Postponement of VAT in the Digital Age Package

Following the 32nd meeting held in December 2022, the European Commission’s VAT Expert Group (VEG) published the minutes of the meeting. The European Commission notably announced the postponement until 8 December 2023 of the adoption of the legislative proposal on VAT in the Digital Age that aims at modernising VAT reporting obligations by introducing standardized Digital Reporting Requirements, updating the VAT rules applicable to the platform economy, and expanding the existing systems of One-Stop Shop (OSS)/Import One-Stop Shop (IOSS) and reverse-charge to minimize VAT registrations in multiple member states. The Travel and Tourism Package was also discussed as well as the decision of the Court of Justice of the European Union on fuel cards (C-235/18, Vega International) and absence of taxation of internal supplies made by members of a VAT group.

Romania Authorised to Continue to Apply the Reverse Charge Mechanism on Domestic Supplies of Wood

The Council of the European Union has authorised Romania to extend the application of the reverse charge mechanism on supplies of wood products.

European Court of Justice, Case C-482/21, “Euler Hermes SA Magyarországi Fióktelepe v. Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága”: VAT Recovery on Bad Debts Not Extended to Insurance Companies in Case of Assignment of a Claim

The European Court of Justice (“ECJ”) has ruled that Article 90(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of VAT, as amended by Council Directive 2010/45/EU of 13 July 2010, and the principle of fiscal neutrality must be interpreted as not precluding legislation of a member state under which the reduction of the taxable amount in the event of non-payment, provided for in that provision, is not applied to an insurer who, under a contract for the insurance of trade debts, pays the insured person, by way of compensation following non-payment of a debt, part of the taxable amount of the taxable transaction at issue, including VAT even though, pursuant to that contract, that part of the debt together with all associated rights has been assigned to that insurer.

European Court of Justice, Case C-519/21, “ASA v. DGRFP Cluj”: Right to VAT Deduction

The ECJ has ruled that Articles 9 and 11 of Council Directive 2006/112/EC of 28 November 2006 on the common system of VAT, must be interpreted as meaning that, the parties to a contract relating to an association without legal personality, which was not registered with the competent tax authorities before the economic activity concerned commenced, cannot be regarded as “taxable persons” along with the taxable person that is liable for tax on the taxable transaction.

In addition, the ECJ has ruled that the principle of proportionality and the principle of fiscal neutrality must not be interpreted as meaning that a taxable person, where it does not hold an invoice issued in its name, must be granted the right to deduct the input VAT paid by another party to an association without legal personality with a view to carrying out that association’s economic activity, even if the taxable person is liable in respect of that activity, where there is no objective evidence that the goods and services at issue in the main proceedings were actually provided as inputs by taxable persons for the purposes of its own transactions subject to VAT.