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GFD information on transfer of heat and cold to 10% VAT rate

In its information effective from 1 January 2020, the General Financial Directorate (GFD) draws attention to the rules of determining the date of supply for the delivery of heat and cold. It provides examples how to technically solve the settlement of advances where tax rates have changed during the settlement period.

An amendment to the VAT Act effective from 1 April 2019 moves the supply of heat and cold to the second reduced VAT rate (10%), affecting all supplies with the date of supply after 1 January 2020.

The GFD’s information draws attention to the correct determination of the date of supply, either as the date a measurement device is read or the date the actual consumption is determined if it cannot be determined otherwise. The GFD has not come up with any revolutionary changes and the rules for the taxation and settlement of advances mentioned in this information shown on a number of examples just demonstrate the current wording of the VAT Act.

The GFD also clarifies that hot water supplies after 1 January 2020 will remain subject to the first reduced VAT rate (15%), since such supplies are considered one delivery, i.e. hot water is mentioned in an appendix to the VAT Act listing goods subject to the first reduced VAT rate.