As EU governments make rapid changes to VAT reporting and payment schedules in light of the coronavirus pandemic, tax authorities across member states are taking very different approaches, with complex schemes with disparate qualifying criteria, payment deferrals and some taking no action as yet
Many tax authorities across Europe have updated their office hours and meeting procedures, penalty and interest timelines, and VAT reporting and payment schedules, according to detailed analysis of the current VAT rules introduced across the EU since the covid-19 crisis.
Specialist cross-border EU VAT specialist Accordance has launched a Covid-19 Tax Authority tracker detailing VAT rule changes across the EU.
Although these changes should ease the immediate cashflow pressures on businesses, Lucy Franklin, CEO of Accordance, warned that 'those who trade in multiple territories need to understand that a prerequisite for many of these assistance measures, including VAT payment deferrals, is that companies continue to file their VAT returns on time.
'Despite deferrals and changes to procedures, businesses should still be preparing their data and submitting in the usual way,' she added.
The EU VAT tracker service details temporary changes to VAT compliance with updates on each member state's measures and information where available on any exemptions.
For UK registered businesses trading with EU member states, it is important to note that any payments due under the VAT Mini One Stop Shop (MOSS) regime will have to be paid – this is VAT due to the tax authorities in other member states so the UK government does not have control of these funds.
Although most EU member states have announced some measures, Slovenia and Malta have made no announcements as yet. Some member states have restrictive measures which only apply to a limited number of businesses.
In the UK, the government has announced a three-month VAT deferral for the next quarterly instalment, from 20 March to 30 June 2020. The VAT will have to be paid by the end of tax year 2020-21. This is an automatic offer with no applications required.
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In Ireland, affected businesses are advised to continue to file tax returns on time; for SMEs, interest on late payment penalty fees for January and February 2020 have been suspended; businesses other than SMEs can also request support; and critical pharmaceutical products and medicines will be given a Customs ‘green routing’.
In Germany, businesses can apply for a tax payments deferral. Businesses affected by Covid-19 will be exempted from enforcement of tax debts and late payment penalties until the end of 2020. There are other measures being discussed which could include extensions to deadlines for submitting VAT returns.
In France, businesses can apply for a tax payment suspension if they provide evidence they are affected by Covid-19. However, at present, it appears that it only applies to direct taxes but could be extended to VAT in due course.
The Spanish Tax Authority has introduced the ‘possibility’ for certain businesses to apply for a deferral of the payment of the VAT due for returns that have to be submitted in the period from 13 March 2020 to 30 May 2020. This does not apply to businesses that have to submit SII declarations [Spanish instant declaration system] and if the debt is in excess of €30,000 (£26,600). No interest will be charged in the first three months. Applications have to be made to the Spanish Tax Authorities in order for the deferral to apply. Offices are closed for face-to-face meetings.
The Italian Tax Authority has announced a number of measures for tax relief due to Covid-19, including suspension of VAT payment deadlines with a due date between 8 March 2020, and 31 May to 30 June 2020. However, currently all easements apply to certain resident businesses only.
Businesses trading in the Netherlands can request an automatic three-month VAT payment deferral. Longer extensions can be granted with supporting evidence. The Dutch government will also lower late penalty fees from 1 June 2020.
Franklin said: ‘The scale of the challenge we face is unprecedented, and businesses across the continent must play their part in safeguarding the future of the economy and protecting jobs. We’re offering our knowledge of and proximity to EU tax authorities to assist other businesses at this complicated moment.
‘Our updates will collate, synthesise and decode tax authority changes for the wider business community as they could have a significant impact on business planning and immediate cashflow.’
The Accordance EU VAT Tracker Service summary and comparison of VAT decisions taken by EU member state tax authorities will be regularly updated.