In our present series of articles we give you a throwback to the most important changes that came into force as a result of the summer tax package 2019.
The most changes effects VAT, that occurs because of the reform measures introduced in the EU VAT-system, the so called „Short-term Quick Fixes”, which will enter into force at the same time in every Member State of the EU as of January 1st, 2020.
Simplification of call-off stock regulation
Simplification of call-off stock regulation
The term of the call-off stock is abrogated, at the same time a new, detailed regulations are introduced, of which shall be known thoroughly by the companies who are using call-off-stock methods. We only point out hereby the main changes.
Basically, according to the rules entering into force as of January 2020, in case of transmission for call-off-stock reasons, the intra-Community supply and acquisition will take place at the time when the call-off happens, provided that the supplier, shall not established in the Member State where the products are transported, and the supplier has to register the purchaser and the purchaser’s tax id in the itemized VAT report at the time of the transport.
The call-off period will be maximized in 12 months as well. Further it will be regulated if another subject steps into the position of the original buyer, and if the products of call-off stock would be sold to a buyer other than the original buyer.
Based on the transitional provisions the regulations in force on the last day of 2019 (i.e. old regulations) shall be applied for the call-off stocks which are transported to Hungary before January 2020. If, however these products will still be on stock on the last day of 2020 then on this very day the transaction shall be qualified as iC supply/ acquisition of products.
Further, the administration of the call-off stock both in and out of Hungary will be regulated directly by the 282/2011/EU Council directive as of January 2020.
Chain transactions
The requirements of the tax-free supply in case of the chain transaction will be regulated in more detail as of January 2020.
If the middle man transports, then it should be handled basically as it has been carried out by a buyer, except in the case, when the middle man uses its VAT ID No. issued by the Member State from where the transport starts: in this case the middle man will be treated as a supplier and consequently the tax free iC supply will be the supply (and not the acquisition) of the middle man.
Intra-Community supply
According to the changes with the effect of January 2020, regarding the documentation of the iC supply more clear and strict regulations will be introduced.
The tax exempt iC supply has strict provision, namely that at the time of the actual transaction the VAT ID No. of the buyer shall be known. Further, these shall be reported in the recapitulative statement. Any, although formal mistakes may result in the loss of the tax-free status of the given iC supply transaction.
There are in fact some other changes related to the VAT in Hungary.
Defining the tax base in case of barter – multipurpose vouchers
If the contribution to be gained is not declared/determined in cash, and will be not determined neither in cash, nor in cash replacement instruments, or multipurpose vouchers, then the two transactions shall be taken into account as two separate ones, i.e. as parts of the barter. So, if the contribution is „paid” in multipurpose voucher, then the barter provisions could not be applied.
Retrospective reduction of the tax base-bad debt
In the future, the retrospective reduction of the tax base will be possible regarding bad debts, if its strict provisions are fulfilled according to the EU case law.
Furthermore, even the case will be regulated, where the debtor still settles his debt after the reduction of the tax base due to bad dept. The new regulation enters into force in January 2020.
‘Special tax refund’ in line with the principle of tax neutrality
A so-called 'special tax refund procedure' is introduced, whereby a taxable person may initiate a refund of input tax paid to him if, for any reason beyond his control, he has not otherwise recovered / is not reimbursed in accordance with the principle of fiscal neutrality. The actual procedure is subject to a limitation period and to several conditions.
5% tax rate
A reduced rate of 5% VAT will be introduced on commercial accommodation services from 2020.
Next to the above changes, Quick Fixes however require preparedness from the business entities, where our experts are here to assist you. Please do not hesitate to contact us in this regard!
