Waiver of VAT on COVID-19 vaccines, tests, and respirators
The Minister of Finance has decided to waive VAT on supplies of in-vitro diagnostic medical devices for COVID-19 testing and COVID-19 vaccinations. The decision shall be in effect from 16 December 2020 to 31 December 2022 and has been published in Financial Bulletin No. 35/2020. Moreover, the ministry decided to waive VAT on supplies of respirators and filtering half masks from 3 February 2021 to 3 April 2021.
Both waiver decisions only apply to output VAT on supplies of goods where the duty to declare tax arises on the date of supply. These involve, e.g., local (national) sales but not acquisitions of goods from another member state or imports of goods where the duty to declare VAT also arises.
The waiver in effect from December 2020 only applies to vaccines against COVID-19 approved by the European Commission or the appropriate member state. For diagnostic devices, only those meeting the requirements prescribed by Directive 98/79/EC of the European Parliament and of the Council or Regulation (EU) 2017/746 and other EU regulations shall be subject to the VAT waiver.
Following the ministry’s waiver decision of December 2020, the General Financial Directorate issued information explaining the waiver in more detail, for example, how the relevant tax document issued by the payer for the delivery of specific goods subject to the waiver should look. We recommend stating directly in the tax document that “VAT was waived by the Ministry of Finance”, i.e. the tax document should for now no longer include information on the VAT rate and amount.
The decision in effect from 3 February 2021 waives VAT on the supplies of filtering half masks and respirators if these are intended by producers for the protection of users. Again, only those meeting the requirements of the above EU directives and other EU regulations shall be subject to the waiver. This means that this waiver does not apply to e.g. various types of masks sewn at home or commercial masks produced from cotton or other materials.
The entitlement to deduct input VAT remains in effect for the above supplies; however, output VAT will not be charged. Subsequently, customers will not be entitled to claim VAT deduction in respect of purchases of testing devices, vaccines or respirators from sellers.
For the sake of completeness, we draw attention to a previous decision of the Minister of Finance waiving VAT on gratuitous supplies of certain goods or gratuitous provisions of services for selected entities. However, this waiver was only in effect from 1 October 2020 to 31 December 2020 and its extension had not been approved at the date of this article’s closing.
If you are not certain of how to proceed with the waiver of VAT, how to issue the appropriate documentation, or how to declare such supplies of goods, please do not hesitate to contact us. We will be happy to help you.