This issue of InfoCourier covers the following topics:
- Amendments to the Value-Added Tax Act passed
Please feel free to contact KPMG’s tax advisers with any queries you may have.
We hope you are enjoying reading it!
Amendments to the Value-Added Tax Act passed
A bill on the amendments to the Value-Added Tax Act and the Customs Act passed the third reading in the Riigikogu on February 10. The amendments required for transposing the EU VAT e-commerce package into Estonian law will take effect on 1 July 2021 and concern the VAT rules for business-to-consumer (B2C) transactions.
Summary of the amendments:
- A new EU-wide threshold of EUR 10,000 is established up to which B2C EU cross-border supplies remain subject to the VAT rules of the member state of dispatch, and above which supplies become subject to the VAT rules of the member state of destination; all supplies of goods and most supplies of services to a consumer located in another member state are included in the calculation (until now only digital services were included).
- When goods are supplied to a consumer in another member state, the VAT payable in the member state of destination can be declared and paid through the Estonian Tax and Customs Board. The so-called Mini One Stop Shop (MOSS) scheme that so far has existed only for digital services and which lets businesses register for and pay VAT in one member state is extended to include sales to final consumers. The abbreviation MOSS is replaced with OSS (One Stop Shop).
- The MOSS scheme is extended to services connected with immovable properties located in another member state, to hiring means of transport and services related to the entrance and organisation of events if these services are provided in Estonia to a customer (final consumer) located in another member state.
- There will be a separate simplified scheme set up to cover B2C sales of goods imported from outside the EU in consignments of up to 150 euros. This scheme is known as IOSS (Import One Stop Shop).
- The deemed supplier is determined with regard to VAT on third-country imports where the sales is facilitated by an online marketplace or platform or a similar channel.
- The place of taxation is determined with regard to an intra-Community supply of goods or when goods are imported for a customer based in Estonia.
- An online marketplace is required to keep records for at least 10 years.
- Businesses who wish to register for the OSS scheme when importing goods for sales to consumers or when selling goods and services to persons located in another member state must lodge an application to the Tax and Customs Board. Applications can be filed as from April 1.
On 1 January 2022, another amendment to the Value Added Tax Act takes effect, introducing the option of bad debt relief , whereby a supplier can claim relief from VAT on bad debts incurred, provided that certain legal conditions are met, including the following:
- the debt has been outstanding for at least 12 months but not older than three years;
- the debt must have been written off in the financial accounts, and the counterparty has been notified of the write-off;
- the debt has not been assigned to a third party;
- the person from whom the debt is due is not a related party.
More information on the bill is available here (in Estonian).
Further information: Tax Advisor Merike Oja, email@example.com