In brief On 26 February 2021, the new Tax Convention for the Elimination of Double Taxation signed between Spain and Japan (“New Tax Convention”) was published in Spain’s Official State Gazette. The New Tax Convention is generally aimed at adapting its previous version to the most recent standards issued by…
On 1 January 2021, the UK left the EU VAT regime. Although the UK has retained a VAT system, it now operates on the basis that it is a third country (with the exception of goods supplied to and from Northern Ireland (“NI”), which continue to be treated as intra-EU trade for VAT purposes).
The UK Government’s agreement of the Trade and Co-operation Agreement with the EU does not change the VAT position. The TCA contains minimal provisions relating to VAT and with the exception of NI trade in goods, the UK is in most respects expected to be treated as any other third country for VAT purposes.
Spain has published the Law transposing Directive DAC 6, which will come into force on 31 December. However, in line with EU legislation, it provides for a transitional regime for arrangements for which the first stage of implementation took place between 25 June 2018 and 30 June 2020. In addition, it also applies to cross-border arrangements that have been subject to the obligation (not just to implementation) from 1 July 2020.
Implementing legislation is yet to be published, but it is expected soon, when a number of administrative reports on these rules are finalized.
On 30 September 2020, the European Commission published Explanatory Notes on the new VAT e-commerce rules that apply from 1 July 2021, which change how VAT applies to imports and distance sales of goods in the EU. These extensive Explanatory Notes explain and clarify the upcoming VAT rules and provide practical guidance for electronic interfaces (e.g. marketplaces or platforms), suppliers and logistic service providers involved in e-commerce.
Due to COVID-19, the implementation of the VAT e-commerce rules was postponed by six months from 1 January 2021 to 1 July 2021; however, the European Commission recently indicated that further postponement will not occur. Businesses must now urgently prepare for the new rules. The Explanatory Notes offer some useful guidance for this exercise. Although they are not legally binding, it is our experience that all EU member states adhere to the views set out in such notes. After all, representatives of all EU member states were involved in drafting them.
Baker McKenzie’s EMEA Tax Practice Group presented an overview on VAT on 13 October 2020, the tenth in a series of short webinars to keep tax professionals abreast of recent developments in these less than certain times.
Baker McKenzie’s VAT/Indirect Tax Practice presented “Financial Services VAT,” on 7 October 2020. This was the fifth presentation in the International VAT Conference Webinar Series, a global webinar series designed for VAT specialists from all industry sectors that aims to discuss the latest developing trends and hot topics in the VAT/goods and services tax (GST) and customs arena.