Applicable changes in tax legislation
Modification of sub - accounts for the payment of excise duties and environmental taxes
As of June 10, 2021, there is a change in the field of excise duties and environmental taxes in the filed of settlements. Liabilities under the calculation of excise duties and environmental taxes will be paid to new tax sub-accounts. Taxpayers will be able to check the correct sub-account for the payment of excise duties and environmental taxes also on the specific calculation of excise duty or environmental charges in the E-TROD information system. In the event that several types of duties are paid in one amount, which are linked to the same sub-account, then the taxpayer shall indicate the reference SI19 tax number-99996 when making the payment.
Also, as of 10 June 2021, the sub-account for the payment of excise duty for excise taxpayers who submit returns via the eCarina portal or in paper form - TRO-NAP or TRO-ZPP documents, will be amended. After June 10, 2021, the eKartica and eKaticaO will be used to view the balance of excise duties and environmental taxes. Statements of excise duties and environmental taxes submitted before 10 June 2021 are still made in eDavki in eKarticoC.
From 1 July 2021, the all-in-one system and special arrangement for business entities - VEM - will be expanded
From 1 July 2021, an electronic one-stop shop for VEM (OSS) will be established, which will simplify the obligations of business entities operating in Member States where they are not established. Under this system, businesses will be able to identify and submit a separate VAT return.
With the VEM system, business entities can register and pay VAT liabilities with a registered office in the EU, as well as business entities that are not based in the EU.
The need to register for VAT in each Member State where the supply of goods or services takes place will no longer be necessary, as taxable persons for whom the place of taxation in the Member State of destination will only be able to do so in one Member State where they are established.
Obligations of the deemed suppliers using OSS and/or IOSS for record-keeping
Information that should be included in the records of the taxable person using Non-Union Scheme (OSS) or the Union Scheme (OSS) differs if the taxable person uses the import Scheme (IOSS). The legal background for these schemes is Article 63c(1) and Article 63c(2) of the VAT Implementing Regulation.
Table 1: IOSS registration by type of supplier and place of establishment
Proposal for amendments to tax legislation
Proposed amendments to the Financial Administration Act and the Tax Procedure Act
The Ministry of Finance is proposing an amendment to the Financial Administration Act with the aim of improving the legal security of taxpayers in proceedings, improving the organization of the financial administration and thus efficiency and quality in the conduct of proceedings. The main changes in the proposal include the introduction of collegial decision-making in the most demanding cases of tax procedure, determining the mandates of financial offices following the example of the Director General of Financial administration of the Republic of Slovenia (FURS), changes in the transfer of similar and specific cases to a group of officials within different offices with a complaint about alleged human rights violations in connection with the exercise of certain powers of officials and demands the obligation to report to the Minister in connection with substantiated complaints..
When amending the Tax Procedure Act, the exercise of the rights and legal benefits of taxpayers is regulated. The proposal seeks to speed up and facilitate procedures. The proposal seeks to shorten the deadlines for determining binding information, the taxpayer will not need a qualified digital certificate to download documents from the eDavki portal, requests for reduction or exemption from tax deduction would be submitted electronically and the deadline for filing a tax return would be extended after the prescribed period.
Additionally, the amendment to the law proposes:
- measures that make it easier for the taxpayer to pay or secure the tax debt
- additional options for fulfilling the tax obligation after the fulfilment deadline without penalty
- measures to strengthen legal certainty and predictability
- measures to ensure transparency, efficiency, and correctness of implementation in practice
- elimination of administrative barriers for taxpayers
- ensuring decision-making in the most demanding tax inspection procedures within the prescribed time limit and determining the effects if the tax authority does not make a decision within the time limit
- reduction or transformation of the interest rate, and
- changes in tax inspection and tax enforcement.
The two Acts are expected to enter into force on 1 January 2022.
The proposed amendments to the Value Added Tax Act provide one more major change
A taxable person who is not established in Slovenia will no longer have to identify himself for VAT purposes in Slovenia if he sells only to VAT payers in Slovenia. In such a case, the end customer will be the VAT payer.
The draft of the law also implements Article 194 of Council Directive 2006/112 / EC of 28 November 2006, which provides that Member States may determine that the person liable for payment of VAT is also the person to whom the taxable supply of goods and services is made. This applies to taxable supplies of goods and services made by a taxable person not established in the Member State where VAT is due.
The payment for business performance is changed in the personal income tax bill
In the personal income tax bill, the performance pay can be paid in cash or in benefits-in-kind and is therefore no longer considered as part of the performance pay under the Employment Relationships Act. A new change is also the amount of tax-free work, as it adds the possibility of tax-free work for business performance up to 100% of the average salary of the employee with salary compensation, for the last 12 months with the employer, if it is more favourable for the taxpayer. Still, the amount of tax-free work remains at 100% of the average monthly salary of employees in Slovenia.
In the Personal Income Tax Act, the condition will be maintained that in the collective agreement, or the general act of the employer defines the right to payment for business performance.
Court of Justice of the European Union (ECJ) new cases
Taxation of the roaming service of a third country company in a Member State of the European Union
On April 15, 2021, the Court of Justice of the European Union ruled in Case C-593/19 (SK Telecom Co. Ltd. v Finanzamt Graz-Stadt), which dealt with the question of whether telecommunications roaming services are taxed where “used and enjoyed” in the territory of a Member State.
SK Telecom is a South Korean-based mobile phone company that has provided mobile phone services to some of its South Korean customers temporarily residing in Austria. To enable these persons to use mobile phones during their stay in Austria, the Austrian network operator made its network available to SK Telecom in exchange for the payment of user fees and Austrian VAT (20%). SK Telecom then charged its customers for roaming to use the Austrian network. SK Telecom then applied for a refund of the VAT charged by the Austrian network operator. The Austrian Finanzamt refused to refund VAT because SK Telecom would have to charge its customers Austrian VAT on its costs, otherwise roaming prices would not be subject to VAT at all, as SK Telecom did not charge roaming VAT to its customers (because these telecommunications services in South Korea are not subject to taxation). In this case, the court took into account Article 59a (b) EU VAT Directive 2006/112 / EU in its decision.
The Court ruled that Article 59a (b) of VAT Directive 2006/112 / EU, as amended, from 1 January 2010, by Council Directive 2008/8/EC of 12 February 2008, should be interpreted as meaning that roaming services provided by a mobile operator established in a third country (in this case South Korea) to its customers who have also a permanent address or habitually resident in that third country allow the use of the national telecommunications network in the Member State (in this case Austria) in which they are temporarily resident. For the purposes of this provision, a roaming service should be considered to be "effectively used and enjoyed" in the territory of that Member State, so that that Member State may take into account the place of supply of the roaming service in its territory, under the domestic tax law of that third country, such a rule applies, as it has the effect of preventing the non-taxation of these services in the European Union.
Clarification of the term ‘restaurant service’ and ‘food’ to which a reduced VAT rate applies
On April 21, 2021, the Court of Justice of the European Union ruled in Case C-703/19 (Katowicach), related to restaurant services and take away meals.
In September 2016, the tax audit office carried out a VAT audit of the taxable person (franchisee in a chain of fast-food restaurants) who is the appellant in the main proceedings, which covered the period from January to June 2016. During the audit, incorrect VAT settlements were identified. Consequently, by decision of 21 April 2017, the tax authority issued a VAT assessment to the taxable person for the period covered by the audit because of its determination that the taxable person’s entire activity consisted in food and beverage services taxed at a rate of 8% rather than in the supply of prepared dishes to which a rate of 5% applies. The essence of the dispute was whether the tax classification of specific products (meals and dishes) sold by the appellant and the application of the reduced rate of 5% thereto (originally, the reduced rate of 8% had been applied) was correct. Those products are intended for immediate consumption by customers within a chain of establishments. These products are served on a tray. The customer receives disposable napkins and with certain products cutlery or a straw. Prepared meals and dishes are served hot or cold in a form which is ready for consumption on the premises or can be taken away. To sum up, Poland has two reduced VAT rates that may apply. The appellants’ activities fell under ‘food and beverage outlets’ subject to the 8% VAT rate, and not the supply of ‘prepared food’ subject to VAT rate of 5%.
The Court ruled that Article 98(2) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2009/47/EC of 5 May 2009, read in conjunction with point 12a of Annex III to that directive and Article 6 of Council Regulation (EU) No 282/2011 of 15 March 2011 implementing Directive 2006/112, must be interpreted as meaning that the concept of ‘restaurant and catering services’ includes the supply of food accompanied by sufficient support services intended to enable the immediate consumption of that food by the end customer, which is a matter for the national court to determine. In case the end customer chooses not to benefit from the material and human resources made available by the taxable person for the consumption of the food supplied, it must be concluded that no support services accompany the supply of that food.
Default interest also due by a person jointly liable to pay VAT
On May 20, 2021, the Court of Justice of the European Union ruled in Case ECJ C-4/20 (ALTI), related to a question whether Article 205 of the VAT Directive and the principle of proportionality are to be interpreted as meaning that the joint and several liability of a taxable person for a VAT debt, being the recipient of a taxable supply where the supplier has failed to account for VAT, extends to the obligation to pay default interest.
The Bulgarian private company ALTI bought from the Bulgarian one-person company FOTOMAG a combine harvester, a tractor, and a wagon, which FOTOMAG had acquired in intra-Community trade from a company established in the United Kingdom. FOTOMAG prepared three invoices for the deliveries of agricultural machinery to ALTI, each of which stated VAT. After paying those invoices, ALTI exercised its right to deduct VAT. The Bulgarian tax authorities imposed an additional assessment against FOTOMAG for failing to pay the VAT it declared for the intra-Community acquisitions and charged ALTI on the invoices. The tax authorities also established that ALTI and FOTOMAG had entrusted their accounting, the management of their bank accounts and the submission of their VAT returns to one and the same person, that the purchase of the agricultural machinery was financed by FOTOMAG through a third company whose partners were the directors of FOTOMAG and ALTI and that a director and representative of ALTI had organized the transport of the combine from the United Kingdom through another company. Based on these findings, the tax authorities concluded that ALTI had itself organized the purchase of the agricultural machinery by FOTOMAG in the form of an intra-Community acquisition to apply VAT incorrectly and that ALTI knew that FOTOMAG charged the VAT on the three concerned would not remit invoices. Subsequently, it was established that ALTI was jointly and severally liable for the VAT unpaid by FOTOMAG under the VAT Act.
The Court ruled that Article 205 of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax, must be interpreted as not precluding national legislation pursuant to which the person held jointly and severally liable, for the purpose of that article, must pay, in addition to the value added tax (VAT) not paid by the person liable for payment of that tax, the default interest on that amount, due from the person liable for payment, where it is proved that, in exercising its right of deduction, it knew or should have known that the person liable for payment would not pay that VAT.
Tax treatment of real estate in case the owner does not have his own staff
On 3 June 2021, the Court of Justice of the European Union ruled in Case C ‑ 931/19 concerning the taxation of rental income in Austria for the tax years 2009 and 2010 with value added tax (VAT).
Titanium is headquartered in Jersey. They are engaged in the management of real estate, property and housing and accommodation. In the tax years 2009 and 2010, the company have leased their real estate in Vienna, Austria, to two Austrian entrepreneurs. The company did not carry out these transactions itself, but authorized the Austrian company to carry them out. The broker would keep business records, issue invoices and prepare VAT returns and these services were not provided at Titanium's premises. In these transactions, Titanium had the power to decide on the decision and cancellation of the lease, to supervise the real estate company, to carry out the investment and repairs, and to determine the legal and economic conditions of the lease.
The dispute arose when the tax administration in Austria considered that the property to be rented out was classified as a permanent establishment, for which it determined the payment of the amount of VAT for 2009 and 2010. By contrast, Titanium argued that it did not have staff for its rental property and therefore the property could not be regarded as a permanent establishment.
The Tax Administration pointed out that real estate rented out in Austria is subject to VAT, as the company is treated as a national entrepreneur and that the recipient of this service is not liable to pay tax. The basis for such an opinion was used by the Umsatzsteuerrichtilinien 2000 - the Value Added Tax Directive 2000.
The Austrian court cited the judgments of 17 July 1997, ARO Lease (C ‑ 190/95, EU: C: 1997: 374), and of 7 May 1998, Lease Plan (C ‑ 390/96, EU: C). : 1998: 206) that the term 'permanent establishment' presupposes that the employment of the staff of another authorized undertaking is not sufficient to define a permanent establishment and that the service provider must have specific staff in order to treat the term as a permanent establishment.
The Bundesfinanzgericht (Federal Finance Court) in Austria has been consulted by the Court of Justice of the European Union. The referring court was interested in whether human and technical resources must always be present and that the service provider's own employees must therefore be present in the establishment in order for the property to be treated as a permanent establishment.
The Court held that Article 43 of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax and Articles 44 and 45 of Directive 2006/112, as amended by Council Directive 2008/8 / EC, of 12 February 2008 to interpret that real estate leased in a Member State in circumstances where the owner of that real estate does not have its own staff to provide rental services is not a permanent establishment.
Issued opinions of Slovene Tax Authority
Taxing concert tickets online
In Note no. 0920-6748 / 2021-3 of 26 March 2021, Tax Authority answered the question at which VAT rate the concert is charged online. Basically, concert tickets are taxed at a 9.5% VAT rate, but in the case of an electronically provided service, the service is taxed at a 22% VAT rate.
In the explanation, they wrote that "the ticket fee for a concert, which is performed via the Internet (streaming, download), is considered an electronic service, which is taxed at the general, 22% VAT rate."
Preclusive period for claiming a VAT deduction
The Financial Administration of the Republic of Slovenia provides the following explanations to the questions of taxpayers, which refer to the interpretation of the second paragraph of Article 67 of VAT Act.