Thresholds for VAT Refunds to Persons Not Established in the EU Increased

As from 1 January 2023, several changes were introduced with regard to VAT refunds to non-European Union (EU) taxable persons, notably:

• The minimum VAT refund thresholds for non-EU taxable persons have increased from BGN 50 to BGN 100 for annual VAT refunds, and from BGN 400 to BGN 800 for VAT refunds relating to periods of more than three months but less than a year.
• Whenever a VAT refund is requested, the taxable person will be required to provide the ratio between the supplies carried out with the right to VAT deduction and those that are not. Also, original documents related to the VAT incurred will no longer be required (a copy will suffice).

Tax Thresholds Converted to EUR

Tax-related thresholds in Croatia have been replaced accordingly by Euro amounts following the adoption of the Euro as Croatia’s official currency.

Single Reduced VAT Rate Proposal

A proposal to merge the current reduced VAT rates (10% and 15%) into a single reduced rate that could be set at 13% or 14% is currently under discussion. There are also discussions about applying the standard rate of 21% to certain goods and services currently under the reduced VAT rate of 10%. The proposal should be presented to parliament in May 2023 and, if approved, the changes would come into force on 1 January 2024.

Zero VAT Rate Applicable to the Supply of Newspapers

The supply of newspapers is subject to a zero VAT rate in Denmark as from 1 January 2023. However, excluded from this measure are the newspapers that are wholly or predominantly engaged in advertising, to which the standard rate applies.

Thresholds for 2023 Intrastat

The intrastat thresholds applicable throughout 2022 will remain the same for 2023 (i.e., EUR 150,000 for arrivals and EUR 90,000 for dispatches).

Reduced VAT Rate Applicable to Certain Dietary Supplements

The Italian tax authority has clarified that the reduced VAT rate (currently 10%) is applicable to supplies of dietary supplements that contribute to the well-being of hair and nails; the reduction of fatigue; promote the normal functioning of the metabolism; and blood glucose levels control.

Non-Resident Taxable Persons Are Not Required to Issue E-Invoices for Supplies to San Marino

The Italian tax authority has clarified that a non-resident taxable person, who is registered for VAT purposes in Italy without having there a fixed establishment, is not required to issue electronic invoices with respect to supplies made to customers in San Marino.

Zero VAT Rate on Supplies to Italian Army on Behalf of NATO

It has been clarified that the zero VAT rate on supplies provided by the ATI (associazione temporanea di imprese) to the Italian army only applies when the Italian army is acting on behalf of NATO.

Refund on Erroneously Charged VAT Clarified

The tax authority clarified that the entitlement to a refund of erroneously charged VAT only arises if a credit note is issued within a period of one year from the date of the performance of the operation, unless if the supplier is not responsible for exceeding the deadline of one year, e.g., when they were waiting for an answer from the Italian tax authorities to a ruling request regarding the VAT treatment of the operation.

New Sugar and Plastic Taxes Postponed

Among other tax measures adopted on the Budget Law for 2023, Italy postponed the entry into force of the new sugar and plastic tax until 2024.

Mining Cryptoassets Is Outside the Scope of VAT

The Italian tax authority clarified that the mining of cryptoassets is outside the scope of VAT, as no link can be established between the provider and the customer. The miner is remunerated by the network in general, so it is not possible to identify a specific recipient of the service.

VAT Treatment of Online Games Activities Linked to Betacoins Clarified

The tax authority has clarified that the supply of services to exchange euros against betacoins (betacoins must be obtained to participate in e-sport tournaments organized by an online game platform) is outside the scope of VAT because there is no consideration agreed between the parties for such a service. However, the fee paid to the management entity for the matchmaking service is subject to VAT.

Utility Token Is Outside the Scope of VAT

The tax authority has clarified that the issuance of utility tokens during an Initial Coin Offering (“ICO”) is outside the scope of VAT. However, this understanding may change as these topics are currently under discussion both nationally and internationally.

Annual VAT Return Form for 2023 Approved

The Italian tax authority has approved the annual VAT return form (“Modello IVA”) for 2023, which must be electronically submitted between 1 February 2023 and 2 May 2023.

2023 State Budget Enacted

The 2023 Italian Budget Law was enacted, and, among other tax measures, the following are namely included:

• A 5% VAT rate is applicable to the supply of natural gas used for domestic and industrial purposes, of thermal energy produced with natural gas under a service contract, and of district heating services (concerning the invoices issued between January and March 2023)
• A 5% VAT rate is applicable to feminine hygiene products as well as on some childcare products, including some food preparations and children’s car seats
• The supply of pellets is subject to the reduced VAT rate of 10%
• A special settlement procedure was introduced regarding tax debts related to the tax periods of 2019, 2020, and 2021, with the possibility (under certain circumstances) to opt for payments in instalments, with interest applied at the legal rate and penalties reduced to 3% of the minimum penalty
• Tax debts under EUR 1,000, entrusted to a tax collector agent between 1 January 2000 and 31 December 2015, will be automatically cancelled

VAT Treatment of Supplies of Educational Services Clarified

The Italian tax authority has clarified that business-to-business (B2B) supplies of educational services carried out in another EU member state by a resident taxable person are exempt from VAT, provided that such services are similar to those for which the taxable person obtained the required recognition by the respective Italian public authorities. Purchases related to such educational services are only exempt from VAT when made between the taxable person and the students (purchases from third parties are excluded).

VAT Treatment of Advance Payments

The tax authority clarified that the advance payments must follow the same VAT treatment of the related supply. On multiple supplies with different VAT treatments, the advance payments should be split proportionally based on impartial and verifiable criteria according to the nature of the transactions. In case of overpayment, the supplier may issue a credit note without time limitations, as the adjustment is linked to the original agreement between the parties.

VAT Group Representative Identification

The tax authority has clarified that the resident taxable person acting as a VAT group representative in relation to a controlled company located abroad should be the participant with the highest VAT turnover or CIT revenue.

Penalties for VAT Non-Compliance Increased

As from 1 May 2023, where additional VAT is assessed, the respective penalties applicable will increase from 10–50% to 20–100% of the calculated VAT amount.

Changes to the Commentary on the VAT Act

The Lithuanian tax authority has amended the Commentary on the VAT Act related to leasing transactions, particularly with regard to the issue of credit invoices when lease contracts are terminated before the end of the term and to the respective determination of the statutes of limitation.

Small Taxpayers Thresholds for 2023

As of 1 January 2023, the threshold to qualify as a small taxpayer for VAT purposes in Poland is PLN 9,654,000 (EUR 2,000,000) and, for agents and commission agents, it is PLN 217,000 (EUR 45,000).

Fertilisers and Agricultural Products Subject to a 9% VAT Rate

As from 1 January 2023, the delivery of fertilizers and pesticides used in agricultural production, seeds and other agricultural products intended for sowing or planting, and for the provision of services normally used in agricultural production, are subject to 9% VAT rate.

Heating Systems, Photovoltaic, and Solar Thermal Panels Subject to a Reduced VAT Rate

As from 16 January 2023, a reduced VAT rate of 5% will apply to the supply and installation of photovoltaic panels, solar thermal panels, and high-efficiency low-emission heating systems.

Temporary VAT Rate Reduction

A temporary VAT rate reduction to 5% on supplies, imports, and intracommunity acquisitions of natural gas and briquettes and pellets of biomass and wood for firewood, as well as on electricity supplies to qualifying customers will apply from 1 January 2023 to 31 December 2023.

2023 State Budget Law Published in the Official Gazette

Among other indirect tax measures included in the 2023 state budget:

• The so-called effective use rule on the place of supply of certain services has been modified
• Some aspects concerning the recovery of bad debts have been amended
• The reverse charge mechanism has been extended to some waste and scrap plastic and textile material professionals
• Some operations have been excluded from the scope of the reverse-charge mechanism such as the taxable leasing of real estate and intermediation in the leasing of real estate provided by taxpayers located outside Spain
• A 4% VAT rate on feminine hygiene products, prophylactics, and non-medical contraceptives was introduced.