EU Member States
Late VAT Payment and Refund Interest Rates for 2023
As from 1 January 2023, the interest rates are set at 8% per year to payable VAT amounts and 6% per year to VAT refunds.
The VAT Deduction Procedure for Mixed Use Activities
The Belgium Tax Authority published clarifications concerning the input VAT deduction procedure for mixed use activities. As from 1 January 2023, taxable persons carrying out taxable and exempt activities can opt to claim an input VAT deduction according to their real use, provided certain requirements are fulfilled (e.g., submission of prior notification).
VAT Bad Debt Relief Approved
The parliament approved amendments to the VAT Act of Bulgaria that are applicable as of 1 January 2023 and include regulations for VAT bad debt relief. Provided certain requirements are met, suppliers are now able to claim relief from VAT on supplies of goods or services for which the respective payment from the customer is not received.
Extension of the Application of the Reduced VAT Rate
As from 1 January 2023, the reduced VAT rate of 9% will apply to newspapers and magazines, books and other publications, accommodation, and certain baby products. The 9% VAT rate will continue to apply for supplies of bread and flour, restaurant and catering services, tour operator services, and the use of sports facilities until the end of 2023.
In addition, a new reporting obligation for payments services providers was introduced, with effect from 1 January 2024.
Clarifications Issued Concerning the Timing of Input VAT Deduction on Supplies Under Cash Accounting Scheme
The Croatian Tax Authority published guidelines concerning the timing of input VAT deduction concerning invoices received from suppliers applying the cash accounting scheme. It was clarified that the input VAT on supplies made by taxable persons that account for VAT under the cash accounting scheme can only be deducted upon payment of the invoice to the supplier.
VAT Registration Threshold Increased
The VAT registration threshold in Czech Republic has increased, since 1 January 2023, to CZK 2 million.
Annual State Budget Approved
The Annual Tax Act 2022 was approved and, among other tax measures, a zero VAT rate became applicable since 1 January 2023 to the supply, importation, and intracommunity acquisition of photovoltaic systems and to the corresponding electricity storage systems, as well as the respective installation.
2023 Budget Law Approved by Parliament
The parliament has approved the 2023 Budget Law. Among other measures stated on the bill, the VAT reduction on transportation, coffee and non-alcoholic drinks, cultural activities, tourism, gyms, and dance schools was extended until June 2023, as well as the super-reduced VAT of 6% on the supply of goods of public health, and the VAT for new buildings was suspended.
Dental Services Exempt from VAT
The revenue agency published the Taxes and Duties Handbook on the VAT treatment of dental services. In particular, it confirms that professional dental services are VAT exempt, clarifies the concept of dental practices, and confirms that goods separable from the dental treatment (e.g., toothbrushes, toothpaste, and dental floss) will be subject to the applicable VAT rate.
Changes Introduced to Application of Reduced VAT Rates
The government has introduced changes on the application of the reduced VAT rates, effective since 1 January 2023, including:
- The introduction of the VAT rate of 9% to electronic books and certain electronic non-periodical information
- The extension of the application of the VAT rate of 9% to accommodation services
- The extension of the application of the VAT rate of 9% to takeaway and catering services until 31 December 2023 and to culture and sports services until 30 June 2023
- The introduction of the VAT rate of 5% to certain food used for special medical purposes
VAT Refund Procedure for Intracommunity Supply of New Means of Transport
The Luxemburg Tax Authority has clarified the procedure to request a VAT refund following an intracommunity supply of a new means of transport.
Application of the Temporary Reductions of the VAT Rates
The Luxembourg Tax Authority published Circular No. 812 with clarifications concerning the application of the temporary reduction in the VAT rates in 2023.
Extension of the Zero VAT Rate on Food and Donations for Ukraine and Application of 8% VAT Rate to Fertilisers
As from 1 January 2023, the zero VAT rate will continue to apply in Poland to essential foodstuff and donations to Ukraine. Furthermore, the reduced VAT rate of 8% will apply to certain fertilisers between 1 January 2023 and 31 December 2024.
Portugal Eases Tax Compliance Obligations
Among other tax measures, the following were notably introduced in Portugal, aiming to simplify some tax obligations:
- As from January 2023, the reverse charge mechanism will apply to the acquisition of electricity produced under units for self-consumption when the purchaser is an electricity reseller. Also, the invoicing regulations applicable will be simpler, namely, through the application of a mandatory self-invoicing regime.
- Possibility to obtain full VAT refund on expenses incurred by entities whose activity includes organising fairs and events for the purposes of such activity.
Temporary VAT Rate Reduction on Basic Foods
The Spanish government announced a temporary VAT rate reduction to 0% on basic foods and 5% on oil and pasta, between 1 January–30 June 2023.
In addition, the fuel subsidy of EUR 0.20 per litre has been abolished from 1 January 2023, with the exception of professional road transport and farmers, shipping companies, and fishermen.