Weekly VAT News

Donald Trump’s headline tax proposals during the US presidential election campaign were:

• Corporate tax rate reduction to 15% for companies that make products domestically, 20% for others
• Extension of expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA)
• Impose 10%-20% tariff on all imports, with higher tariffs proposed for specific countries including China
• Exempt tip income from tax
• Exempt social security income from tax for seniors
• Eliminate all taxes on overtime pay
• The Trump Treasury in December 2019 expressed support for a "GILT-like Pillar Two solution", with concerns about Pillar One and pushed for a safe harbour approach

The Republican platform for the ‘Make America Great Again’ presidential campaign is here.

We hosted a number of webcasts following the election which can be accessed on demand once registered:

• Post-election 2024: key insights for business leaders
• 2024 US election impacts on state and local tax policy
• Tax in a time of transition: legislative, economic, regulatory and IRS developments – post-election edition

Comment: The large tariffs proposed mean that businesses may wish to review physical supply chains and assess the customs valuation, classification and origin of their goods, as well as the use of customs procedures such as duty drawback, to manage the financial impact of the tariffs.

For further information, please contact George Riddell, Ross Freeman or Marc Bunch.

Topics – Land, pre-cast foundation, residential building construction, sale of building land

C-594/23 Lomoco Development and Others

On 6 November 2024 the Court of Justice of the European Union (CJEU) delivered its judgment in this Danish referral asking whether a supply of land on which, at the time of supply, a pre-cast foundation had been constructed and on which a residential building is only subsequently constructed by other owners, should be treated as a sale of building land subject to VAT?

Nordre Strandvej Sæby (NSS) subdivided a number of plots of land which had previously been used as a campsite and in 2009, service lines for electricity, water, heating and sewage were established on some of these plots. In 2010, the casting of foundations began on some of those plots. The casting of the foundations was completed before 1 January 2011.

In 2015, NSS transferred ownership of the plots on which precast foundations had been built to a Danish company. These plots were subsequently sold to private individuals. On five of those plots, a residential building was built on the foundation cast in 2010. On eight other plots, a residential building was built, but not on the foundation cast in 2010. On the remaining three plots, the foundation cast in 2010 is still there, but no construction had been erected on it.

Until 31 December 2010, Danish law treated supplies of immovable property (without exception) as exempt from VAT. From 1 January 2011, that exemption was repealed in part such that supplies of immovable property were exempt from VAT with the exception of:

• The supply of a new building or of a new building and the land on which the building stands
• The supply of building land, whether improved or unimproved, and in particular the supply of built-on land

The Danish Tax Authorities ordered NSS to pay VAT on the supply of the plots on the basis that they were supplies of 'building land' subject to VAT under the amended Law.

NSS appealed to the National Tax Tribunal which held that the supply of the plots of land was an exempt supply of immovable property. In that regard, NSS had commenced the casting of foundations before 1 January 2011 and the same plots had been acquired by NSS before the submission of the Bill that introduced the Amended VAT law.

The Tax Authority appealed against the decision of the National Tax Tribunal and argued that in order to determine what constitutes a 'building' for VAT purposes, the wording of Article 12(2) must be considered, specifically, it follows that 'building' means 'any structure fixed to the ground'. According to a common linguistic understanding, a 'structure' in the form of a 'building' is characterised by the fact that it is composed of several individual parts forming a whole intended for a specific purpose. Taken in conjunction with Article 12(1)(a), which concerns the 'supply of a building or part of a building and its land before first occupancy', a building (or part thereof), is characterised by the fact that it can be moved into and can therefore be used for the purposes for which it is intended.

According to the Tax Authority, a building (or part thereof) cannot be put into use unless it has been completed to such an extent that partial occupancy is possible. Further, the third subparagraph of Article 12(2) allows criteria other than the date of first occupancy to be used to define the concept of 'building', in particular the period between the date of completion of the building and the date of first delivery. However, this provision means that an unfinished structure cannot be regarded as a building. Further, a residential building cannot be regarded as completed and cannot be the subject of occupancy if only a foundation has been cast for the building. Nor can such a foundation constitute 'part of a building' since there is a supply of part of a building only if the part of the building supplied is capable of being occupied, for example, phased delivery of apartments in a residential building.

The referring court states that, according to NSS, when the casting of the foundations began, the plots were transformed from being 'building plots' to being 'buildings or parts of a building with land attached to it'. It is undisputed that the foundations on those plots were fully usable at the time of the supply of those plots in 2015. According to NSS, the foundations are covered by the very broad concept of 'building' within the meaning of Article 12, which is defined as 'any solid structure'. In NSS's view, paragraph 54 of the VAT Order, which adds the condition that designs must be 'completed for the purpose for which they are intended', restricts this concept in conflict with the VAT Directive. Finally, NSS submitted that the criterion of first occupancy and the alternative criteria laid down in the third subparagraph of Article 12(2) of the VAT Directive are intended to determine the moment when supplies of buildings and of land may be subject to VAT and not the moment when a structure becomes a ‘building’.

In summary, the CJEU had to consider whether Article 12 must be interpreted as meaning that a transaction consisting of the supply of land on which, at the time of that supply, only foundations for residential buildings had been erected, constitutes a supply of 'building land'.

In accordance with Article 12(3) of that directive, ‘building land’, for the purposes of paragraph 1(b) of Article 12, means any land, unimproved or improved, defined as such by the Member States. However, the VAT Directive limits the discretion of the Member States as regards the scope of the concept of 'building land'. In that context, the Member States must comply with the objective pursued by Article 135(1)(k) which is to exempt only supplies of land which are not intended to be used for the construction of a building (Icade Promotion). Further, the definition of the concept of 'building land' is also limited by the scope of the concept of 'building', which the EU legislature has defined very broadly in Article 12(2) as covering 'any solid structure' (KPC Herning, Icade Promotion). The CJEU held that it follows that land bearing a structure which must be classified as a 'building' within the meaning of that provision cannot be classified as 'building land'.

At the time of supply, the land at issue had in place only the foundations for residential buildings. It is therefore necessary to determine whether those foundations constitute a 'building' or a 'part of a building', in which case those plots could not be regarded as 'building land'. Clarification is necessary since the supply of building land is subject to VAT. Although the supply of a building or part of a building is also in principle subject to VAT, it is clear that, until 31 December 2010, Denmark treated all supplies of immovable property as exempt from VAT. The supply of buildings, the construction of which had begun by that date, continued to be exempt from VAT under the applicable national legislation. Since the foundations of the land at issue were cast in 2010, NSS contended that the supply of those plots was exempt from VAT.

The CJEU considered that the Court has already held that Article 12(3) provides that land which is under development could be covered by the concept of 'building land' even if it has been improved. In other words, the development of land, such as the connection to electricity, gas and water supply networks, cannot change its legal classification as a 'building' as a structure fixed to the ground by, for instance foundations (Icade Promotion). Furthermore, although Article 12(2) defines a building very broadly as 'any structure fixed to the foundation', the fact remains that that provision refers to Article 12(1)(a) and 'the supply of buildings or parts thereof before their first occupancy'. It cannot therefore be concluded that ordinary network connection works may fall within the concept of 'building' (Icade Promotion). Thus, in the context of the very broad definition of the concept of 'building', the Court has emphasised the importance of the criterion of the 'first occupation' of a building.

Article 135(1)(j) provides for an exemption from VAT for supplies of buildings other than those referred to in Article 12(1)(a) thereof. Those provisions draw a distinction between old buildings (the sale of which is not, in principle, subject to VAT) and new buildings, the sale of which is subject to VAT, whether in the context of a lasting economic activity or occasionally (État belge and Promo 54).

The CJEU held that in light of earlier case law, the foundations of residential buildings cannot be classified as a 'building' or 'part of a building'. Article 12(2) broadly defines a building as 'any structure fixed to the ground' and it cannot therefore be ruled out that such a definition taken in isolation could be interpreted as covering foundations. However, that provision refers to Article 12(1)(a) which refers to the 'first occupation' criterion. The CJEU held that mere foundations of residential buildings cannot be the subject of a 'move-in' nor do they mark the completion of the construction process when the building becomes a consumer good and therefore cannot be a building or part of a building. Part of a building could include a building which consists of several parts or units, such as apartments, which are constructed in stages, even though some of those parts or units may be subject to occupancy while other parts are still under construction, the important point being the actual use of immovable property at the time of supply. The CJEU also points out that Member States may apply criteria other than first occupation, such as the period between the date of completion of the building and the date of the first delivery or the period between the date of first occupation and the date of subsequent delivery.

The CJEU was not persuaded by NSS’s reliance on other case law to support its view of the interpretation that foundations constitute a building within the meaning of Article 12(2). The CJEU pointed out that the Court has already held in Icade Promotion that the development of land, such as by way of connection to electricity, gas, water supply networks etc. cannot have the effect of altering the legal classification of those plots as a 'building' as a structure fixed to the ground by a foundation. The Court merely confirmed that foundations are a means of attaching a structure to the ground, and not that those foundations constitute a building. In Breitsohl, the Court stated that a construction comprising foundations and a partially completed floor was considered to be the delivery of a building or part of a building and its land before first occupancy. However, NSS acknowledged that this case did not concern the interpretation of 'building' or 'part of a building' as per the first subparagraph of Article 4(3) of Sixth Directive 77/388, equivalent to Article 12 (2) of the VAT Directive. Finally, in (Maierhofer), the Court held that single-storey and two-storey buildings standing on a concrete base erected on concrete foundations sunk into the ground, even though they were capable of being dismantled or moved, constituted ‘immovable property’. Thus, the assessment of the Court in that judgment related to completed buildings not to their foundations.

In summary, the CJEU held that a transaction consisting of the supply of land with foundations for residential buildings constitutes a supply of 'building land' and therefore is subject to VAT under Denmark’s amended VAT law.

Comments: Whilst not of direct relevance to the UK as it has not introduced the concept of building land and therefore not the mandatory taxation of it, the case does serve to highlight the difficulties of assessing when a building comes into existence and when construction of a building has commenced. For UK developers this is particularly acute when considering how much construction needs to have occurred in order to apply the zero rate to a supply of a building designed as a dwelling or number of dwellings. This judgment perhaps offers some support for HMRC’s current position that a building is only clearly under construction “…once it has progressed beyond foundation level” – a position which is increasingly tested by modern construction methods and the erection of modular buildings.

For further information, please contact Ali Anderson.

Thursday 14 November

Judgment – C-613/23 Herdijk

Topics – Failure to pay tax debts, good faith, abuse/fraud

A Dutch referral asking whether the principle of proportionality precludes domestic legislation which, in practice, makes it extremely difficult for a director of an entity that has failed to comply, or has failed to comply properly, with its obligation to notify the tax authorities of its inability to pay, to escape liability for tax debts of that entity, including turnover tax debts? Does the answer depend on whether the director acted in good faith in that he or she acted with the care of a prudent business person, did everything reasonably within his or her power, and his or her involvement in abuse or fraud may be ruled out?

Thursday 21 November

Judgment – C-624/23 SEM Remont

Topics – VAT deduction, no VAT indicated on invoice, subsequent invoice failed to meet tax invoice requirements, Tax Authority impossible or excessively difficult

A Bulgarian referral asking whether Articles 63, 167, 168(a), 178(a), 218, 219, 220, 226 and 228 of the VAT Directive permits domestic legislation which refuses the right to deduct VAT on the provision of a service both for the period in which the service was rendered and also for the period of its declaration in the tax return on the ground that no VAT was indicated on the invoice issued to the recipient and, at a later date (during the tax audit of the service provider), a document was issued that does not meet the requirements of a tax invoice. A ‘memorandum’ was drawn up in which its author was described as both the recipient and provider of the service and VAT was declared, calculated on the basis of the taxable amount indicated therein. Does the practice of the tax authority make the deduction of VAT practically impossible or excessively difficult?

Thursday 28 November

Judgment – C-622/23 rhtb

Topics – Whether VAT due on part-fulfilled contract where cancellation is attributable to customer

An Austrian referral asking whether Article 2(1)(c) of the VAT Directive, read in conjunction with Article 73, must be interpreted as meaning that the amount which a customer owes to a contractor, even where the work has not been (fully) carried out but the contractor was ready to provide the service and, through circumstances attributable to the customer (for example, cancellation of the work) was prevented from doing so, is subject to VAT?

Thursday 5 December

Judgment – C-680/23 Modexel

Topics – Following period definition in terms of calendar year, deduction of excess VAT

A Portuguese referral asking whether the expression “the following period” in Article 183 of the VAT Directive must be interpreted as referring literally to the period which immediately follows in the calendar year? If the answer to question 1 is in the negative, where an undertaking ceases its activity and subsequently recommences that activity, with a period of 15 months having elapsed between those two points in time, is that undertaking entitled to deduct the amount of the excess which it carried forward when it ceased its activity in the first assessment that it files after recommencing its activity?

• C-535/24 Svilosa – a Bulgarian referral concerning whether the concept of a ‘supply of services’ within the meaning of Article 24(1) of the EU VAT Directive or the expression a ‘supply of services free of charge’ within the meaning of Article (26)(1)(b) include acts of law or fact carried out, without authority or mandate, by a person registered for the purposes of VAT with the direct intention of recovering a debt for the benefit of a third party and the indirect intention of satisfying a claim under the law of obligations which the registered person so acting holds against the person in whose direct interests the acts in question were carried out?
• C-521/24 Aptiv Services Hungary – a Hungarian referral concerning whether Articles 168(c) and 178(c) and (d) and Articles 179, 180, 181 and 182 of the EU VAT Directive and the principles of tax neutrality, proportionality and effectiveness should be interpreted as meaning that the legislation and practice of a Member State are compatible with them where, according to that legislation and practice, the deduction of the input VAT in respect of intra-Community acquisitions of goods is refused and definitively excluded (no corrected return can be filed and the application for a special tax refund procedure is refused). This is on the grounds that the taxable person, for administrative reasons, did not exercise its right to the deduction during the same tax period as that for which the tax due was calculated, although it did do so within the relevant time limit, in circumstances in which, in previous inspections, the tax authority of the Member State had not raised any objection to such exercise of that right?

We understand that Barclays has been given leave to appeal to the Upper Tribunal. The FTT held in the Barclays Service Corporation decision that Barclays lacked control over the necessary resources on the date of the VAT grouping application and as such, it did not qualify as a fixed establishment and could not therefore be included in a VAT group.

For further information please contact Mitchell Moss.

As reported in VAT News last week, the EU has reached agreement on the VAT in the digital age (ViDA) proposal – Taxation: Council agrees on VAT in the digital age package.

ECOFIN adopted all three pillars of the proposal, following the adoption of compromises to the original proposals made to satisfy all 27 Member States.

The three ViDA pillars can be summarised as:

1. Digital Reporting Requirements (DRR) – Introducing common standardised Digital Reporting Requirements and e-invoicing for intra-community transactions (i.e., between Member States)
2. Platform Economy – Addressing the challenges of the platform economy for short-term rental of accommodation and passenger transport services by enhancing the role of digital platforms in collecting VAT
3. Single VAT Registration – Reducing VAT registration requirements in the EU by expanding the scope of the One Stop Shop (OSS) for imports and the reverse charge for business-to-business (B2B) transactions

Our global alert and UK VAT alert are now available.

Comments: Businesses operating in the EU will need to consider the new rules and the associated systems, tax and commercial implications of the changes.

From an e-invoicing and real-time reporting perspective, many countries have or are already in the process of introducing e-invoicing and real-time reporting requirements ahead of the 2030 deadline. The UK also confirmed on 30 October that an e-invoicing consultation will be published in early 2025. This will be welcome news allowing businesses operating in the UK time to feed in lessons learned from implementing recent changes across the EU as well as other more advanced countries such as LATAM which have had e-invoicing and real-time reporting in place for years.

For further information, please contact Chris Taylor (e-invoicing), Gaurav Patney (single registration) or Alex Hale (digital platforms).

Several new free zone custom sites have been designated by the Government:

SI 2024/1106 – The Free Zone (Customs Site No. 1 Thames) Designation (Amendment) Order 2024
This Order amends the Free Zone (Customs Site No. 1 Thames) Designation Order (S.I. 2021/1432) (“the 2021 Order”). The amendments come into force on 10th November 2024.

SI 2024/1105 – The Free Zone (Customs Site No. 1 Inverness & Cromarty Firth Green) Designation Order 2024
This Order designates the Customs Site No. 1 Inverness & Cromarty Firth Green as a special area for customs purposes (a “free zone”).

SI 2024/1104 – The Free Zone (Customs Site No. 1 Humber) Designation Order 2024
This Order designates the Customs Site No. 1 Humber as a special area for customs purposes (a “free zone”).

SI 2024/1103 – The Free Zone (Customs Site No. 4 Liverpool) Designation Order 2024
This Order designates the Customs Site No. 4 Liverpool as a special area for customs purposes (a “free zone”).

SI 2024/1102 – The Free Zone (Customs Site No. 6 Liverpool) Designation Order 2024
This Order designates the Customs Site No. 6 Liverpool as a special area for customs purposes (a “free zone”).

SI 2024/1100 – The Free Zone (Customs Site No. 5 Liverpool) Designation Order 2024
This Order designates the Customs Site No. 5 Liverpool as a special area for customs purposes (a “free zone”).

This follows the publication of various freeport customs site maps as set out below:

• Map of Humber Freeport customs site
• Maps of Liverpool City Region Freeport customs sites
• Map of Inverness and Cromarty Firth Green Freeport customs site

Comments: Ports in Inverness and Humber will get designated customs sites for the first time. It is a requirement of a Freeport to have a designated customs site therefore the addition of customs sites at Humber and Inverness will mean these Freeports can become operational.

For further information please contact Penny Isbecque.

Finance Bill 2024-25 has been published. The Bill is available here and the explanatory notes can be found here.

First reading took place on 6 November, and second reading is still to be scheduled. It is not possible to say when the Bill will be enacted at this stage.

The Finance Bill covers many of the Autumn Budget measures published on 30 October, including:

• VAT on private school fees
• Provision to allow the introduction of a UK CBAM
• Replacement of the non-dom regime
• Increased capital gains tax rates, including for carried interest
• Changes to the energy profits levy
• Pillar Two amendments and the introduction of the UTPR (and associated repeal of ORIP)
• Tax relief for visual effects expenditure
• SDLT rate changes for additional dwellings and purchases by companies
• Inheritance tax changes, including to reliefs

For further information, please contact Sarah Delaney.

On 30 and 31 October 2024, the European Commission published two draft implementing regulations regarding the European Union's (EU's) Carbon Border Adjustment Mechanism (CBAM) on the application to become an Authorised CBAM Declarant and Establishing a CBAM Registry, respectively. Both implementing regulations are a requirement for the full implementation of the CBAM. The draft regulation on how to be an Authorised CBAM Declarant sets out the key procedures and conditions for authorising CBAM Declarants in the EU, which should apply from 24 December 2024 to provide sufficient time for the information technology (IT) system development of the CBAM Registry to be operational by 1 January 2026.

Interested businesses have until 27 and 28 November, respectively, to submit comments via the EU's "Have Your Say" platform.

Affected businesses will want to consider actions such as:

• Identify all entities subject to CBAM obligations to apply for the Authorised CBAM Declarant authorisation. In addition to the entities already exercising the CBAM reporting in the CBAM transitional period, businesses will want to consider which other entities may fall under CBAM regulation with their imports based on planned business operations.
• Assign responsibilities related to CBAM compliance and certificate management obligations.
• Prepare documented internal processes, controls and escalation procedures for the management of CBAM compliance and certificates.
• If not already accomplished, carry out a gap assessment of the CBAM compliance processes and data management practices in place to manage obligations. Where gaps or risks are identified, mitigation actions should be taken.
• Continue to monitor and assess legislative developments on this topic.

A global alert is available.

For further information, please contact Danny Vu or George Riddell.

The Bank of England Monetary Policy Committee announced on 7 November 2024 that the Bank of England base rate will be reduced to 4.75% from 5.0%. HMRC interest rates are linked to the Bank of England base rate.

As a consequence of the change in the base rate, HMRC interest rates for late payment and repayment will reduce.

These changes will come into effect on:

• 18 November 2024 for quarterly instalment payments
• 26 November 2024 for non-quarterly instalments payments

Information on the interest rates for payments will be updated shortly.

The press release is available here.

HMRC has updated its guidance on how to Apply for an Advance Tariff Ruling. Information about how to request a review of a ruling decision has been updated.

For further information, please contact Gerard Koevoets.

HMRC has updated Excise Notice 76: excise duty on gas for use as fuel in road vehicles. This notice is about excise duty charged on gas for use as road vehicle fuel. The bank details in section 3.2 have been updated.

For further information, please contact Craig Clark.

HMRC has updated Registered dealers in controlled oil (Excise Notice 192) which provides information about registered dealers in the controlled oil (RDCO) scheme. Specifically, section 3.5 – supplies of marine fuel to commercial ships and vessels which involve a dry broker not located in the UK has been added. Sections: 2.1, 2.3, 2.5, 5.2, 5.3 and Appendix D Buying groups and machine rings have been clarified. In Appendix B clarification has been provided regarding when plant hire companies need approval.

For further information, please contact Craig Clark.

HMRC has updated its guidance – Preparing for the new safety and security declaration requirements. Businesses importing any goods from the EU to Great Britain from 31 January 2025 will need to submit a safety and security declaration. The guidance was first published on 14 October and has been updated with additional information about the customer journey according to mode of transport.

The changes from 31 January 2025 are intended to make the process easier as the amount of safety and security data required on an Entry Summary Declaration will be reduced.

If businesses already submit safety and security declarations for imports from countries outside the EU (or already voluntarily submit them for EU imports), they do not need to change existing systems or procedures if they do not want to. However, they can benefit from the reduced dataset by only completing the mandatory and any relevant conditional fields from 31 January 2025.

The guidance encourages businesses that are ready to start submitting safety and security declarations before 31 January to do so and speak to parties in the supply chain now to agree who is responsible for completing declarations for EU to Great Britain imports from 31 January 2025, and the most suitable method for doing so.

For further information, please contact Gerard Koevoets.

HMRC has updated its guidance – Insolvency (VAT Notice 700/56). Section 25 has been updated with how to tell HMRC about insolvency for Plastic Packaging Tax.

For further information, please contact Danny Vu.

HMRC has updated its Guidance – Check if you must register for VAT if you receive private school fees. Information about how to register for VAT has been updated to include further details for charities and limited companies on what will be needed to register based on the school's circumstances.

For further information, please contact Mark Dyer.

UK e-invoicing

The UK Budget on 30 October 2024 included an announcement about a consultation for the introduction of e-invoicing in the UK. This is a welcome announcement as the UK is behind the curve compared to many other countries in relation to VAT digitalisation. For further information, please contact Chris Taylor.

Kenya

The Kenyan Supreme Court (the Court) has issued a landmark judgment in an appeal challenging the constitutionality of the Finance Act 2023 (the Act). Signed into law on 26 June 2023, the Act amended various pieces of tax and non-tax legislation. The constitutionality of the Act was challenged, and the Court of Appeal declared it as unconstitutional. However, the Supreme Court has now held that sufficient public participation had been conducted on the Act in accordance with constitutional requirements. The Court also relied on the decision of the High Court of Kenya, which established that when amendments are made as a direct response to feedback obtained during the public participation process there is no requirement for these amendments to be subjected to an additional round of public participation.

Poland

Poland’s Ministry of Finance has presented the framework for a draft act aimed at simplifying the implementation of the mandatory use of the National e-Invoicing System (KSeF).The Ministry of Finance anticipates that the new measures will be adopted by the Council of Ministers in the fourth quarter of 2024.

Poland

On 6 November 2024, the Ministry of Finance released a long-awaited draft amendment to regulate changes concerning obligatory e-invoicing in Poland and the National e-Invoice System (KSeF). Release of the draft follows the recent release of a framework for the KSeF rules. As previously announced, the requirement to issue structured invoices via KSeF will be implemented in stages:

• Starting on 1 February 2026 for taxpayers whose sales value (including tax) exceeded 200 million Polish zloty (PLN 200m) (approximately €46m) in 2025
• Starting on 1 April 2026 for other, smaller businesses

The draft includes measures designed to facilitate the implementation and use of KSeF, addressing requests raised during previous consultations.

For further information, please contact Chris Taylor.

Italy

Italy has proposed removing the revenue thresholds in its digital services tax (DST) rules, making any business generating digital service revenues in Italy subject to the tax from 1 January 2025. The Budget Law is pending parliamentary approval.

For further information, please contact Liam Smith.

Saudi Arabia

On 22 September 2024, the Saudi Cabinet announced the approval of the Real Estate Transaction Tax Law. The Law was published in the Official Gazette on 11 October 2024. The Law introduces specific exemptions for various real estate transactions, providing further guidance on certain exemptions that were not referenced previously. Taxpayers dealing with real estate in Saudi Arabia should review the provisions of the approved Law to facilitate compliance and identify exemptions applicable to their real estate transactions. Non-compliance can trigger the application of fines and penalties.

Philippines

A new law imposes 12% VAT on digital transactions and applies to both resident and non-resident digital service providers (DSPs). Implementing rules and regulations will be issued within 90 days from the effective date of the new law, meaning on or before 16 January 2025. Non-resident DSPs will be subject to VAT 120 days from the effective date of the implementing rules and regulations.

On 8 November 2024, Italy joined the Centralised Clearance for Import (CCI) system, implementing the first phase of CCI system.

The new trans-European system ensures the digitalisation of the centralised clearance process at European level as defined in the Union Customs Code (UCC). It is available for use by European businesses in Bulgaria, Estonia, Spain, Luxembourg, Latvia, Lithuania, Poland, Romania, Croatia and Italy. Other Member States are planning to join gradually in the coming year.

For further information, please contact Gerard Koevoets.