In our last issue we have informed you about document no. 206 discussed in the Chamber of Deputies. The second reading was scheduled for the beginning of December. It contains besides else the proposed amendments to the area of value added tax. We have already presented some of the planned changes to you, concerning for example lease purchase, executive directors as persons subject to VAT, or renting of immovable property. This article brings information about the proposed changes relating to the place of the chargeable event with so called electronic services, to vouchers, and to summarizing invoices.

At the time of writing of this article, it is not yet known when the amendment shall enter into force. Its effect shall be changed from 1 January 2019 by an amendment to the first day of the calendar month following after the day of the changes’ publication in the Collection of Laws. The specific date is still not set.

The place of the chargeable event: broadcasting services, telecommunications, services provided electronically

Until now the place of the chargeable event with telecommunications, broadcasting services (TV, radio), and electronic services for the end-user has been the place of payment in the state of the receiver.  Newly, there should be an option to choose in situation where the place of payment is different from the state of the provider (cross-border services in the EU) and where the amount does not surpass 10.000 EUR (neither in the given nor the preceding calendar year). In such cases the place of the chargeable event will not be determined by the state of the receiver; the provider will have the option to decide whether their services shall be taxed in the state of the receiver or the provider.

Vouchers

We have already informed you about changes to the area of vouchers in one of our articles (find it here). In relation to Council Directive 2016/1065 from 27 June 2016 which amends Directive 2006/112/ES modifying rules as regards the treatment of vouchers, a change is proposed to the area of vouchers. These regulations should be unified across the entirety of the EU. Newly, the provisions should include not only the definition of a voucher but also specify the date of the chargeable event, assessment of the tax base and right to tax deduction concerning vouchers.

Simply put, the amendment divides vouchers into two categories: single-purpose and multi-purpose. A single-purpose voucher is a document which must be accepted as payment or part of it for specific goods or services, or the provider is known and at the same time it is clear at the time of issuance if and with what rate the future payment will be taxed, and what the place of the payment will be. With this type of vouchers the date of the chargeable event is the day of transfer of the voucher.  The date of the chargeable event for payments with multi-purpose vouchers (defined as a voucher different than a single-purpose one) is the subsequent delivery of goods / rendering of services.

Problems can arise in cases where the payment is not known. In such a case, the tax base should be the amount stated on the multi-purpose voucher (alternatively, stated in relevant documentation). One’s attention should also be drawn to individual services in relation to the transfer of a multi-purpose voucher. If such a service is provided by an entity other than the entity obliged to accept the voucher as a form of payment or a part of it, this entity is not subject to the voucher regime.

Summarizing invoice

Until now, a summarizing invoice could be used only in a situation where there were more individual taxable payments within a tax period. A prototypical example is a baker delivering baked goods to a grocery store every day of the week. In a case like this, the baker does not have to invoice each delivery separately but can issue a summarizing invoice for all deliveries of the month. This invoice shall be issued by the 15^th day of the month following after the month during which the first chargeable event or the first acceptance of payment occurred.

The new regulations allow the summarizing invoice to be used in situations where there is only one individual chargeable event and one or more accepted payments (which are taxable) within one calendar month during which this chargeable event occurred. The requisites of a summarizing invoice are changing as well. The obligatory requisites of a summarizing invoice shall newly include the scope and subject of the chargeable event. With accepted payments, the scope of the chargeable event will be stated only if it is known.

A few words to conclude

The aim of this article is not to state all the changes in their entirety.  The changes to the area of value added tax which are currently under consideration are quite complicated and cannot be fully presented within one article. Therefore, should you have any follow-up questions about these topics and their practical applications, do not hesitate to contact us. 

In the next and last article of this series we will tell you something about the changes proposed to the area of the rounding up rule, corrections of tax base, bad debt, or fixing of immovable property.