EU: Effects of and considerations about VAT rate reductions (COVID-19)

EU: Effects of and considerations about VAT reductions

There are countries in Europe that changed their rates of value added tax (VAT) as a response to the economic impact of the coronavirus (COVID-19) pandemic.

1000

Related content

For instance, changes to the VAT rates were temporarily put into place in Germany, Austria, Belgium, Cyprus, and the Czech Republic.

Some countries applying a new VAT rate as of the second quarter of 2020 have decided to end the temporary VAT regime at the end of 2020 or in the first quarter of 2021. The temporary VAT regime is a phenomenon specific of these times (meaning that all changes could be reversed after a short period). A temporary reduction in VAT rates could be relevant in combination with operational changes in supply chains, modifications of go-to-market terms, and agreeing to new vendor conditions. These aspects need to be re-considered at the end of the temporary VAT regime period.

Whether a VAT rate change was an appropriate measure is not yet clear. In any event, there are ERP (enterprise resource planning) considerations that tax functions of a business need to examine. An ERP update, however, has several steps even for a “simple” VAT rate change, and these need to be planned properly.

Read an October 2020 report prepared by the KPMG member firm in Switzerland

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal