Corona Virus- Emergency VAT Update
Coronavirus Special Update: Emergency VAT measures to combat fiscal side effects of coronavirus epidemic outbreak
It sounds counterintuitive to be producing a tax newsletter about a virus! However, the financial side of the COVID-19 crisis is leading governments into to VAT interventions, which are unfolding at such great speed we felt the need for a VAT Life special issue. Here is a summary of some emergency VAT measures to combat the financial impact of this pandemic, current as at 17 March.
- ITALY – the Italian Ministry of Finance announced on Friday, 13 of March that all the VAT payments due by March 16, 2020 will be postponed. Now it looks like the VAT payments for small businesses (with annual turnover below EUR 2m) will be postponed until 31st of May 2020 whereas for the remaining taxpayers the payments will be deferred until the 20th of March 2020. Moreover, all VAT declarations filings are to be postponed until the 30th of June 2020, including the Annual VAT Return for 2019 period. Businesses can apply for a 5-month payment plan.
- SPAIN – last week the Spanish Tax Agency published on their website a statement about the extension of the deadlines in VAT procedures. The Spanish Tax Agency also published on their website some provisional instructions on applying for a VAT deferral in accordance with the Royal Decree of 12 March foreseen for SMEs and professionals (with the last year’s turnover below EUR 6m), i.e. automatic 6-month VAT payment deferral will be granted for the VAT returns with a filing deadline between 13 March – 30 May 2020 and resulting with a VAT payment of up to EUR 30k. In addition, no late payment interest will be due for the first 3 months of a delay in payment. Link to the Spanish Tax Agency’s announcement can be found here: https://www.agenciatributaria.es
- GERMANY – the German tax authorities are offering a possibility to apply for delayed VAT payments as of the 13th of March 2020.
- AUSTRIA – application can be made to the tax authorities to postpone payment of VAT or payment via instalments. Application can also be made for reduction/waiver of late payment interest.
- FRANCE – businesses can apply for a suspension of their tax payments due in March 2020.
- UK – on the 11th of March 2020 HMRC published on their website an updated package of some temporary measures aimed to support businesses with outstanding VAT liabilities. Amongst the presented measures HMRC are open to agree on a case-by-case basis a support through HMRC’s Time To Pay Service. HMRC opened a dedicated helpline on 0800 0159 559 for these purposes. Please follow the link for full HMRC’s guidance ‘COVID-19: support for businesses’: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
- IRELAND – on the 13th of March 2020 the Irish Revenue announced on their website the following assistance for SMEs experiencing cashflow difficulties: whilst the VAT returns for period of January/February 2020 should still be submitted on time, the tax authorities will not apply the interest on late payment of VAT for this period. Revenue will issue further guidance for businesses when required and in good time before the March/April VAT returns. Please follow this link for the full Irish Revenue press release:
- POLAND – on the 11th of March 2020 the Polish Ministry of Finance informed that entrepreneurs who, due to the coronavirus, will have problems paying their taxes on a timely manner can apply for a reduction/relief or waiver/remission of arrears. Further detailed support should be announced by the Ministry of Finance in a due course. In addition, the go-live date for the implementation of the combined SAF-T file with the VAT returns for large companies (the details of which Essentia provided to its readers in our February 2020 VAT Life publication) will be postponed from the 1st of April 2020 onto the 1st of July 2020. Moreover, the tax authorities are also to make the VAT refunds quicker. For full details about the proposed ‘shield package for companies’ follow this link: https://www.gov.pl/web/koronawirus/pakiet-oslonowy-dla-firm-w-zwiazku-z-koronawirusem
- SWEDEN – the government is proposing an opportunity for temporary deferral with payment of VAT, which is proposed to enter into force on April 7. The deferral period may be set for a maximum of one year.
- NETHERLANDS – the government has announced that the Dutch tax authorities will grant a deferral of payment for any VAT if a company will motivate in writing that it has run into financial issues due to the coronavirus. As soon as the tax authorities receive such a the request, they will put the collection of tax on hold.
- CYPRUS – Cypriot government announced a temporary reduction of the standard VAT rate from 19% to 17% for 2 months and bringing down the reduced rate of 9% (applicable mainly to hotel accommodation, restaurant and catering services or domestic passenger transport) to 7.5% for 3,5 months.
- JAPAN – Japan is considering temporarily lowering its Consumption tax rate from 10% to 5% on top of delaying the filing and payment deadlines by 1 month until April 2020.
- CHINA – the country where the first cases of the coronavirus epidemic were detected has put some extensive measures in place to overcome the crisis, e.g. expanding temporarily the scope of the VAT exemption for goods and services needed to combat the effects of the virus, exempting temporarily from VAT all small-scale VAT payers located in Hubei Province or extending monthly VAT returns filing deadline for February and March 2020 periods by 2 weeks and 1 week, respectively.
Judgement of CJEU in case C-48/19 X concerning VAT exemption of telephone medical consultations
Not driven by the crisis, but nevertheless extremely timely, is a European Court of Justice case concerning remote consultations with Doctors (which may become very much more popular in the coming months).
The case related to a German company X-GmbH providing medical advice to insured persons and running patient support programmes for those suffering from chronic or long-term diseases. The medical consultations were provided over a healthcare telephone line, supported by an on-line assessment which allowed the consultant to put the patients’ situation into a medical context before providing the advice. The German authorities felt that this remoteness brought the service out of the VAT exemption for medical care. However, the CJEU held that the main criterion for determining whether or not the medical services could be exempt from VAT is whether those services pursue a ‘therapeutic aim’ regardless of the place or means of providing of such services.