GFD issues information on the amendment to the VAT Act and instructions on how to complete VAT ledger statements

The GFD published official information on the duty to balance or adjust VAT deductions for unsupported shortages and damage, on the extension of the reverse-charge mechanism to selected supplies and on the new unreliable person concept. Moreover, it also issued information on the moment VAT on gift vouchers must be paid in the light of new Section 20a of the VAT Act.

Section 20a clarifies the rules how to determine the moment the duty to declare VAT arises with respect to consideration received before effecting the relevant supply. The duty to declare VAT before a taxable supply is effected arises only if the following attributes are known at the moment of receiving the consideration: (i) the goods or services to be delivered, (ii) the VAT rate and (iii) the place of supply. If these attributes are not know at the moment gift vouchers are sold, the amount of the consideration received upon the sale of such vouchers is not subject to VAT at that time. It becomes subject to VAT once the voucher is actually used. 

Interpretation uncertainty primarily concerned the accuracy of determining goods or services that can be received for a voucher. From examples included in the GFD’s information it now becomes clear that, upon the sale of a voucher for any type of goods or services in a shop in which only goods and services subject to the same VAT rate can be acquired, the duty to pay output VAT arises at the moment the consideration for such a voucher is received, despite the fact that it cannot be accurately determined at the moment of receiving the consideration what specific goods or services will be purchased when the relevant voucher is used.

With respect to previous interpretations of the VAT Act regarding vouchers, this new GFD’s information may affect established practice. We therefore recommend reviewing your organisation’s internal systems to pay VAT on the sale of vouchers in compliance with the effective amendment of the VAT Act and the related GFD information. In this way you will avoid any sanctions imposed by the tax authority.

The new GFD information also changes the existing practice of applying VAT on the sale of prepaid phone cards. If this concerns your company, we recommend paying increased attention to this issue. In connection with the new amendment, the GFD has also amended its instructions on how to fill in VAT ledger statements.