COVID-19 is a global issue and governments around the world are providing temporary tax breaks to help their struggling economies. Indirect taxes are a common area for reliefs to be applied.
In the UK, measures adopted include:
For indirect tax across Europe, the approach has been inconsistent, with many jurisdictions being less supportive than the UK. This is a constantly changing picture; however, we have captured some of the highlights:
The Norwegian measures include a VAT payment delay from 14 April 2020 to 10 June 2020.
In addition, the low rate of VAT was reduced from 12% down to 6% (8% initially proposed) for a temporary period of 1 April 2020 to 31 October 2020.
The European Union
The EU has temporarily suspended customs duties and VAT on goods needed to combat the effects of the Coronavirus outbreak such as personal protective equipment, testing kits or medical devices such as ventilators. It was confirmed by the UK Government on 31 March 2020 that this would also apply to imports into the UK.
Although the French Tax Authority’s tax deferral does not currently extend to VAT; the French have confirmed that the gift of medicinal products (masks, hand sanitizers, protective clothes and ventilators) made to care facilities or to public authorities does not give rise to a VAT adjustment.
The German Tax Authority has announced that there is no postponement for the VAT return filing or payment dates, however businesses may apply for a payment deferral if the payment would lead to significant hardship.
The Danish Government has implemented a temporary one-month suspension of VAT payments for businesses with a turnover higher than DKK 50Million. The deadline for remittance of VAT for the periods March, April and May 2020 is postponed by 30 days.
Similar to Germany, the Netherlands has confirmed that current VAT filing deadlines remain in place. However, applications can be made to the tax authority for deferral of the payment due without the need to provide documentary evidence of the need for the deferral. There will be no penalties imposed for late payment.
The Dutch Customs authority also have payment extension for customs and excise duties is granted until the fifteenth day following the month in which the COVID-19 measures end. Non-compliance with certain filing deadlines for customs duty returns will be excusable.
The Belgian Tax Authorities have announced minor changes to the deadlines for submitting VAT returns and for EC Sales Lists have been delayed, as have the payment deadlines. For February returns, the filing deadline is 6 April 2020 with payment delayed until 20 May 2020 and for March returns, including quarterly returns, the filing deadline is 7 May 2020 with payment due by 20 June 2020. In addition to this automatic deferral of payment, taxpayers can also apply for instalment payments of the debts relating to VAT.
Provided payments are made by the revised due date, no penalties or interest will be imposed.
The Greek government announced that the payment deadline for VAT debts that became or will become due between 11 March 2020 and 30 April 2020 will be extended to 31 August 2020. During this extension, the overdue amounts will not be subject to interest or surcharges.
Greece has reduced the VAT rate on products needed to protect against the coronavirus and prevent its transmission. The VAT rate is reduced from 24% to 6% for such products, i.e. hygienic masks and gloves, antiseptic solutions, wipes and other preparations, soap and other items for personal hygiene, and ethyl alcohol (if used as a raw material by industry for the production of antiseptics). The reduction applies until 31 December 2020.
For obvious reasons, the position in Italy is more fluid than other jurisdictions. The VAT deferral currently involves the suspension of VAT payment deadlines with a due date between 8th March 2020 and 31st May 2020 to 30th June 2020. However, this relief does not apply to non-resident businesses.
The Spanish Tax Authorities allow certain businesses to apply for a deferral of the payment of the VAT due for returns that have to be submitted in the period from 13th March 2020 to 30th May 2020. This does not apply to businesses with a turnover of over €6m or where the VAT debt is more than €30,000. The deferral will apply for 6 months and no interest will accrue during the first 3 months of deferral.
This is very difficult period for all businesses and AAB is here to support and help you through it. If you would like any further information on the points mentioned above or any other country, please contact Alistair Duncan (email@example.com) or your usual AAB Contact.
If you are unsure about what Government support package is available to your business, we are here to help. We have created a simple toolkit that cuts through the noise and makes you aware of exactly what help is available to you. It takes a few minutes to fill out and you can find it on our COVID-19 Information hub.