What’s new in the Value Added Tax Act (VAT Act) as of 1 January 2024?

In this article, we examine some of the amendments to the Value Added Tax Act (VATA) which come into force on 1 January 2024.

            1. Article 27(6) specifies the method for determining direct costs where goods and/or services are used simultaneously for the personal needs of the taxpayer, the owner, the workers and employees, or, more generally, for purposes other than the taxable person’s independent economic activity and for independent economic activity.

In such cases, the tax base is allocated proportionally according to the extent to which the relevant goods and/or services are used for the owner’s personal needs, the workers and employees, or, more generally, for purposes other than the independent economic activity.

            2. A new Article 57e has been introduced concerning the deferred payment of VAT in the case of centralised clearance of imported goods, under which:

Deferred payment of tax in the case of centralised clearance of imported goods may be applied by a taxable person who holds an authorisation for the centralised clearance of goods, issued in accordance with the terms and conditions of Union customs legislation and which, on the date of importation, meets all of the following conditions:

• holds an identification number pursuant to Article 94(2) of the Value Added Tax Act, issued in the country, and this number is entered in the authorisation for the centralised clearance of goods;
• holds an authorisation for deferred payment of import duties, issued or approved by the customs authorities in the country in accordance with the conditions and procedures laid down in Union customs legislation.

            The procedure for declaring and charging VAT with deferred payment in the case of centralised clearance upon importation of goods is set out in Article 57g, whilst the procedure for paying the tax where deferred payment applies in the case of centralised clearance of imported goods is set out in Article 57h.

            3. An amendment has been made to the text of Article 71(3) of the Value Added Tax Act, pursuant to which: A person may exercise their right to a tax credit where they have fulfilled one of the following conditions:

• holds a customs import document in which the person is named as the importer, and a document, a copy of a document or a document proving that the tax has been paid in accordance with Article 90(1) – in the case of imports under Article 16.

            This provision allows for the fact that VAT has been paid to be proven by means of a document, a copy of a document or a document proving that the tax has been paid.

            4. In Article 79, concerning the adjustment of a tax credit claimed in respect of goods or services, the circumstances in which an adjustment is made have been expanded to include theft and the discovery of a loss.

The new text reads: A registered person who, in whole, in part or in proportion to the extent of use for independent economic activity, has claimed a tax credit in respect of goods produced, acquired or imported by them, shall, in the event of destruction, theft, the discovery of a loss or shortage, or the scrapping of the goods, shall be liable to pay tax equal to the amount of the tax credit claimed.

            5. At the same time, Article 80 contains new provisions regarding restrictions on adjustments. Under the new wording, effective from 1 January 2024, adjustments under Article 79 shall not be made in the following cases:

1. proven or confirmed destruction, loss or absence of goods as a result of:

(a) force majeure;

(b) accidents or disasters which the person can prove were not caused by their own fault or by the fault of the person using the goods;

(c) natural wastage resulting from changes in the physical and chemical properties of goods during storage and transport, determined within the limits set for natural wastage in accordance with legislation or company standards and specifications;

(d) events other than those referred to in points (a) to (c), beyond the taxpayer’s control, in respect of which the taxpayer can prove that they were not caused by his or her fault;

2. the destruction of excise goods under administrative control in accordance with the Excise Duties and Tax Warehouses Act;

3. proven or confirmed destruction, including the disposal of goods in a manner that results in their irreversible loss as a result of:

(a) production scrap within the permissible limits specified in thetechnical documentation for the relevant production process or activity;

(b) rejection due to the expiry of the shelf life or durability period, as determined in accordance with the requirements of a regulatory act or, in the absence of such an act, company standards, and within the limits customary for the activity in question;

(c) the disposal of goods which have become objectively unusable for the taxable person’s independent economic activity as a result of their normal use in that activity;

(d) the write-off of fixed assets where their carrying amount is less than 10 per cent of their carrying value;

4. the disposal of goods which are objectively unsuitable for use in the taxable person’s independent economic activity, where a subsequent taxable supply has been made in respect of those goods, including in accordance with the provisions of Chapter Nineteen ‘a’.

            6. The options for paying tax on imported goods have been expanded.

In accordance with the new version of Article 90: In the cases referred to in Article 16, the importer of goods or their representative under Union customs legislation shall effectively pay the tax assessed by the customs authorities into the State budget as follows:

1. into the relevant account of the Customs Agency for import duties, value added tax on imports, excise duty on imports, fines, financial penalties and interest;

2. via a virtualPOS terminal or via a POS terminal in accordance with Article 4(3) of the Law on the Restriction of Cash Payments.

            7. In the procedure for offsetting, deduction and adjustment of the result for the period – tax to be refunded – the following cases have been added to those set out in paragraph 3:

Notwithstanding paragraph 1, the tax refundable under Article 88(3) shall be refunded within 30 days of the submission of the tax return containing a new point 3: where the person has utilised funds for the construction, management, maintenance and operation of water supply and sewerage systems and facilities in the implementation of water projects financed from the budget or from funds provided under European Union programmes.

            8. In Article 102 of the VAT Act, concerning registration at the initiative of a revenue authority, paragraph 5 has been repealed and an entirely new paragraph 6 has been introduced, which sets out the methods for calculating VAT by taxable persons:

            Where a revenue authority establishes that a person has failed to fulfil their obligation to submit an application for registration within the prescribed time limit, it shall register that person by issuing a registration certificate, provided that the conditions for registration are met. The certificate shall specify the grounds for registration and the date on which the obligation to register arose.

For the purposes of determining a person’s tax liabilities in cases where they were required to, but failed to, submit an application for registration within the prescribed time limit, it shall be deemed that the person owes tax on the taxable supplies and taxable intra-Community acquisitions made by them and on the taxable supplies of services received, for which the tax is chargeable to the recipient:

            1. for the period from the expiry of the deadline by which the registration certificate should have been issued – provided the person submitted the application for registration within the deadline – until the date on which the person was registered by the revenue authority;

            2. for the period from the expiry of the deadline by which the registration certificate should have been issued – provided the person submitted the application for registration within the deadline – until the date on which the grounds for registration ceased to exist.

            A registered person may, in respect of any taxable supply made by them, documented by an invoice and/or an invoice note without VAT charged, in respect of which they owe VAT, may, in the first or subsequent tax period, cancel the documents issued without VAT charged in accordance with Article 116 of the VAT Act and issue a new invoice in accordance with Article 113 of the VAT Act, in which the tax is shown on a separate line.

When determining the amount of tax due for each taxable supply made, it is assumed that the tax is included in the agreed price, unless it is expressly agreed, when the new invoice is issued, that the tax is to be payable separately. The new invoice is recorded in the sales ledger for the tax period in which it was issued.

            Where no new invoice has been issued in accordance with the procedure described above, the registered person shall account for the tax due on the taxable supply made by them by means of a protocol in the first or the following tax period. The statement must contain the details specified in Article 117(2)(1) to (8) of the VAT Act, and must also specify the documents issued which document the supply without VAT charged. The statement issued shall be recorded in the sales ledger for the tax period during which it was issued.

            A registered person in respect of taxable supplies made which are not documented by an invoice and/or a note to an invoice without VAT charged, and for which tax is due, shall, in the first or subsequent tax period, draw up a return under Article 119 of the VAT Act, in which they shall determine the amount of tax due in accordance with Article 67(2) or (3) of the VAT Act, and shall record it in the sales ledger for the tax period in which it was issued.

            The registered person shall account for the tax due on each taxable supply of goods or services received, for which the tax is payable by the recipient, by means of a statement under Article 117 in the first or subsequent tax period. The statement shall be recorded in the sales ledger for the tax period in which it is issued. In respect of supplies under Article 163a(2) for which tax has been charged by the supplier, the registered person shall not be liable for tax under the provisions of this Article.

            The person shall be liable to pay interest on the tax due, with effect from the expiry of the period within which the tax should have been paid, provided that the person was registered under this Act within the prescribed time limit.

            In the cases referred to in Article 102a(6) of the VAT Act, the recipient of the supply – a person registered under this Act – may exercise the right to a tax credit in accordance with the general rules of the Act during the tax period during which the new invoice was issued, or during the following tax period, provided that they were a registered person on the date of supply and had recorded the originally issued invoice and/or the related notification in the purchase ledger under Article 124, (1)(1) within the time limit specified in Article 72(1) of the VAT Act.

            9. The provision of Article 113(2) of the VAT Act has been clarified: A paper invoice must be issued in at least two copies – one for the supplier and one for the recipient.

            10. A new paragraph 1a has been inserted into Article 118, which provides that: Where a person, whether registered or unregistered under this Act, fails to issue a document as referred to in paragraph 1 (a fiscal receipt or a system receipt), the recipient is entitled to withhold payment of the value of the supply or sale.

The first sentence shall not apply in cases where this Act or the regulation referred to in paragraph 4 permits, in respect of supplies or sales at a retail outlet, the non-issuance of a fiscal receipt from a fiscal device (fiscal receipt) or a cash register receipt from an integrated automated retail management system (system receipt).

            A new paragraph 21 has been introduced, under which a person who has chosen to use, in a retail outlet, software included in the list set out in paragraph 16, may register and report the supplies/sales made by them at that commercial premises by issuing a fiscal/system receipt generated electronically, which is provided to the recipient electronically, subject to the the conditions, procedure and manner specified in the regulation referred to in paragraph 4.

            11. A new Chapter Twelve ‘a’ has been introduced. General obligations of payment service providers.

A new Article 123a has been introduced. The obligations of taxable persons who are payment service providers to payees regarding the maintenance of an electronic register of payees and payments in connection with cross-border payments have been specified.

            12. With regard to the reduction of the tax base and the tax charged in the case of an uncollectible receivable, the wording of Article 126b( 8 concerning the notification of the competent regional directorate of the National Revenue Agency and the issue of a permit or refusal in accordance with the procedure set out in Chapter Twelve of the Tax and Social Security Procedure Code.

            13. The provisions relating to the registration of foreign nationals not resident in the country and to special registration for the application of a regime outside the Union have been clarified.

            14. Provisions relating to fines for natural persons who are not traders, or to financial penalties for legal persons and sole traders, have been amended in Articles 179, 181e, Article 182, Article 185 and Article 192a have been amended.

            15. The transitional and final provisions define the terms ‘payment serviceprovider’ and‘payment service’.