International ITX Breakfast - VAT Outlook BREXIT, Digital Taxation and more... March 19, 2019 - Presentation
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International ITX Breakfast VAT Outlook BREXIT, Digital Taxation and more... March 19, 2019
Agenda
1 Introduction 3
2 VAT Outlook - Latest VAT news & trends 5
3 BREXIT 15
4 Impacting Case Law 17
5 Digital Taxation & E-commerce package 30
6 Q&A 38
PwC - International ITX Breakfast - March 19, 2019 2
1 Introduction
New reporting rules, SAF-T
Lithuania
Norway SAF-T
SAF-T On request
Luxembourg
Not yet implemented 1 Jan 2019
SAF-T
1 Jan 2020
On request
1 Jan 2011 Poland
Mandatory Disclosure Rules
incl. VAT
United Kingdom 1 Jan 2019
Making Tax Digital (MTD)
Mandatory, quarterly VAT return data
only – no transaction reporting Czech Republic
1 Apr 2019 Control Statement
Mandatory, with VAT return
1 Jan 2016
France
SAF-T
On request Austria
1 Jan 2014 SAF-T
On request
31 Jan 2009
Spain
SII (Immediate Information Supply)
Mandatory for large tax payers, Hungary
every 4 days Real-time invoice reporting
1 July 2017 Mandatory, live for all invoices
above HUF 100k
1 Jul 2018
Portugal
SAF-T Italy
Mandatory for residents, Greece
SdI - Sistema di Interscambio Live invoice reporting
with VAT return Mandatory, live invoice reporting
1 Jan 2008 Mandatory on all invoices
for all businesses 1 Jan 2020
1 Jan 2019
PwC - International ITX Breakfast - March 19, 2019 4
2 VAT Outlook - Latest VAT news & trends
VAT and the Crypto currency and ICO/STO
• Trend and global increase of interest in crypto currencies and ICO/STO
• Federal tax authorities drafted a practice for consultation (twice (10.2018
and 01.2019))
• Grey area in the FTA’s practice
• Qualification of coin/token;
• Identification of recipient;
• Location of services.
Solution : Ruling request
PwC - International ITX Breakfast - March 19, 2019 6
UK: Making Tax Digital – new postponement for
overseas traders
Deferral period
October 2018 • HMRC deferred the obligation to file their first MTD
Pilot program opens for relevant UK VAT return until October 1st, 2020, for
sole traders and certain categories of VAT registrants including traders
companies based overseas
1st April 2019 • The time needed for implementation should however
not be underestimated
VAT registered taxpayers
(except certain
categories) must keep MTD vision
VAT records and submit
their VAT returns • VAT is just the beginning – planned to apply to other
electronically taxes in the coming years (income tax pilot launched
in spring 2018)
Spring 2019
• The businesses preparing for future ask:
Pilot program opens for
taxpayers whose
What is the end vision and how can we comply
with it?
obligation has been Shall we have reactive or proactive approach?
deferred What technology will we need in the future?
1st October 2019 How does it integrate with our other digital strategy
Making Tax Digital (finance, logistics, reporting)?
How does the UK requirement align with our global
mandatory for all approach?
taxpayers
• Further tax governance requirements (publish your
large business tax strategy)
PwC - International ITX Breakfast - March 19, 2019 7
US: Economic nexus recent case law and impacts for
foreign traders
US sales tax and concept of nexus Wayfair case law and impacts for foreign retailers
• Retail sales of goods and services are • The June 2018 South Dakota vs. Wayfair US Supreme Court
generally taxed at the State level in the US. ruling considered the technology and e-commerce expansion
and reversed the 1992 “Quill” ruling as it considered the
• Sellers are required to collect and remit the physical presence rule “unsound and incorrect”
tax to the State, if they do not, in-state
consumers are responsible for paying a use • Physical presence standard is no longer required for a
tax at the same rate. retailer to have a qualifying nexus. Economic standard
would be sufficient to create a nexus (i.e. for South
• Sellers having a “nexus” in the state have an Dakota, USD 100’000 gross revenue or 199+ sales with
obligation to collect and remit the tax, and if customers in the state).
they fail, they become jointly and severally
liable for the failure to collect and remit the • In January 2019, half of US states are now enforcing the
tax. economic nexus approach.
• Based on settled US Supreme Court case • Case law should apply to foreign non-established companies.
law (Quill vs. North Dakota, 1992), a nexus However, its immediate enforcement of the judgment is
was characterised where a retailer had a questionable. There could be risks to rely on the
fairly significant physical presence. unenforceability of the judgment (i.e. no statute of limitations,
mergers, etc.).
PwC - International ITX Breakfast - March 19, 2019 8New EU VAT rules applicable to vouchers
as of 1 January 2019
• Why a voucher VAT Directive?
Vouchers are booming business
Enormous growth with digitalisation
Increased use in cross border transactions
Lack of clear common EU VAT rules
Insufficient practical guidance from ECJ case law
Different approaches followed by the EU Member States
resulting into double or non taxation
• What are the vouchers IN the scope of the new “voucher” VAT Directive?
Vouchers issued as from January 1st 2019 (included);
Paid-for-vouchers, meaning vouchers which can be used for redemption against goods or
services (e.g. retail gift card, voucher to compensate for product taken back, code to be used
or e-service)
Single vs multi purpose vouchers
• What are the vouchers OUTSIDE the scope of the new “voucher” VAT Directive?
General payment instruments (e.g. credit cards)
Discount vouchers
PwC - International ITX Breakfast - March 19, 2019 9New EU VAT rules applicable to vouchers
Does it impact you?
Determine what type of vouchers Where are the vouchers
is your business using and why? marketed and how?
In what capacity is your business
Does your business manage risks
acting and how is accounted for
and recover overpaid VAT if any?
VAT on vouchers?
Would you be interested to discuss this topic in more details?
PwC - International ITX Breakfast - March 19, 2019 10Amended definition of exporter of record
Impact for non established entities
According to the Commission Delegated Regulation (EU) 2018/1063 of 16 May 2018 the Exporter is now
defined as:
i. a person established in the customs territory of the Union, who has the power to determine and has
determined that the goods are to be taken out of that customs territory;
ii. where (i) does not apply, any person established in the customs territory of the Union who is a party
to the contract under which goods are to be taken out of that customs territory
• Such definition implies that to be mentioned as exporter in Box 2 of the customs export declaration
(Single Administrative Document form) the person needs:
To be established in the EU;
Is no longer required to hold the contract with the consignee in the third country;
Should be able to demonstrate that it is party to a contract under which the goods are to be taken
out of the EU customs Territory.
For VAT purposes, to support the exemption of export, the supplier (who does not necessarily need to be
established in the EU) needs to hold the proof that the goods has been transported/ dispatched to a
destination outside the Community (i.e. the export declaration)
• How should the non established entities support the VAT exemption of their export supplies since
they can not act as exporter for customs purposes?
PwC - International ITX Breakfast - March 19, 2019 11Amended definition of exporter of record
Actual case study
A supplier FOB B intermediary FOB C intermediary FOB D final customer
(RO entity, RO (non-EU entity, (non-EU entity, (consignee, non-
VAT ID) RO VAT ID) RO VAT ID) EU entity)
Constanța
port (RO) Non-EU destination
• Which entity is entitled to act as exporter of record in Romania?
• Lack of uniform interpretation of the Delegated Regulation (EU) 2015/2446 among Customs authorities.
• In certain cases, strict application of the new definition of exporter by Customs offices, no longer allowing non-
EU entities that are not established in the customs territory of the Union to act as exporters from the
Union (i.e. be mentioned at Box 2 of the export customs declaration).
• Even if the export declaration is not challenged immediately, there is a risk that the Customs authorities during
a subsequent audit deny retroactively the validity of the export operation performed by the non-EU entity. In
such case, additional VAT liabilities could arise since the VAT exemption for export will no longer be
applicable.
• If A can qualify as exporter of record, can the VAT exemption for export be applied on the supply to B
considering the FOB Incoterm?
PwC - International ITX Breakfast - March 19, 2019 12Customs update on non-EU entities and acting as
exporter of record
Main considerations
Most EU Member States take the approach that a non-EU established entity may still act as
exporter of record through the appointment of an indirect customs agent
Some EU Member States provide guidelines allowing to indicate non EU established “VAT
exporter” in box 44 of the export declaration (while the exporter for customs purposes
indicated in box 2 must be an established entity) to overcome the discrepancy between
customs and VAT definitions
The concept of exporter may be challenging in the case of complex, chain supplies where
determining the party who will carry out the customs formalities may be required and
dependent on the position of local Customs authorities.
Businesses need to watch out for EU Member States adopting strict interpretation of the
new definition and limiting the possibility to qualify as exporter only to EU-established
entities
Determination of transport terms, i.e. selection of Incoterms should be a point of attention
(to fulfil the requirement that the goods will be taken outside the EU territory)
PwC - International ITX Breakfast - March 19, 2019 13Customs and international trade wars
Current trends Challenges
Currently, opposite movements: Lobbying
Scope (eg. arguments against inclusions of specific
• Development of free trade agreements products) of tariffs
(eg. NAFTA renegotiated as USMCA,
Level of additional tariffs
negotiation for TAFTA)
Analyse
• Development of tariff threats (eg. US- Identify the international trade flows and use of data
China tariff war escalation – rates analytics techniques/tools to have clear view on
amounting to 25%) flows, volumes, amounts to assess customs impacts
and identify opportunities.
• Development of non-tariff barriers (e.g.
Determine upfront high risk shipments that could be
import quotas, technical barriers through
spotted by customs authorities data analytics tools.
standards, sanitary rules, domestic
subsidies, etc.) Plan
Determine potential optimizations – 3 main areas
• Brexit and uncertainty on future customs
relations with EU What it is? - tariff code
Where is it from? - origin of the goods
How much is it worth? – customs valuation
PwC - International ITX Breakfast - March 19, 2019 143 Brexit
BREXIT
Link to recorded Webcast
PwC - International ITX Breakfast - March 19, 2019 164 Impacting Case Law
Recent cases from the CJEU
• Ryanair (C-249/17): Judgement – Deduction of input VAT incurred by an holding company for aborted acquisition
of shares
• C&D Foods (C-502/17): Judgement – Deduction of input VAT incurred by a company for aborted sale of shares
• Morgan Stanley (C-165/17): Judgement – Calculation of input VAT deduction right for branches located in a
different country from the headquarter
• EN.SA. Srl (C-712/17): AG opinion – Refusal of deduction of input tax and VAT zero-rate in case of fictitious
actions
• CTT–Correios de Portugal (C-661/18): Referral – Retroactive adjustments to input VAT recovery where a supply
had wrongly been treated as VAT exempt
Deduction
• Vadan (C-664/16): Judgement – Absence of invoices – Recourse to a court commissioned expert report – Burden
right of proof of the right of deduction
• Mennica Wrocławska sp. z o.o. (C-491/18): Rejection of the right to deduct – Incorrect description of goods on
invoices
• Human Operator Zrt. (C-434/17): Deduction of VAT – Determination of the taxable person liable for VAT –
Retroactive application of a derogating measure
• Nestrade SA (C-562/17): Company not established in the European Union – Preliminary and final decision
refusing the refund of VAT – Incorrect VAT identification number
• Fontana (C-648/16) : Judgement – Method of calculating the taxable amount by extrapolation – Right to deduct
VAT – National law basing the calculation of VAT on presumed turnover
• Alpenchalets Resorts GmbH (C-552/17): Special scheme for travel agents – Supply of a holiday residence rented
from other taxable persons – Accommodation supplied by a travel agent in his own name
• Scarpa Travel sp. z o.o. (C-422/17): Special scheme for travel agents – Determination of the margin – Payments
Special on account made before the supply of travel services by the travel agent
schemes • Harry Mensing (C-264/17): Supply of works of art by the creator or his successors in title – National tax authorities’
refusal to grant a taxable person the right to opt for application of the margin scheme
• Regards Photographiques SARL (C-145/18): AG Opinion – Special scheme for works of art – Photographs taken
by their photographer, printed by him or under his supervision
PwC - International ITX Breakfast - March 19, 2019 18Recent cases from the CJEU
• MEO (C-295/17): Judgement – VAT treatment of contract termination fees
• A Oy (C-410/17): Judgement – Netting of transactions involving non-monetary consideration (demolition services
where the taxpayer can dispose of the demolition waste).
• Arex CZ (C-414/17): Judgement – Intra-Community acquisitions of goods – Transaction to which the transport
should be ascribed
Taxable • Baumgarten sports & more GmbH (C-548/17): Judgement - VAT chargeability - Football agent’s commission -
Payment by instalments and subject to a condition.
transactions
• SRF Konsulterna AB (C-647/17): Judgement – Supply of services in respect of admission to educational events
– Place of taxable transactions
• Commission vs. Austria ( C-51/18): Judgement – Infringement procedure - Administrative practice of imposing
VAT on the royalty payable to an author of an original work of art on the basis of the resale right
• Tratave (C-672/17): Judgement – Taxable amount – Reduction – Principle of fiscal neutrality
• A & G Fahrschul-Akademie GmbH (C-449/17): Judgement – Exemption for certain activities in the public interest
– School or university education – Driving school tuition provided by a driving school
• Virgil Mailat, Delia Elena Mailat, Apcom Select SA (C-17/18): Judgement – Transfer of a totality of assets or
part thereof – Exemption for lettings of immovable property
• Cartrans Spedition Srl (C-495/17): Judgement – Road transport transactions directly connected with the export
Exemptions of goods – Customs declaration – TIR carnet
• Manuel Jorge Sequeira Mesquita (C-278/18): Exemption – Leasing or letting of immovable property – Contract
for the transfer of the use of land comprising vineyards for agricultural purposes
• Vetsch Int. Transporte GmbH (C-531/17): Exemptions from VAT on importation – Imports followed by an intra-
Community transfer – Tax evasion
• Federal Express Corporation Deutsche Niederlassung (C-26/18): AG Opinion – Customs debt – Definition of
Customs & importation – Requirement for goods to enter the economic network of the European Union
Excise • Bene Factum UAB (C-567/17): Excise duty – Exemptions – Definition of ‘products not for human consumption’
PwC - International ITX Breakfast - March 19, 2019 19Deduction of input VAT incurred for aborted
acquisition of shares – CJEU – Ryanair (C-249/17)
Supplier 1 Supplier 2 Supplier 3
Consultancy services and other
Issues services in connection with the planned
acquisition.
• Is Ryanair Holding a taxable person due to
the sole fact that the company intended to
supply taxable services to the purchased Deduction
company? Ryanair of input
Holding VAT?
• Is it possible for Ryanair to deduct the input
VAT paid on that expenditure even if the
planned acquisition (partly) failed?
Takeover bid (failed)
Aer Lingus
PwC - International ITX Breakfast - March 19, 2019 20Deduction of input VAT incurred for aborted
acquisition of shares – CJEU – Ryanair (C-249/17)
Court decision
• The Court reminded that the mere acquisition and
Outcome & Consequences
holding of shares does not constitute an economic
activity. A direct or indirect involvement of the holding • Positive ruling for the deduction right of
entity in the management of the target is necessary. active holding companies and more
• Preparatory acts during a planned acquisition of shares generally companies that incur costs for
performed with the intention to pursue an economic intended taxable activities, even where
activity are, nevertheless, subject to VAT. these activities are not carried out.
• The right to deduct, once it has arisen (i.e. in general • Importance of anticipating VAT questions
when services or goods are received), it is retained during the structuring phase.
even if the intended economic activity is not carried
out and, and thus, did not give rise to taxed transactions. • Holding companies planning to acquire
shares should carefully document their
• The Court found that the costs incurred by Ryanair had a intention to carry out economic activities
direct and immediate link with its intended economic up-front.
activity and constituted a part of its general costs.
• Ryanair should benefit from a full input VAT recovery
right on the costs related to the intended acquisition.
PwC - International ITX Breakfast - March 19, 2019 21Deduction of input VAT incurred for aborted sale of
shares – CJEU – C&D Foods (C-502/17)
Consultancy services and other services
in connection with the planned sale
Supplier 1 incurred on behalf of C&D food Supplier 2
Kaupthing
Bank
Issue C&D
• Is it possible for C&D Foods to deduct Foods
the input VAT paid incurred even if the
planned sale failed?
Management
services Arovit
Holding A/S
Planned
Arovit Sale
Petfood
A B C
PwC - International ITX Breakfast - March 19, 2019 22Deduction of input VAT incurred for aborted sale of
shares – CJEU – C&D Foods (C-502/17)
Court decision
• The Court reminded that transactions relating to shares in Outcome & Consequences
a company fall within the scope of the VAT when they are
carried out: • In order to allow a holding company to
deduct the input VAT incurred on expenses
o As part of a commercial share-dealing activity, or; related to the sale of shares, a direct link
o In order to secure a direct or indirect involvement in should exist between these costs and a
the management of the companies in which the taxable activity, not with the (VAT exempt)
holding has been acquired, or; sale of shares itself.
o Where they constitute the direct, permanent and • The concept of “essential reason of the
necessary extension of the taxable activity (cf. CJEU transaction” might complicate the question
29 October 2009, C-29/09, SKF). of the VAT deduction for all taxpayers.
• The Court underlined the importance of the “direct and • In Switzerland, the mere acquisition,
exclusive reason” of the transaction. holding and the sale of qualified
• In the case at hand, the objective of the disposal of shares participations constitute a commercial
was to pay the debt of Aerovit towards Kaupting Bank, activity. The right of input VAT deduction
thus the reason of the transaction was not linked to the should, however, be verified esp. in case of
economic activity of C&D Foods. mixed activities / VAT exempt turnover (e.g.
• It was therefore not possible to deduct the input VAT interests).
incurred.
PwC - International ITX Breakfast - March 19, 2019 23VAT recovery for EU foreign branches – CJEU – Morgan Stanley
(C-165/17)
S S S
General overhead
Issues
Deduction
Which method should be used to of input
VAT?
compute the input VAT deduction right
of a branch that incurred :
Support services
• Costs used exclusively for the
Branch
internal transactions with the head HQ UK
FR
office (“HQ”) in another Member
Remuneration
State?
• Costs that are used for the Financial services to UK
Financial services to French
activities performed by the branch customers (partially VAT
customers (opted for VAT)
with third parties and for internal taxable / VAT exempt)
transactions with the HQ in
another Member State? FR FR UK UK
Client Client Client Client
PwC - International ITX Breakfast - March 19, 2019 24VAT recovery for EU foreign branches – CJEU – Morgan Stanley
(C-165/17)
Court decision
Outcome & Consequences
• For costs which are used solely to support the HQ, the
• Complex approach with multiple ratios.
branch should determine the VAT recovery right as follows:
• The branches incurring expenses for its HQ
activities must allocate its expenses between
the different activities of the HQ, control the
VAT treatment applicable in both countries to
• The branch must exclude its own revenues from the
ensure that the turnover generated by the HQ
equation as well as turnover generated by the HQ not
gives right to VAT recovery and calculate a
linked to the expenses.
prorata.
• For costs which are used for both branch and HQ
• Applicability in case of partial allocation or
activities (“overhead costs”), the branch should determine
sectorisation?
the VAT recovery right as follows:
• Similar approach in case of expenses
incurred by a HQ for the activities of its
branches? (Le Credit Lyonnais – C-388/11)
• Impact in case of VAT group (Skandia, C-
• In all cases, internal transfers between the branch and the 7/13) or independent branches?
head-office are excluded from the calculation of the
recovery ratios.
PwC - International ITX Breakfast - March 19, 2019 25Early termination of contract – Supply for
consideration – CJEU – MEO (C-295/17)
No payment of VAT Portuguese tax
MEO authorities
Issue
• Should a pre-determined amount
received by a company where a contract Compensation for early
for the supply of services with a minimum termination of contract
commitment period is terminated early be
treated as a consideration for the provision
of taxable services? Clients
PwC - International ITX Breakfast - March 19, 2019 26Early termination of contract – Supply for
consideration – CJEU – MEO (C-295/17)
Court decision
Outcome & Consequences
• Following its reasoning on the Air France case
(Joined Cases C-250/14 and C-289/14), the CJEU • The main driver for the CJEU to reach this
decided that payments for early termination of a fixed conclusion is the fact that the amount paid
term services contract, should not qualify as remains exactly the same, whether or not the
compensation for damages. client terminates the contract before the end of
the minimum duration.
• The key factors:
• Tax authorities are generally reluctant to qualify
o Amount already determined when the contract
a sum as compensation not subject to VAT.
is concluded ;
o The remuneration received for the early • In Switzerland, the administrative practice on
termination was equal to the amount that this subject is unclear. In practice, it may prove
would have been received by the supplier difficult to qualify a sum as compensation for
during the fixed term, if the contract had not damages.
been terminated ;
• Need to carefully review the contractual terms
• The Court considered that since the supplier is in and conditions for compensatory payments to
the same economic position, the amount received confirm whether such amounts fall outside the
cannot be deemed compensation for damages scope of VAT.
incurred due to early termination of the agreement.
PwC - International ITX Breakfast - March 19, 2019 27Place of supply of training / seminars – CJEU – SRF Konsulterna
AB (C-647/17)
Professional
Issue association
• Seminar organized in a Member State
other than the Member State where the
provider and the business participants
are established. SRF
Konsulterna
• Should the place of supply of such AB
seminar be the Member State where the
seminar takes place or where the Seminars taking place abroad
recipients are located?
A B C
PwC - International ITX Breakfast - March 19, 2019 28Place of supply of training / seminars – CJEU – SRF Konsulterna
AB (C-647/17)
Court decision Outcome & Consequences
• A service in respect of educational events constitutes a • Decision consistent with the CJEU case
single, albeit composite, supply whose essential elements law based on which goods and services
present a close physical link with the place where the event should be taxed as far as possible at the
actually happens. place of consumption (A and B,
• The Court found that the right to be admitted to an C-453/15).
educational event should be taxable where the event take • Advance planning, physical presence of
place (Art. 53 EU VAT Directive 2006/112/EC). the customers, duration are key factors
• It is immaterial whether: for the qualification of an event within the
meaning of Art. 53 of the EU VAT
o All customers make information, such as their fiscal
Directive.
identification data, available to the supplier ;
o The service in question requires advance registration • Where ‘admission’ to an event constitutes
or payment ; one of many components of a composite
supply (and thus cannot be regarded as
o That service is offered only to a specific group or to the its essential element), that composite
general public ; and supply should be subject to the general
o The fact that the service is taxed in the Member State rule in Article 44.
where the event in question takes place leads to an
additional administrative burden for the supplier or its
customers.
PwC - International ITX Breakfast - March 19, 2019 295 Digital Taxation & E-commerce package
Digital tax: Where do we stand?
“In Europe it has become common enough for companies to have a significant digital presence in a Member
State, and make substantial profits there, but to enjoy tax levels close to zero….That calls for a fundamental
overhaul of our corporate tax systems – and Europe is about to decide how to do just that.”
Keynote speech by EU Commissioner Moscovici at the 'Masters of Digital 2018' event
• Aim of the EU Commission to reform EU’s corporate tax rules and ensure that profits generated from digital services are taxed at the jurisdiction
where the customers are located (“digital footprint”).
• Council Directive Proposals put forward by the EU Commission relating to the corporate taxation of a significant digital presence COM (2018) 147
and the application of digital services tax on revenues resulting from the provision of certain digital services COM (2018) 148
o Compromise text put forward by Austrian Presidency containing the elements that have the most support from Member States to introduce
interim digital tax measures (unanimity required)
o Proposal not adopted during the Council meeting in December 2018 – discussions at EU Council level to re-boot in March 2019
• Several EU countries take up initiatives individually, introducing tax on revenues from certain digital services (tax to be levied at the rate of 2%-3%):
o France: DST rules included in 2019 Budget and applicable as of Jan 1st 2019
o Italy: DST rules to enter in force as of June 1st 2019
o Spain: DST bill put forward and set to come into force in 2019
o Austria: Plans to introduce DST measures as of 2020
o UK: Tax on digital revenues on to enter in force in 2020
• OECD initiative launching a public consultation on the tax challenges of the digitalisation of the economy open until March 6, 2019
PwC - International ITX Breakfast - March 19, 2019 31Digital economy: New VAT rules & tax initiatives
E-services E-commerce
• EU: New rules for application of MOSS, as • EU: E-commerce package - Extension of
from Jan 1st 2019 MOSS regime to Intra-EU distance sales
• Russia: Wide definition of services by of goods, as from Jan 1st 2021
foreign suppliers, VAT registration • China: New measures for cross-border
requirement as from Jan 1st 2019 B2C e-commerce introduced as from Jan
• South Korea: Expanded scope for services 1st, 2019
by foreign suppliers (incl. advertising, cloud
computing, brokerage services for goods)
• Colombia: Remote maintenance of
programs and equipment subject to VAT Fair taxation of
beginning of 2019
digital
economy Low value imports
Online platforms
• EU: New provisions for electronic platforms • EU: Abolishment of VAT exemption on
or marketplaces facilitating supplies of import of low-value goods & new rules for
goods or services, as from Jan 1st 2021 levying VAT, as from Jan 1st 2021
• Indonesia: New reporting & tax rules for • Switzerland / New Zealand / Australia:
online marketplace providers established in Registration requirement for foreign traders
Indonesia in relation to e-commerce if annual threshold of low value goods is
transactions, as from April 1st 2019 exceeded, as from 2019
• Norway: Low value goods import relief to
be removed, 25% VAT as from 2020
PwC - International ITX Breakfast - March 19, 2019 32EU: Digital services & e-commerce package
1 2 3 4
New rules for e-services as
from 1 January 2019
New rules for e-commerce
goods as from 1 January 2021
Anti-avoidance rules engaging
liability of online platforms as
from 1 January 2021
New rules for low-value
consignments as from 1 January
2021
PwC - International ITX Breakfast - March 19, 2019 33EU: Digital services & e-commerce package
New rules for digital services as from 1 New rules for digital services & e-commerce
January 2019 as from 1 January 2021
Simplification measures for EU small businesses: Current MOSS will be extended to cover all types of B2C
cross-border services & intra-EU distance sales of goods
EU suppliers whose turnover from the provision of
cross-border B2C electronic services remains below a Abolition of the different distance sales thresholds applicable
threshold of EUR 10,000 are able to benefit from in EU Member States:
taxation at origin
Unique threshold of EUR 10’000, under which VAT
Only one piece of evidence is sufficient for EU may have to be charged at origin will apply to both
suppliers to prove their customer’s location France: DST goods and services
rules included in 2019 Budget and applicable as of Jan
1st 2019 Import taxation scheme for low value consignments:
Non-EU businesses allowed to use MOSS even if they are Abolition of the current import relief on low value
already registered in an EU Member State for VAT purposes consignments and introduction of import VAT
measures on goods imported from third-countries
Invoicing and record-keeping: Suppliers using the MOSS are
able to apply the invoicing rules of their Member State of The supplier will charge and collect the VAT at the
identification rather than those of the Member State of point of sale to EU customers and declare and pay
consumption that VAT globally to the EU Member State of
identification in the MOSS (goods to benefit from fast
release at customs)
Introducing anti-avoidance rules with VAT liability for online
platforms and marketplaces
New technical measures to improve the functioning of MOSS
system to be implemented as well in 2021
PwC - International ITX Breakfast - March 19, 2019 34EU: Digital services & e-commerce package
New rules for online marketplaces, platforms and electronic interfaces as from 1 January 2021
• New anti-avoidance measures targeting electronic marketplaces proposed by the EU Commission to be adopted as part of the VAT e-commerce
package ()
• Measures introducing “deemed” liability of online platforms facilitating distance sales to EU consumers:
o Online platforms that facilitate B2C imports of goods into the European Union of a value below EUR 150 will be deemed to receive the
supply from the initial seller (deemed B2B supply) and to sell onward to the final consumer (deemed B2C supply)
o New provisions will apply irrespective of whether the online platform facilitating the sale is established or not within the EU
• New rules introduce a set of provisions to determine who acts as the seller of the goods via the online platform and impose strict requirements in
relation to:
o the identification of the customer location,
o reporting period (based on records of payment data)
o record-keeping obligations
Contracts with online platforms for the provision of advertising/marketing space should be
carefully reviewed to determine the impact of the new rules on the distribution models and the risks
arising from the responsibility of online platforms to collect and remit VAT on online sales by foreign
sellers.
PwC - International ITX Breakfast - March 19, 2019 35New rules on low value consignments across the globe
• Country: New Zealand • Country: Australia
• Entry into force: 1st October 2019 (expected) • Entry into force: 1st July 2018
• Impacted business: Off-shore sellers are required to register and • Impacted business: Any business that meets the AUD $75,000
account for NZ GST at 15% on low-value (valued at NZ$ 1,000 or registration threshold on sales of low-value goods (under $1,000) into
less) imported goods if sales to New Zealand consumers exceed NZ$ Australia to consumers as well as ecommerce marketplaces will be
60,000 over a 12 month period. Broad scope of application for foreign affected.
sellers, electronic platforms and re-deliverers.
What does this mean for businesses ?
What does this mean for businesses ?
By 1 October 2019, companies will need to: Businesses have to ensure that they are registered for Australian GST,
comply with the mandatory customer notification requirements and
Assess whether they need to register for NZ GST and register accounted for GST in the first returns due in October 2018.
if required
As more jurisdictions introduce similar laws it becomes very important
Evaluate their current pricing and customer terms and for companies to be able to deal with these obligations in a standardized
conditions; and way.
Implement any changes to systems and processes necessary
to comply with the proposed new rules.
If the above are not addressed early enough, GST obligations
could impact margins.
PwC - International ITX Breakfast - March 19, 2019 36New rules on low value consignments across the globe
Recommendations for a smooth
process
• Country: Switzerland
Verify threshold of low value consignments
(forecasted sales) to anticipate VAT
• Entry into force: 1st January 2019
registration requirements
• Impacted business: Swiss or foreign company generating at least CHF
Opening a customs account with the Swiss
100,000 turnover per year from sales of low-value goods transported or
Customs administration: Faster processing of
dispatched from abroad to Swiss customers. If the above threshold is
customs clearance and import formalities. Partial
reached, the businesses have the obligation to register for VAT in
deferment of import VAT (cashless procedure at
Switzerland and charge Swiss VAT on their supplies to Swiss
the time of import)
customers.
Combined consignments: Combining several
• VAT registration requirement arising:
consignments for different recipients on a single
customs declaration could trigger VAT liability
o Businesses which exceeded the threshold in 2018 and expect the
upon import (low value threshold checked based
same volume in 2019 => VAT registration as of 1.1.2019
on total value of goods in each customs
declaration). However, combined consignments
o Businesses which start the supplies in 2019 are obliged to get VAT
could substantially reduce the logistics cost for
registered/ charge Swiss VAT on all supplies made in Switzerland
online sellers.
as of the month following the one in which the threshold has been
exceeded/reached
• Importations of low value consignments continue to benefit from the
import VAT exemption
PwC - International ITX Breakfast - March 19, 2019 376 Q&A
Thank you
Our Team
PricewaterhouseCoopers SA PricewaterhouseCoopers SA
Avenue Giuseppe-Motta 50 Avenue C.F. Ramuz 45
1211 Genève 1001 Lausanne
T: +41 58 792 95 07 T: +41 58 792 81 74
patricia.more@ch.pwc.com olivier.comment@ch.pwc.com
Patricia More Olivier Comment
West ITX Lead - Principal Indirect tax Director
PricewaterhouseCoopers SA
Avenue C.F. Ramuz 45
1001 Lausanne
T: +41 58 792 92 34 PricewaterhouseCoopers SA
kristyna.kaniova@ch.pwc.com Avenue Giuseppe-Motta 50
1211 Genève
T: +41 58 792 91 31 PricewaterhouseCoopers SA
konstantina.tsiosta@ch.pwc.com Avenue C.F. Ramuz 45
1001 Lausanne
Kristyna Kaniova T: +41 58 792 82 51
Indirect tax Manager gilles.widder@ch.pwc.com
Konstantina (Nadia) Tsiosta
Indirect tax Manager
Gilles Widder
Indirect tax Manager
PwC - International ITX Breakfast - March 19, 2019 40Notes This document is protected under the copyright laws of Switzerland. It contains information of PwC that is proprietary and confidential, and shall not be disclosed to any third party outside the recipient’s company or duplicated, used or disclosed in whole or in part by the recipient for any purpose other than to evaluate this proposal. Any other use or disclosure in whole or in part of this information without the prior written consent of PwC is prohibited. © 2019 PwC. All rights reserved. In this document, ‘PwC’ refers to PricewaterhouseCoopers AG which is a member firm of PricewaterhouseCoopers. 41
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