Recent amendments in the VAT regulations

VAT regulation amendments

 

The following VAT legislation amendments were published recently and have retrospective effect from 1^st of January 2019.

• Invoicing rules

From 1 January 2019, a supplier using the Mini One Stop Shop (MOSS) will only have to follow the invoicing rules of the Member State in which he registered for the MOSS, instead of the rules of each Member State where customers are located.

• Place of supply – 10 000€ for telecommunication, broadcasting and electronically supplied services (‘TBE’)

The place of supply of TBE services supplied by a taxable person established in a Member State to a non-taxable individual in another Member State, is in the Member State where the customer is located, (i.e. permanent address or usually resides). Therefore, the supplier has the obligation to charge VAT to the customer at the rate of the customer’s Member State.

To declare and pay this VAT to the tax authorities in that Member State, the supplier has two options:

1. Register for VAT in the Member State of the customer and submit VAT declaration
2. Register for the Mini One Stop Shop (MOSS) in his own Member State

 

From 1 January 2019 the threshold of the 10,000€ per annum is introduced, up to which the place of supply of cross-border TBE services remains in the Member State where the supplier is established

The application of this threshold is subject to the following conditions:

1. The supplier is established, has his permanent address or usually resides in only one Member State;
2. The TBE services are supplied to customers who are established, have their permanent address or usually reside in another Member State;
3. The total value of TBE services supplied to other Member States does not exceed 10,000€ in the current and in the previous calendar year.

If the supplier decides to apply the general place of supply rule, that is the place of supply is where the customer is established, he is committed by this decision for two calendar years.

As soon as the threshold of EUR 10,000 is exceeded, the general rule applies without exception.

• VAT treatment of Vouchers

 

The Schedule 14 is added to the VAT Regulation, which provides detailed rules concerning the VAT treatment of Vouchers.

 

Who will be affected from the new rules?

The new changes affect all businesses that issue or buy and sell vouchers.

In summary until 31^st of December 2018, a taxable supply in relation with vouchers occurs when a voucher is redeemed. Therefore, the VAT is due when the voucher is redeemed rather and not when the voucher is issued. According to the new rules as from 01 January 2019 the VAT treatment of Voucher is separated to ‘’Single Purpose’’ and ‘’Multi-Purpose’’ Vouchers.

“Single-Purpose” vouchers

A “single-purpose” voucher is any voucher where place of supply of the goods or services to which the vouchers relate, and the VAT due on those goods or services, are known at the time of issue of the voucher”.

Following the new rules, the VAT on the ‘’Single-Purpose’’ Voucher must be accounted for at the point of issue. The actual redemption of the voucher is not to be consider as an independent supply.

In case of a transfer of a single purpose voucher by a taxable person acting on behalf of another taxable person, the supply is considered to take place on behalf of that other taxable person.

When the taxable person who has issued the voucher is not the supplier of the goods and services which are represented by the voucher, the person who issued the voucher is considered to be the supplier of the goods and services.

“Multi-Purpose” vouchers

A “multi-purpose” voucher means “a voucher, other than a single-purpose voucher”. This means that “multi-purpose” vouchers can be redeemed for goods or services for which the applicable VAT treatment is not known at the time of the issue.

Concerning “Multi-purpose” vouchers, the VAT is accounted for by the supplier at the time of redemption of the goods or services.

The value of the supply will be equal to the amount paid by the last person who acquired the voucher or in the absence of this information, the value is the nominal value of the multipurpose voucher.

 

If you have any additional questions on recent amendments in Cyprus VAT regulation or on any other services that we provide feel free to contact us.