Compliance Services

Belgium, Netherlands, and Luxembourg representatives have convened to discuss plans to reduce the VAT gap.

Although Continuous Transaction Controls (CTC) have proven to be extremely popular in the past few years, with a means to reducing the VAT gap, the VAT gap remains high- 134 million Euros was lost in revenue the EU in 2019.

Shared borders and economic interests between the 3 countries have prompted the countries to work together to reduce this gap yet further- a key factor in the implementation of e-invoicing mandates.

B2G e-invoicing is expected to go live in 2022, and B2B e-invoicing in 2023.

Considering the upcoming e-invoicing mandate, the Serbian Ministry of Finance has published some new documents. These outline the final specifications of the application interface for the e-invoicing system.

XML formats based on the UBL 2.1 standard will be available for the following documents:

• Advance payment invoices;
• Invoices related to VAT exempted transactions;
• Public procurement invoices;
• Credit notes related to a certain period in time;
• Credit notes for multiple invoices;
• Debit notes related to multiple invoices;
• Debit notes related to a certain period.

Many European countries are reviewing their plans for e-invoicing implementation and Slovakia is no exception. Despite e-invoicing expected to take hold in the country some way away yet- in 2024- the Ministry of Finance is setting out some clear timeframes to accomplish this.

Some key dates are summarised below:

• 2021: Ministry of Finance introduces a law regarding sending invoice structured data to the Financial Directorate; public consultation with stakeholders commences
• 2022: Law expected to finalise
• 2023: Law effective from this date
• 1 January 2024: obligation to use e-invoicing expected

The passing of the year between the ‘effective date’ and the obligation to use e-invoicing indicates that the Slovakian tax authorities acknowledge the difficulties that can be expected in the transition from paper to e-invoicing. This time should allow Slovakian taxpayers to familiarise themselves with the technical specifications, e-invoicing process and finer detail relating to e-invoicing.

Small businesses will get further assistance via a free online application ‘Virtual invoice’. This aims to reduce administrative burdens and offer a more simplified process to smaller businesses. This includes the ability to issue an invoice via a mobile phone and send this to the national e-invoice system.

Electronically recording sales is accompanied by several administrative burdens. Furthermore, the main reason for the introduction of electronically recording sales- cash payment / sales- are decreasing. In fact, non-cash payments are projected to reach 80% by 2025, further reducing the need for electronically recording sales. This phenomenon is taking hold not just within the parameters of the EU but globally too.

To this effect, the proposal to abolish the electronic sales recording has been approved by the Czech government.

It is expected that the Act on the Registration of Sales, which introduced the obligation for electronic sales recording, will shortly be cancelled.

A Royal Decree has been published outlining the modalities regarding the obligation for entrepreneurs in the context of public contracts and concession contracts (B2G).

Below are a few key timeframes regarding e-invoicing obligations:

• 1 October 2022: public contracts and concessions the estimated value of which is less than European threshold
• 1 April 2023: public contracts and concessions the estimated value of which is less than EUR 30 000 excluding value added tax, but less than European threshold
• 1 October 2023: all public contracts and concessions

The Official Royal Decree can be found via the following link.

Recent events in Ukraine has led to a surge in energy and electricity prices.

To this effect, the Irish government will cut VAT on electricity and energy from 13.5% to 9%.

This will take place from 1 May 2022 to 31 October 2022 and is estimated to come at a cost of 46 million Euros.

The UK Treasury is considering whether a 1% online sales tax needs to be applied on e-commerce goods and services.

The e-commerce trade has seen a radical increase – fuelled significantly by the Covid-19 pandemic- and it is no coincidence that the government is reviewing its fiscal measures at a time when e-commerce has grown exponentially over the past 2 years.

An open consultation to this effect has been launched from 25 February 2022 until 20 May 2022.

The proposal of the online sales tax aims to rebalance the taxation of the retail sector between online and in-store retail.

Information on the public consultation policy can be found via the following link.

We communicated in 2020 that the UK has reduced its VAT rate for the hospitality sector from 20% to 5%.

From 1^st April 2022, the VAT rate will revert to 20%, fuelling the indication that the United Kingdom is entering a post-recovery era of the pandemic.

In Portugal, under certain circumstances, a PDF invoice can qualify as an electronic invoice. The Covid-19 pandemic has meant that many countries around the world have had to deal with challenges in the management of their fiscal operations. Part of these challenges have involved governments acknowledging that they must provide some concessions to taxpayers.

During much of Covid, PDF invoices were made available to clients, despite not meeting the stringent requirements to qualify as an invoice.

During the following periods, it was / is permitted that PDFs can qualify as e-invoices, despite not meeting stringent requirements:

• April, May and June 2020;
• 9 November 2020 to 31 December 2021;
• 1 January 2022 to June 30 2022.

This means that up to 30 June 2022, PDFs can be accepted as e-invoices without the need to meet any specific requirements.

At all other times, the PDF must be digitally signed to be accepted as an e-invoice.

Rising electricity costs has been linked to the re-opening of the economy after Covid- 19. Recent events in Russia / Ukraine has also meant that supplies of natural gas from Russia have been interrupted.

The Spanish tax authorities have responded to rising costs. The reduction in the VAT rate for electricity to 10% will be extended to 30 June 2022. At this point, the rate will revert to 21%.