-reporting.   

The Croatian Tax Administration launched a new project referred to as Fiscalization 2.0, which will focus on the implementation of an e-reporting system for cashless transactions with an integrated e-Archive and advanced online bookkeeping system. This project will potentially impact the current e-invoicing, e-archiving and e-bookkeeping obligations in the country.  

For more information on the Fiscalization 2.0 project, you can refer to the publication available on the website of the Minister of Finance:   

https://www.porezna-uprava.hr/HR_projekti/Stranice/Fiskalizacija_2.0.aspx   

Brexit, which was implemented in 2020 and which ultimately sparked the UK’s departure from the European Union, presented multiple challenges from a fiscal perspective. One of the most significant challenges was the formation of what is commonly referred to as the Northern Ireland protocol.   

The Northern Ireland protocol provided that EU VAT rules on VAT will apply to Northern Ireland– which was always a contentious issue as by some this was viewed as creating a ‘hard border’ between Northern Ireland and the rest of the UK, which were subject to UK-specific rates. For Tungsten, this presented planning on multiple fronts, as transactions subject to the protocol required the insertion of an XI prefix, as opposed to the GB prefix previously used.   

The proposed Windsor Framework agreement modifies rules for movement of goods between Great Britain and Northern Ireland. A so-called ‘green lane’ is proposed for internal trade, which results in customs checks and surplus checks effectively abolished between the two.  

In other important changes:  

• The UK and Northern Ireland will share the same VAT rates  
• VAT rates can now be applied UK-wide  
• Goods between Northern Ireland and Republic of Ireland subject would be subject to a ‘red lane’, which effectively means that customs checks and additional checks between the two are maintained.   

The introduction of the Northern Ireland Protocol triggered multiple changes in the Tungsten system. Therefore, the reversal of these policies also means it is likely changes will need to be initiated in the Tungsten framework.   

It is important to note that the Windsor Framework Agreement provisions need to be agreed unanimously by the European Parliament, and we will closely monitor the approval of these changes and any changes we need to instil to remain compliant with the agreement.   

While 2022 and the start of 2023 has seen an explosion of fiscal-related policies specifically pertaining to an environmental agenda, fiscal policies intrinsically can also be linked to humanitarian disasters. Most discernibly, we saw this exemplified during the pandemic.   

Similarly, we can expect to see countries enact similar policies in respect of the recent earthquake in Turkey and Syria, which has sparked a significant humanitarian disaster in the region. Germany is at the forefront of such policies, and it has announced specific exemptions for victims of the earthquake.   

You can read more about the exemptions in Germany’s publication here.  

Tungsten is mindful of the upcoming VAT rate changes in Switzerland, expected in January 2024. 

While the VAT rate change may appear superficially straightforward, there are more practical and complex considerations that come with the introduction of new tax changes, such as when VAT rate are to be applied, etc.  

The Swiss government has published a comprehensive publication including information relating to the application of the new VAT rates, which can be accessed here.  

While the VAT rate change may appear superficially straightforward, there are more practical and complex considerations that come with the introduction of new tax changes, such as when VAT rate are to be applied, etc.  

The Swiss government has published a comprehensive publication including information relating to the application of the new VAT rates, which can be accessed here.