GFD Information on Application of VAT from January 2024

The information on changes to VAT rates mainly focuses on the following:  

• definition of selected beverages and potable (tap) water
• tax rate for land public passenger transport
• tax rate for the supply of beverages as part of catering and accommodation services
• tax rate for medical devices
• tax rate for the supply of food and beverages (specifically, the supply of baby food, coffee, tea and other dry foods, instant mixes, etc.)
• tax exemption for the supply of books and the provision of similar services
• reduced tax rate for the provision of construction and assembly work and for the supply of buildings for social housing.
• The information on VAT rate changes also mentions the VAT treatment of the settlement of advances paid before the end of 2023 and draws attention to a decree on tax submissions using prescribed forms.  

The information on the application of VAT on selected passenger cars focusses on the following: 

• definition of selected passenger cars
• calculation of the maximum VAT deduction limit where a proportionate right to deduct VAT or a technical improvement are involved, with practical examples 
• limitation procedure in the case of the acquisition of selected cars for the purpose of their resale 
• limitation or non-limitation of VAT deduction for lease companies relating to cars acquired for the purpose of their subsequent provision via operating and finance lease arrangements 
• transitional provisions for situations where an advance had been paid before the end of 2023 (including the procedure for the subsequent technical improvement to these cars) 
• reporting of individual cases in VAT returns and VAT ledger statements.
• In its information, the GFD also points out that the sale of such a vehicle does not constitute a change in the scope of use of a fixed asset for VAT purposes and thus does not give rise to the possibility to increase the originally claimed deduction. 

Please note that the information does not contain a further explanation of the limitation of the right to deduct VAT on demo cars.