GFD clarifies procedure regarding VAT waiver for electricity and gas

According to the General Financial Directorate (GFD), the waiver of VAT shall apply to electricity intended for any purpose. As for gas, the waiver shall apply both to supplies through the distribution system, and to tankers and cylinders. The GFD has also clarified how to settle VAT on advances.

The waiver of VAT shall apply to supplies of electricity whatever the intended use, and to supplies of gas intended for the propulsion of engines and the production of heat. It does not matter how the gas is delivered to the customer: VAT shall be waived for gas supplied both through the distribution system, and through tankers or cylinders.

VAT on these supplies shall be waived if the date when the duty to declare the tax arises falls between 1 November and 31 December 2021. The duty to declare the tax arises either upon effecting the taxable supply (the date of taxable supply – most often the date of reading the measuring device or the date of determining the actual consumption) or upon receiving an advance payment. Therefore, if a taxable supply is effected (by reading a measuring device or determining actual consumption) or an advance payment is received in November or December 2021, these supplies are covered by the VAT waiver, and the VAT payer shall issue the tax document without the VAT.

In this respect, the GFD further commented on the settlement of advances. If the settlement takes place following the date of taxable supply in November or December (in particular where the measuring device is read in these months) and it results in an underpayment, the VAT waiver shall apply even though the consumption relates to a prior period. If the settlement results in an overpayment, the tax rate applicable at the time of receiving the advance payment shall apply, in accordance with the rules stipulated by the VAT Act. Therefore, VAT shall not apply to settlement of advances received in November or December 2021. The information also contains several illustrative examples regarding the settlement of advances.

Supplies of electricity and gas that meet the conditions for the waiver of VAT shall be declared in the VAT return on line 26. Where a reverse charge is applied, the recipient shall also declare the supply on line 26, while the provider should do so on line 25.
 

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