News
VAT - Customs - International trade

Dual-use goods and technologies - New export licenses  New !
The European Union has adopted 5 new general export authorizations in addition to the authorization EU001 (Regulation EC No 428/2009) that already exists for most dual-use goods and technology exported to the 7 friendly countries (Australia, Canada , USA, Japan, New Zealand, Norway, Switzerland). New general export authorizations are:
‐ EU002 (exports of certain goods to 6 countries)
‐ EU003 (export after repair / replacement to 24 countries),
‐ EU004 (temporary export for exhibition or fair to 24 countries),
‐ EU005 (exports of certain goods in the telecommunications sector to 9 countries).
‐ EU006 (exports of certain chemicals to 6 countries).
Finally, License EU001 now expressly covers exports to Liechtenstein.
These new provisions are effective 7 January 2012 (EU Regulation No. 1232/2011 of
16 November 2011).

VAT – The “répondant” tolerance  New !
The so-called “répondant” tolerance laid down by the French administrative guidelines
3 A-9-06 is condemned by the ECJ.
The “répondant” regime allows the person not established in France and the client identified for VAT in France to depart from the reverse charge mechanism by agreeing in writing that the tax legally due by the customer will be declared and paid in the name and on behalf of the later via a “répondant” by the taxable person not established in France.
This tolerance is considered by the ECJ as being non-compliant with Directive 2006/112/EC notably on the grounds that the input VAT that the supplier / provider abroad incurs in France cannot be compensated with that it collects in the name and on behalf of its clients
(ECJ - Case C-624/10 - Commission v. / France of 15 December 2011).

Yachts rental – Conditions of the VAT exemption  New !
On 29 September 2011, the EU Commission has decided to bring an action before the Court of Justice concerning the VAT exemption applied by France to certain transactions involving vessels in breach of EU law (press release # IP/11/1126).
According to the EU Commission, the French legislation and administrative practice still go beyond what is laid down in the VAT Directive, applying the VAT exemption to vessels carrying passengers for reward or used for the purpose of commercial activities, without requiring them to be used for navigation on the high seas.
The issue then remains a grey zone and a VAT exposure exists should the vessel be not operated on the high seas. Moreover, it can be anticipated that France will have to clarify its legislation and administrative practice so that the VAT exemption will not apply any longer for leisure yachts operated in the territorial waters.

Invoicing rules  New !
The European Commission has published Explanatory Notes to provide a better understanding of VAT invoicing rules laid down by Council Directive 2010/45/EU, which will enter into force on 1st January 2013 (Europa website).
For memory, the directive provides for a simplification of rules on electronic invoicing (currently limited to EDI invoices or accompanied by an electronic signature) and specifies for different types of transactions (domestic sales of goods, intra-Community supplies, exports ...) what are the national invoicing rules that are territorially applicable (country of establishment or country  where the operation takes place).

Fairs and exhibitions  New !
The ECJ has held that a supply of services consisting of the design, temporary provision and, where necessary, the transportation and assembly of a fair or exhibition stand for clients presenting their goods or services at fairs and exhibitions may come within the scope of:
- Art. 56(1)(b) of the EU VAT Directive (currently: Art. 59(b)), if the stand is designed or used for purposes of advertising;
- Art. 52(a) of the EU VAT Directive (currently: Art. 53), if the stand is designed and provided for a specific fair or exhibition on a cultural, artistic, sporting, scientific, educational, entertainment or similar theme, or if that stand corresponds to a model in respect of which the organizer of a specific fair or exhibition has prescribed the form, size, material composition or visual appearance; and
- Art. 56(1)(g) of the EU VAT Directive (currently: Art. 59(g)), in the case where the temporary provision, for payment, of the constituent material elements of that stand constitutes a determining element of that supply.
(ECJ – Case Inter-Mark Group C-530/09 of 27 October 2011)

Purchase of default debts  New !
The ECJ has held that an operator who, at his own risk, purchases defaulted debts at a price below their face value does not perform a supply of services and does not carry out an economic activity falling within the scope of the VAT directive when the difference between the face value of those debts and their purchase price reflects the actual economic value of the debts at the time of their assignment (ECJ – Case GFKL Financial Services C-93/10 of 27 October 2011)

Invalidation of a customs declaration  New !
According to te ECJ a declarant cannot request a court to annul a customs declaration made by it when that declaration has been accepted by the customs authorities. By contrast, according to the EU Customs code, that declarant may request those authorities to invalidate that declaration, even after they have released the goods. At the conclusion of their assessment, the customs authorities must, subject to the possibility of a court action, either reject the declarant's application by reasoned decision or proceed with the invalidation requested (ECJ – Case DP Grup EOOD  C-138/10 of 15 september 2011

Customs nomenclature 2012  New !
The Commission has published Regulation (EU) n°1006/2011 of 27 September 2011 amending Annex I to Council Regulation (EEC) n°2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ L 282 of 28 October 2011).

GSP  New !
In accordance with Regulation (EU) No 512/2011 (OJ L145/11), the generalized system of preferences applicable to developing countries since 1st January 2009 and, initially, until 31 December 2011 under Regulation (EC) No 732/2008 (as amended), is extended until December 31, 2013 in all its forms, waiting for the new GSP scheme.
If it were adopted before 31 December 2013, extension would be shortened accordingly.

Goods under bond: exemption from VAT deposit  New !
Pursuant to article 120 of the French Customs Code operators can be exempted from providing a guarantee for the VAT on the goods transported in bond or under a suspension of customs duties, taxes or prohibitions. A decree specifies the terms and conditions to qualify for this measure (Decree No. 2011-1103 of 12 September 2011).

Finland - VAT  New !
The draft budget for 2012 provides that subscriptions to newspapers or magazines may be subject to the reduced VAT rate of 9%. These subscriptions are currently exempt from VAT.

Germany - VAT  New !
The draft budget for 2012 provides that the threshold below which VAT is due on the receipts (Istbesteuerung) will be increased from EUR 250,000 to EUR 500,000.

Hungary - VAT  New !
The draft budget for 2012 provides that the standard VAT rate should be increased from 25% to 27%.

Italy - VAT  New !
Since 17 September 2011, the standard VAT rate has been increased from 20% to 21%.

Portugal - VAT  New !
The draft budget for 2012 provides that the intermediate rate of VAT of 13% applicable to certain goods could be increased to 23%.

Sweden - VAT  New !
The draft budget for 2012 provides that the rate of VAT on catering services will be reduced from 25% to 12%.

French dock dues (“octroi de mer”) 
Decision n° 448/2011/ EU of the Council of 19 July 2011 amending decision 2004/162/EC as regards the products that may benefit from exemption from or reduction in French dock dues (“octroi de mer”). This decision is applicable as from 1st February 2012.

VAT rates 
The European Commission has published on its website the VAT rates in force on 1st July 2011(taxud.c.1(2011)759291 – EN).

Excise rates 
The European Commission has published on its website the excise rates in force on 1st July 2011 (energy products, alcohol, and tobacco):
http://ec.europa.eu/taxation_customs/taxation/excise_duties/energy_products/rates/index_en.htm

Dual-use goods – Green Paper 
The European Commission has published on 30 June 2011 a Green Paper on dual-use goods and technologies and invited operators to participate to the open consultation held on this occasion. Exporters and other stakeholders have until 31 October 2011 for providing their comments and answers to the questions raised in the Green Paper (COM(2011)393 final).

Military items 
Publication of law No. 2011-702 of 22 June 2011 on the control of imports and exports of military items and similar equipment, simplification of transfer of such items and defense/security contracts.

French overseas territories – Mayotte 
The recent conversion of the French overseas territory of Mayotte into the new status of overseas department does not have an automatic impact on the customs status of the imported goods or the applicable taxes.
Indeed, under sections LO6113 LO6161-1-24 and the French general code for territorial entities, Mayotte keeps its customs and fiscal autonomy until 2014. This territory also remains outside the customs territory of the EU.

EU / South Korea 
The EU-South Korea free trade agreement will enter into force on 1st July 2011.
The invoice declaration will be the only acceptable proof of preferential origin. EUR 1 certificates will not be accepted as proof of origin. The exporters will have therefore to obtain the status of “approved exporter”.

AEO – Mutual recognition between EU and Japan 
The agreement of mutual recognition of the EU and Japanese AEO programmes will come into force on 24 May 2011.

AEO – Self assessment 
The European Commission has updated the AEO self-assessment and explanatory notes to take account of mutual recognition possibilities.

Common system of VAT – Various clarifications 
Applicable as from 1 July 2011, an EU regulation clarifies several provisions of the VAT Directive 2006/112/EC. The concept of taxable recipient of a service, as well as those of permanent establishment acting as the "recipient of a service" and permanent establishment acting as the "provider of a service" are clarified (EU Regulation 282/2011 dated 15 March 2011).

VAT - Fairs, congresses, conferences, seminars ... 
The French tax authorities comment on the place of supply rules applicable to services referred to in article 259 A 5 ° bis of the French tax code and defines the notion of “right of access" to an event (service taxable where it is physically carried out).
A difference is notably made between training sessions open to the public and those organized for a sole taxable person. Comments are also provided about the complex services rendered to exhibitors by organizers of events (Guidelines 3 A-2-11 dated 28 March 2011).

Anti-dumping – Products originating in the US 
Updating of the products originating in the US which are subject to additional customs duties when imported in the EU. This list, which is shorter than the previous one, is applicable as of 1 May 2011 (Regulation (EU) No. 311/2011 of the Commission dated 31 March 2011).

Dual-use goods and technologies
Opportunity to seek for a decontrol of your goods 
The European Commission has launched a technical consultation seeking input from interested stakeholders on the issue of foreign availability of dual-use items included in the EU dual-use export control list (Annex I of Regulation 428/2009).
The consultation represents an ideal opportunity for exporters to persuade the Commission to decontrol their goods and technology currently covered by the dual-use controls. It will end on 26 April 2011.

Commercial vessels – VAT exemption 
Asked about the VAT exemption applicable to commercial vessels, the French tax authorities confirmed that the three criteria laid down in its doctrine published prior to the amendment of Article 262 II 2 of the FTC (amended finance bill for 2010) remain applicable: commercial flag, presence of a permanent crew, use for commercial activities.
However, no details are given on the concept of navigation on the high seas recently introduced in the FTC (Ruling No. 2011 / 2 - TCA).

EU - Minimum standard VAT rate 
The EU Council of Ministers has decided to maintain the minimum standard rate of VAT at 15% until 31 December 2015 (Press release # 17447/10 + Directive 2010/88/UE).

EU - Travel agents 
On 27 January 2011, the European Commission published three press releases concerning infringement procedures several EU Member States, including France (Czech Republic, Finland, France, Greece, Italy, Poland, Portugal and Spain) regarding the special VAT regime applicable to travel agents (special place of supply rule + margin scheme). In brief, the Commission considers that the travel agents VAT regime is not applicable to the services that said operators invoice to each others.
 
EU - VAT rates in force 
Publication of the VAT rates in force on 1 January 2011 in the 27 Member States (taxud.c.1-2011- 39295).

Dual-use goods - Export Control  
The penalties for unauthorized exports (exports without a license) of dual-use goods (goods and technologies that could be used for both civilian and military purposes) should be increased in a near future Thus, the prison sentence would be increased from 3 years to 5 years and the fine could be increased from two times the value of the goods to three times.
These provisions clearly announce tighter controls on dual goods and technologies (law proposal No. 1652 on the fight against proliferation of weapons of mass destruction and their vectors).

Jersey 
GSTshould rise from 3% to 5% from June 2011 

Export Control (USA) 
for facilitation purposes, the United States plans to merge the system of dual use goods and technologies  (EAR) with that of military goods (ITAR). Thus, the new list would be managed by one agency, which should speed up the procedures for obtaining export licenses.
These new regulations are currently discussed at the Congress and could be adopted this year.
Finally, it should be kept in mind that this reform also concerns the EU businesses that integrate products or technology of U.S. origin in their production processes.

Norway 
Non-resident suppliers of electronic services to consumers (BtoC) could have to register for VAT Jul 2011 (2011 budget proposal).

GSP 
New rules of origin regarding the Generalised System of Preferences apply as of 1 January 2011

Russia 
The zero rate of VAT applies as from 1 January 2011on international transportation services and other related services.

UK 
The standard VAT rate increased from 17.5% to 20% as from 4 January 2011.

Poland 
The increase of the standard VAT rate from 22% to 23% is effective from 1st January 2011.

VAT – Right to deduction 
A taxable person has the right to deduct value added tax paid in respect of services supplied by another taxable person who is not registered for that tax, where the relevant invoices contain all the information, in particular the information needed to identify the person who drew up those invoices and to ascertain the nature of the services provided (ECJ - C 438/09 - 22/12/2010).

VAT – Notion of exempt intra-EU supply 
When goods are the subject of two successive supplies between different taxable persons acting as such, but of a single intra-Community transport, the determination of the transaction to which that transport should be ascribed, namely the first or second supply – given that that transaction therefore falls within the concept of an intra-Community supply – must be conducted in the light of an overall assessment of all the circumstances of the case in order to establish which of those two supplies fulfils all the conditions relating to an intra-Community supply.
In circumstances such as those at issue in the main proceedings, in which the first person acquiring the goods, having obtained the right to dispose of the goods as owner in the Member State of the first supply, expresses his intention to transport those goods to another Member State and presents his value added tax identification number attributed by that other State, the intra-Community transport should be ascribed to the first supply, on condition that the right to dispose of the goods as owner has been transferred to the second person acquiring the goods in the Member State of destination of the intra-Community transport (ECJ - C 430/09 - 16/12/2010).

Commercial yachting - VAT 
The ECJ has ruled that the hiring of yachts, with a crew, by individuals for leisure purposes can not benefit from the VAT exemption provided for commercial vessels operating on the high seas (ECJ - C 116/10 - 12/22/2010).

Commercial vessels - VAT exemption 
As from 1 January 2011 the VAT exemption laid down for commercial vessels is applicable only to vessels operating on the high seas, that is to say outside territorial waters.
The new VAT provisions notably apply to commercial yachts.
This legislative change is in response to the infringement proceedings initiated by the Commission against France (see our previous communication on the subject).

VAT taxation of non-equiped premises used for professional purposes 
The option to submit rents to VAT can now be exercised very early i.e. even before to get title to the building. This option allows taxpayers to exercise their rights to deduct input VAT without delay or restrictions. The lessor must be able to evidence that his intention is based on objective factors (administrative guidelines dated 3 Decmeber 2010 – BOI 3 A-8-10).

VAT - CO2 emission quotas 
The  amended financial bill draft for 2010 introduces into French law the opportunity provided by Directive No. 2010/23/EU of the Council dated 16 March 2010 to implement a reverse charge mechanism specific to the transactions relating to CO2 emission quotas.
A paragraph 2 septies will be added to Article 283 of the French Tax Code.
As quotas qualify as intangible goods, the territorial rules applicable to such services would be therefore those came into force on 1 January 2010 and laid down in Article 259-1 ° of the French tax code (standard regime for services) for B to B  transactions and by articles 259-2 ° and 259 B of the French tax code for B to C transactions.

Minimum standard VAT rate 
The EU Council adopted a directive maintaining the current minimum standard rate of VAT at 15% until 31 December 2015.

French Intrastat (DEB) 
From 1st January 2011, the levels of obligations will be modified (2 instead of 4) and the “net mass” data will be generalized (Decree 2010-1544 date 13/12/2010).

TARIC 
An improved version of the TARIC, the EU's online customs tariff data base, is now available in the TARIC's 21 languages.
It offers new search functions, relating to:
- the type of measures applicable to a product or a chapter and to certain tariff quota
- the (type of) measures applicable during a certain period
- the regulations that are linked to the measures or the EU Official Journal
- the possibility to display more than one product code at the same time.

GSP 
From 1st January 2011, rules of origin under the GSP will be modified, including
- increase in the percentage of the general tolerance rule
- modification of the rules relating to the preferential origin
-specific list rules varies for the less developed countries  concerning certain tariff headings.
- new rules and new types of cumulation of origin
 (EU Regulation No. 1063/2010 of the Commission date 18 November 2010)

VAT – Exemption of imports followed by intra-EU deliveries 
A decree dated 27 October 2010 (n°2010-1288) details the conditions under which the VAT exemption laid down by article 291-III-4° of the French tax code (article 143(d) of Directive 2006/112/EC) applies and the information/documents required from the importer to benefit from the VAT exemption.
The new provisions come into force as from 1st January 2011.

Refund of EU VAT – Electronic procedure 
The Council has finally adopted the directive providing for the exceptional extension of the deadline for the submission of refund applications for expenses incurred in 2009 from 30 September 2010 to 31 March 2011 (provisional press release 14825/10).

Refund of EU VAT – Electronic procedure 
The Commission’s proposal to postpone until 31 March 2011 the deadline for claiming the refund of the VAT incurred in another Member State has been approved by the European Parliament on 22 September 2010. 
The VAT claims for refund relating to expenses incurred during the year 2009 can be therefore validly submitted through the electronic portals after 30 September 2010 and at the latest on 31 March 2011. 

Incoterms 2010 
As from 1 January 2011, 11 new ICC 2010 Incoterms will replace the 13 existing ICC 2000 Incoterms. Notably, Incoterms DES, DDU and DAF are deleted and replaced by a new Incoterm DAP, "Delivered at place».

Deduction of VAT – Formal conditions 
A taxable person justifies the recovery of input VAT if she proves that the material conditions of the deduction were originally satisfied and has produced, before the tax authorities have made a decision, a compliant invoice showing the correct date on which the transactions occurred.
In addition, a non compliant invoice can be cancelled by a credit note which numbering can be different from that of the corrected invoice (CJEU - C-368/09 - 15 July 2010).

Refund of VAT to non-resident taxable persons   
The French tax authorities comment on the new electronic reimbursement procedure (conditions, terms ...) open to EU taxable persons for the recovery of VAT incurred in a Member State where they are not established.
These guidelines also contain comments on the 13th Directive procedure of reimbursement for taxable persons established outside the European Union (BOI 3-D 2-10 dated 6 August 2010).

Customs valuation 
For sales performed according to the Incoterm DDP, customs duties may, in accordance with Article 33 of the Community Customs Code, be excluded from the customs value, provided that the import declaration refers to this Incoterm (ECJ -15 July 2010 - Case C-354/09 Gaston Schul BV).

Rules on invoicing 
The Council of the European Union has adopted new rules on VAT invoicing. These new provisions contain some simplifications, notably regarding electronic invoicing, and will apply as from 1st January 2013 (Directive 2010/45/EU of 13 July 2010).

Russia-Kazakhstan-Belarus Customs Union
As of 6 July 2010, these three countries apply a common customs code. The main consequences of the Customs Union are the introduction of common customs duties, the abolition of customs controls at the borders of these countries and the adoption of common mechanisms of regulation of foreign trade.

VAT refund applications - "8th Directive" 
French decree (No. 2010-789) and “arrête” on the electronic procedure of reimbursement provided for refund of VAT introduced in France by taxable persons established in another Member State and those introduced via the French portal by French taxpayers to recover the VAT paid in another country of the European Union have been published on 12 July 2010.For VAT incurred in 2009, the period within which above claims must be submitted should be exceptionally extended to 31 March 2011 instead of 30 September 2010 (proposal of the EU Commission dated 15 July 2010).

GSP+ - Sri Lanka 
A from 15 August 2010 Sri Lanka will not benefit from the GSP+ any longer.

AEO – New self-assessment questionnaire
On 26 July 2010, a new questionnaire entered into force. This questionnaire has been harmonized at an EU level and notably contains a more detailed security/safety section.
Operators may however use the former questionnaire for any AEO application filed before 1st January 2011.