VAT Break/Holidays in Europe

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Introduction

This summary is updated to: 17 June 2020.

Given the current dire situation of the economy, many retailers are struggling to meet the tax obligations imposed on them by distance selling regulations of other countries. Indeed, retailers who are registered for VAT/Sales Tax/GST in foreign countries must meet overseas filing/payment deadlines (alongside their home-country requirements, of course).

Appropriately enough, following the sudden COVID-19 outbreak, many European states have decided to grant special tax breaks in relation to the reporting and/or payment of VAT.

Below follows a quick overview of the VAT deferral schemes linked to the COVID-19 outbreak in many EU countries.

It has been prepared for you by Taxmen.eu, the one-stop-shop for tax and legal services to the e-commerce industry. Taxmen is available to provide friendly support on the matter to Fruugo partners. For any information on the current VAT breaks, you can please write to: info@taxmen.eu

Country-by-Country

Austria

Austria has exceptionally extended the deadline for submitting the 2019 yearly VAT return to 31 August 2020 (instead of the usual deadline falling on 30 June).

Moreover, it is possible to apply for tax relief by using a single form, including the deferral of periodic VAT payments. You can write to info@taxmen.eu to receive a PDF copy of the form.

Belgium

The Tax Authorities of Belgium have rescheduled the next deadlines to submit VAT returns:

• The deadline for the filing of the April VAT return has been postponed to 5 June 2020. The deadline for payment has been postponed to 20 July 2020.

There is a specific form that retailers can fill out and submit to the Belgium tax authorities in order to apply for further VAT deferrals or to avoid penalties/interest in case of failure to meet deadlines. Please write to info@taxmen.eu to receive a PDF copy of the form.

Bulgaria

There is currently no VAT holiday specifically related to the COVID-19 outbreak.

Croatia

There is currently no VAT holiday for foreign business specifically related to the COVID-19 outbreak.

Cyprus

VAT payments are deferred until 10 November 2020. The deferral of VAT payments only applies to VAT relating to the periods ending on 29 February 2020 (1/12/2019 - 29/2/2020), 31 March 2020 (1/1/2020 - 31/3/2020) and 30 April 2020 (1/2/2020 - 30/4/2020). This deferral only applies when the relevant VAT returns are submitted on time.

Czech Republic

There is currently no VAT holiday specifically related to the COVID-19 outbreak.

Denmark

There are new extended deadlines for VAT payment only: for quarterly returns (1 January - 31 March 2020), the new deadline for payment is 1 September 2020 (but for reporting : 2 June 2020), for half-year returns (1 January - 30 June 2020) the new deadline for payment is 1 March 2021 (but for reporting by 1 September 2020).

Estonia

VAT returns must be submitted on time. In case of late payments linked to the COVID-19 outbreak, interest will not be calculated until 1 May 2020.

Finland

Retailers can apply for additional tax-filing time, if necessary. Extra time may be granted for a specific reason, such as illness, which has prevented the retailer from submitting a return within the deadline. The application must be submitted to the Finnish Tax Authorities by the due date of the concerned tax return. Retailers can apply for a VAT payment arrangement for temporary payment difficulties. Given the exceptional situation caused by the COVID-19, the Finnish Tax Authorities have committed to ease the terms of the payment arrangement for the time being. Late VAT payments will be subject to a reduced late interest charge of 4% (instead of the standard 7% rate) until 31 August 2020.

France

There is currently no VAT holiday specifically related to the COVID-19 outbreak. However, those companies that have experienced a drop in their turnover linked to the Covid-19 crisis, during the period of lockdown can exceptionally report VAT as it follows:

The outstanding payable VAT amount will have to be reported in the first regular VAT return. (May), unless otherwise stated by the French Tax Authorities in the next future.

Please read carefully the instructions on the official site of the French Tax Authorities:
https://www.impots.gouv.fr/portail/coronavirus-covid-19-le-point-sur-la-situation

Germany

Germany has exceptionally reduced the standard VAT rate from 19% to 16% and the reduced rate from 7% to 5% for sales made between 1 Jul 2020 and 31 Dec 2020.

Retailers may also apply for a deferral of VAT payments up to the end of 2020. In exceptional cases, the term can be extended to cover part of 2021. There is a specific form available. You can write to info@taxmen.eu to receive a copy of the form.

Greece

There is a special postponement applying for VAT obligations until 31 August 2020 (without any surcharge) for payable amounts regarding March and April, but only for specific activity codes (for instance, distance sales of clothing, etc). There is a technical issue which unfortunately excludes foreign companies having direct registration in Greece for VAT purposes from taking advantage of announced measures for COVID-19. In order to qualify for the VAT break, all concerned taxpayers must be registered to a special system. The system requests (among other information) the Greek tax number of the fiscal representative. Without this information, applications cannot be submitted. Since EU companies do not have the obligation to use a Greek fiscal representative, they seem to be excluded.

Hungary

There is currently no VAT holiday specifically related to the COVID-19 outbreak.

Ireland

The application of interest on late payments has been suspended for January/February/March/April/May/June VAT. All debt enforcement activity is suspended until further notice. Revenue advised that business experiencing temporary cash flow difficulties should keep submitting tax returns on time. Current tax clearance status will stay in place for all businesses over the next months.

Italy

Retailers with a yearly turnover not exceeding 2 million euros will be waived from carrying out any VAT payment in the period ranging between 8 March 2020 and 31 May 2020. Such payments will have to be carried out by 16 September 2020. Filing requirements are suspended up to 31 May 2020. In spite of the ambiguous wording of the law, it appears the Italian tax authorities have recently clarified that these deferrals are open to retailers established outside Italy.

Lithuania

Lithuania allows deferment of VAT payments. The Lithuanian tax authorities have decided to apply the following VAT measures:

• Deferred VAT payments with exemption from statutory interest;

• Disapplication of tax recovery measures.

These measures are applicable during the period of the emergency + two months from the end of the emergency. When the emergency ends, taxpayers will have two months to settle the VAT liability or apply for an extension of the VAT holiday. The Lithuanian tax authorities have prepared a list of business activities for which these measures shall apply automatically; companies falling under these categories do not need to submit any special requests. Companies outside the list should submit a special request to the Lithuanian tax authorities.

Latvia

Postponement of current and overdue tax payments, for up to three years, or the ability to make instalment payments when the delay is related to COVID-19 without triggering late-payment penalties; a request must be submitted to the tax authority and will only be issued to “most affected” industries and companies that can prove a decrease in income due to Covid-19.

Beginning 1 April 2020, the tax authority will refund the approved input VAT within 30 days after the due date of submitting the VAT return (and not until end of the tax year), and the faster refund of input VAT will also apply for January and February 2020

Luxembourg

Given the current situation, the Ministry of Finance of Luxembourg has suspended the filing of VAT returns for an unlimited period of time. This means that, at certain conditions, retailers will not be fined if they file the VAT return after the deadline. Such extraordinary tax holiday was decided last week and will be valid until the Ministry decides to cease it. We can reasonably assume that the break will last for at least three months.

Netherlands

Penalties for late penalties will be cancelled but returns must be filed on time. After filing the return, retailers may write a letter to the Dutch Tax Authorities to ask for a VAT payment deferral due to problems with the coronavirus outbreak up to 30 September 2020. The deferral should be granted automatically. A lengthier break can be granted, provided that the retailers produce evidence of the damage suffered because of the current healthcare crisis.

Poland

Taxpayers can apply for VAT payment by instalment or for a payment deferral. The introduction of the new JPKV reporting (integrated VAT return and SAF-T file) system has been postponed to 1 Jul 2020.

Romania

Romania has halted most VAT audits and accelerated the process for VAT repayments.

Slovenia

Retailers may apply for a tax deferral lasting up to two years or pay VAT liabilities by 24 monthly instalments. The application for VAT payment deferral or VAT payment by instalments can be submitted using the e-Tax system or, exceptionally, via e-mail directly to the Slovenian Tax Authorities by using a specific form. You can write to info@taxmen.eu to receive a copy of the form.

Spain

Retailers with a volume of operations not exceeding 6 million euros in 2019 may request the payment deferral, without the need for any guarantee/deposit, for VAT payables when the total amount, per taxpayer, does not exceed 30,000 euros. This break concerns VAT liabilities arisen between 13 March 2020 and 30 May 2020. Such deferment may be granted for six months, without accrual of interest for the first three months. For larger taxpayers, deposits or guarantees may be required in order to qualify for the tax break.

Sweden

Sweden will grant a VAT holiday. The new rules are in force from 7 April 2020. In case of retailers strongly affected by COVID-19, the maximum accessible VAT deferral will be of up to 1 year.

United Kingdom

This means that no business will pay any VAT from 20 March 2020 until the end of June 2020; and will have until the end of the financial year 2020 to 2021 to repay those bills. VAT refunds and reclaims will be paid by the government as normal. Taxpayers using Direct Debit facilities should cancel them if they intend to enjoy the VAT holiday. The implementation of Phase 2 of Making Tax Digital has also been postponed by 12 months to 2021.

The VAT payment deferral period ends on 30 June 2020. This means that merchants will need to:

• Set-up cancelled direct debits in enough time for HMRC to take payment;

• Submit VAT returns as normal, and on time;

• Pay the VAT in full on payments due after 30 June.

Disclaimer

We strongly advise to contact Taxmen.eu (info@taxmen.eu) or the local tax authorities for additional information. This overview does not aim to embody proper and complete tax advice, but only a mere indication of where retailers may find complete tax information.

As the regulatory scenario in many EU countries is likely to change soon, we expect further updates in the next weeks. We also aim to add other countries to this EU VAT holiday overview as soon as more information becomes available.