Tax Q&A: Your conundrums answered
Our tax technologists speak to tax professionals around the world on a daily basis, so it’s no surprise they are asked a huge number of questions spanning a range of topics.
In this special Q&A, we’ve picked some of the questions our team have been faced with in recent months and shared the answers for you to enjoy.
Q: Is a pro-forma invoice required when importing goods to the UK?
A: According to the regulations, a commercial invoice or delivery note is required. A pro-forma invoice could be considered a commercial invoice, providing it has the correct information on it.
Q: I work for a business in the Netherlands that offers a service to local people looking to move to France. We assist with the purchase of properties and other aspects of the move. All our work (from searching for a suitable property to completing the necessary paperwork) is carried out in the Netherlands; at no point do we travel to France. This is a local service and we pay Netherlands VAT. However, the Dutch tax office has said that French VAT registration is required. Is this correct?
A: I agree with the Dutch tax office. French VAT registration is required as B2C intermediary services are taxable in the country where the underlying supply takes place. In your case, this is in France where the sale of the property in question takes place. More information is available here.
Q: Saudi Arabia is due to introduce mandatory e-invoicing later this year. As my business trades in the country, what steps should I be taking at this stage?
A: You need to be proactive because a huge number of businesses in the region will soon have to implement new solutions to ensure compliance and the number of providers currently in the market will struggle to meet demand. I expect there to be multiple stages of implementation, starting with the largest companies. Those businesses that failed to invest in automation when VAT was introduced in Saudi Arabia in 2018 now have a second chance to get it right by reviewing their processes and taking steps to ensure invoicing and tax determination are completed with 100% accuracy.
Q: My business is based in Poland. We have recently registered for distance selling in Italy. What do we need to be aware of?
A: You may need to inform the Italian tax authorities of your plans so your first step should be to send a letter to the Pescara tax office to confirm them that your sales from Poland to Italy will be taxed in Italy. I would recommend sending a letter with recorded delivery for peace of mind.
Q: How are sales between Northern Ireland and Great Britain treated for VAT since Brexit was finalised on 1st January 2021?
A: The good news is that in terms of VAT, Northern Ireland and Great Britain are considered to be the same country. This means standard Great Britain VAT rules apply.
Q: My organisation does a lot of business in Oman. I’ve heard that VAT registration is now open for businesses with supplies worth more than OMR 1 million, but our total is about half that amount. When can we expect to register?
A: Oman is making great progress in readying itself to impose VAT on some businesses in April 2021, but many have a little longer to wait. For businesses with supplies worth between OMR 500,000 and OMR 1 million – which may include yours – you will be invited to register between 1st April and 31st May and can expect to start paying VAT from 1st July this year.
Q: I’m interested in triangulation in Italy. For example, could it be applied to a scenario in which Agent B is registered in Italy? Also, how about when that business is VAT registered and has a branch for direct tax purposes? Finally, would the Italian tax authorities allow triangulation when Agent B has a fixed establishment for VAT?
A: Providing you follow the EU’s triangulation rules, it would be permitted in these scenarios. Having a permanent establishment within Italy is not a reason to not apply for a triangulation.
Q: New e-commerce rules are coming for retail platforms operating within the EU from July 2021. If a seller does not opt complete an Import One-Stop-Shop (IOSS) declaration, France has suggested it will make the platform the importer of record. Is there any legislation for this?
A: It’s not entirely clear, but generally speaking this provision indicates that the marketplace will be deemed the supplier for VAT purposes on distance sales performed by sellers based outside the EU on goods up to a value of €150 per shipment.