VAT: The hot gossip!

Tuesday, April 5, 2011

by Nick Ryan

There are a number of issues that are currently attracting interest in the VAT world and below are a brief précis on some of these which may be of interest to our readers. If you have some news or issues on VAT that you would like to open for discussion then please post them on our Face book and LinkedIn pages.
VAT treatment of food prepared for immediate consumption: The ECJ has provided a recent ruling on a German case whereby the VAT treatment of food prepared for immediate consumption for snack stalls or cinema foyers is supplied at the reduced rate. A key question arising from this ruling is how this decision impacts in the other Member States and whether the current treatment in these Member States is conflicted. Following this is whether there is an opportunity for these businesses involved in these supplies to submit retrospective claims. If so, whether unjust enrichment would be argued by the tax authorities and applied as in line with the Marks and Spencer decision.
Specialised warehousing services to non established businesses: This issue related to these services provided on behalf of a US company by a German warehouse operator and whether the services qualified as Business to Business services, as such then outside the scope of German VAT, or, alternatively whether the services related to immovable property and therefore German VAT applied. This demonstrates the complexities involved in determining what, on the surface, appears a relatively straightforward supply. Here the discussion threads have reaffirmed the need to dig deeper and examine the details of the services provided prior to reaching a decision as to the VAT treatment to be applied.
VAT in the USA: There is a wealth of discussion on the introduction of GST (“VAT”) in the USA with mixed views. Currently the system applied in each State can differ and therefore when entering into business with a US company particularly in relation to the supply of goods there is a need to identify what the local State tax position is.
ESL’s for branch VAT registrations: The UK Revenue & Customs have reissued an updated Notice 725, The Single Market, which confirms that where branches sales exceed the £70,000 threshold then they are required to submit an individual ESL. For branches that do not exceed this threshold then their information is included in the overall group ESL. Branches that exceed this threshold can also avail of the online correction facility.

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