InfoCourier provides a monthly overview of the latest changes in legislation.
A bill on amendments to the Value-Added Tax Act is currently undergoing the third reading in the Riigikogu. The amendments concern primarily the businesses supplying goods to another member state with the intention of warehousing for a known customer (call-off stock) and the businesses participating in a chain transaction (successive supplies of the same goods). The bill provides more detailed guidance as to how to treat such supplies for tax accounting purposes. The aim of the amendments is to harmonise the VAT treatment of these supplies at the EU level, and to transpose the revised EU VAT Directive into national law. Further, the definition of investment gold is specified to include only the gold of the quality acceptable for trading on the bullion market.
The following amendments are proposed with regard to cross-border supplies:,
1) specification of the conditions that must be met for the application of call-off stock arrangements. When the goods are moved to another member state under a call-off stock arrangement, ownership remains with the supplier, but the goods are to be called off by a known customer within a 12-month period. The bill provides more detailed rules on the treatment of call-off stock for tax accounting purposes and the obligation to provide information on such supplies in the report on intra-Community supply. The proposed changes should help to avoid having to register for VAT in another member state where goods are held in the call-off stock;
2) specification of the conditions that must be met for qualifying a supply as an intra-Community supply of goods in a chain transaction, i.e. the direct transport from the first supplier to the last customer in another member state, comprising successive supplies of the same goods. A zero-rated intra-Community supply of goods is a transaction in which goods are dispatched or transported by the supplier or the intermediary from Estonia to another EU country. If the goods are transported by an intermediary who holds Estonian VAT registration in Estonia, and if the intermediary has communicated the VAT identification number to the supplier, the supply of the goods by the intermediary is treated as an intra-Community supply;
3) a provision is added requiring that a zero-rated intra-Community supply of goods must be duly reported in the report on intra-Community supply.
A list of documents accepted as evidence of dispatch or transport to another EU country has been added to Implementing Regulation (EU) No 282/2011, which is directly applicable in all EU countries. A person applying the zero rate to a transaction must be in possession of at least two items of non-contradictory evidence confirming the transport of the goods.
The amendments are expected to enter into force on 1 January 2020.
The bill and the details of the legislative process are available here (in Estonian).
Additional information: Tax Advisor Merike Oja, email@example.com
A bill on amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act is currently undergoing the second reading in the Riigikogu. The bill changes the rate of excise duty on cigarettes and smoking tobacco and specifies the application of the act with regard to tobacco products intended for consumption by heating and the revenue stamping arrangement.
The bill reduces the cigarette excise rise initially planned for 2020 from close to 10 percent to 5 percent, in order to curb cross-border trade with Latvia. For the years 2021 to 2023, the bill foresees a yearly increase of close to 5 percent.
The rise in excise duty on smoking tobacco for 2020 remains unchanged at 8 percent planned earlier. A rise of 8.3 percent is foreseen for 2021, so that smoking tobacco would be taxed at a rate equal to cigarettes. The excise duty on smoking tobacco is to increase 5 percent in 2022 and 2023.
The change does not impact the increase rates decided earlier for other excise goods. Excise duty on both liquefied petroleum gas (LPG) and natural gas is increased by 25 percent in 2020, compared with the current rate.
The provisions on revenue stamping foresee that a business without a excise-taxable status and a registered consignee must have obtained revenue stamps by the time when the excise goods are received from another member state and affix the stamps immediately to the goods. In case the revenue stamps have not been ordered in time and are not available at the time when the excise goods are received, the goods need to be stored in an excise warehouse.
The amendments are expected to enter into force on 1 January 2020, and the amendments concerning revenue stamping on 1 July 2020.
The bill is available here (in Estonian).
Additional information: Tax Advisor Merike Oja, firstname.lastname@example.org
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