On January 18th of 2018, the European Commission has proposed new simplification rules to help reduce VAT compliance cost for small businesses.
French companies have recently requested for the restitution of the VAT which they had to pay because of expenses related to free meals served to their employees.
The French Conseil d’Etat (CE, October 11, 2017, No. 397902, “SAS Autogrill Côté France”) agrees with it on the grounds that if the free supply of meals by companies to its employees is in principle treated as a provision of services subject to VAT, it is different in the absence of alternative catering offer at the place of activity of employees.
Referring to the European case law (ECJ, 11 December 2008, C – 371/07, Danfoss A / S and AstraZeneca A / S vs. Skatteministeriet), the Conseil d’Etat recalls that VAT liability does not cover the provision, free of charge, of meals in company canteens to business contacts in the course of meetings held on the company premises where objective evidence indicates that those meals are provided for strictly business related purposes.
On the other hand, the provision, free of charge, of meals by a company to its staff on their premises is neither subject to VAT at least when the needs of the company, such as the need to ensure that work meetings are run smoothly and without interruptions, require the employer to ensure that meals are provided.
In the case at hand, the company operates catering establishments located on the motorway network. As part of this activity, the company provides free meals to its staff.
In view of the activity on the motorway network, the Conseil d’Etat considers that the provision of meals to staff meets specific needs, considering the lack of alternative catering offer at the place of business of the company and, correspondingly, should not be treated as a supply of services for consideration for VAT purpose.
The company can therefore deduct the VAT on its cost without accounting for VAT on the value of meals it provides free of charge to its staff under the aforementioned conditions.
Austrian Jurisdiction: The Austrian Administrative Court (VwGH) confirmed that it is possible to amend invoices which are incorrect with respect to formal demands ex tunc under certain conditions.
In the main proceedings an invoice was issued in 2008. The VAT number of the supplier was not shown on the invoice as it was issued after invoicing.
The invoice was corrected in 2011 after the VAT number was issued. The corrected invoice was entitled „Correction“and also the signature of the supplier, the date of the correction and the VAT number were shown. The VAT number was valid from December 10th, 2008 until August 8th, 2009. The recipient deducted input tax in the business year 2008/2009.
The tax office refused the input tax deduction in 2008/2009.
The VwGH referred to the ECJ-judgement C-518/14, Senatex as a similar case and therefore accepted the deduction of input VAT ex tunc.
VAT Gap: EU countries lost an estimate total of €152 billion in Value-Added Tax (VAT) in 2015, according to a new study by the European Commission, showing urgent need for VAT reform. Read more
Following the recent decision of the European Court of Justice concerning the right to deduct input VAT charged on invoices, the Belgian VAT Administration issued on 12 October 2017, a Circular letter providing guidelines on the requirement of a compliant invoice, to ensure the right to deduct incoming VAT.
According to the small business VAT regulation in Austria entrepreneurs whose turnover doesn’t exceed EUR 30.000 (net) in one assessment period are exempted from VAT. If this threshold is exceeded once in five years by not more than 15 % it doesn’t affect the exemption.