There will be changes to the Value Added Tax Act on 1st of January 2011. Most significant changes are:
1. Report on intra-Community supply of goods or service has to be presented monthly for the deadline of 20th date of each month. Previously it had to be done quarterly.
2. VAT on purchase of a new means of transport from other EU member state has to be paid within 10 days if the car is not registered in Estonian Road Administration.
3. All taxable persons with annual turnover less than 200 000 EUR can use cash basis VAT accounting until 31st of December 2012.
4. The term of “location of service” will change.
1. All Estonian companies have to mention intra-EU services in turnover report in addition to intra-EU goods turnover if the international service is provided to VAT-registered EU companies. This report had to be done quarterly until 31.12.2010. Staring with 2011 this report has to be done every month.
2. If new vehicle is bought in another EU member state then VAT is to be taxed within 10 days if the vehicle is not registered in Estonian Road Administration. Term “new vehicle” means car with engine not less than 48 cm2 and power more than 7.2kW, which has been registered less than 6 month ago and operational kilometers less than 6000 kilometers. Inside EU VAT is 0% if the vehicle was approved by another EU state member. The buyer always pays VAT regardless of the VAT-obligations of the buyer and the seller.
Also there are new additional requirements for the invoices (data confirming that expropriate goods is new vehicle sold is new).
If new vehicle is sold to private person of another EU member state, the invoice copy should be attached to the intra-EU turnover report (VD) regardless of VAT obligations of the buyer and the seller). VAT-obliged or limited VAT obliged person pays the VAT to custom authorities.
3. All taxable persons with annual turnover less than 200 000 EUR can use cash basis VAT accounting until 31st of December 2012. Tax and Customs Board agent has to be informed of the date of start using cash basis VAT accounting. VAT on amounts not received still has to be paid on 3rd calendar month and declared as invoice carrying the date of first day of the 3rd month.
Previously this method has been used only by sole proprietors.
The amendment is based on EC Council decision 2009/1022 of December 15, 2009, which authorizes Estonia to apply a measure derogating from article 167 of EU VAT Directive (2006/112/EC).
4. The location of service provided is determined by the location of the person who provides the service. If Estonian VAT-registered entity provides services to a foreigner in Estonia, then Estonia is the location of the service provided and VAT must be paid according to Estonian laws.
According to draft plan for the law, the main rule for the service provided is that turnover belongs to the location where the VAT-obliged buyer is located (including the cases when buyer does not belong to EU member state). The process is familiar to companies who sell goods to VAT-obligated companies in another EU member state and the goods are imported.
In the case of reverse taxing the company providing the service makes the invoice with 0% VAT and the VAT obligations will transfer to the company which receives the service. Depending on the location of company providing the service (like it happens nowadays) the services provided to non VAT-obligated entity will continue to be VAT-obliged. Also the exceptions based on previous criteria of the location of provided service will still apply and have to be paid at the location where the service was provided.
Estonian parliament has approved more amendments to the VAT Act:
• For anti-evasion purposes, taxation by reverse charge would be extended to the supply of waste metal and real estate.
• The special tax regime applicable to cross-border supplies of natural gas and electricity via network would also be extended to heating and cooling energy. Under the special tax regime, the location of supply of heating and cooling energy would be the location where the customer is established. This amendment would implement changes introduced to the EU VAT Directive by Council Directive 2009/162/EC.
Act to enter force on 1st of January is located here (in Estonian) www.riigiteataja.eeVeronika Kimsen
info@1office.ee
