Latest amendments to the VAT Directive: changes to the reverse charge mechanism and to the applicable VAT rates on electronic books
VAT Alert 3-2018
The Official Journal of the European Union published two VAT amendments this week: one extending the time period for the reverse charge mechanism in certain transactions, the other concerning the ability to charge reduced rates on electronic books, as occurs with paper books.
Two amendments to the VAT Directive were recently published in the Official Journal of the European Union.
The first relates to the reverse charge mechanism. The VAT Directive allows member states to establish that the customer is the taxable person for certain transactions, with the aim of preventing VAT fraud. This is the case for supplies of mobile phones, laptops, computer tablets, game consoles, greenhouse gas emission allowances, among others, which have proved very susceptible to carousel fraud This provision was temporary, however, only allowed to be applied until December 31, 2018, and therefore had to be expressly extended. Following this amendment – made through Directive 2018/1695, published in the Official Journal on November 12–, the measure may be used for an extended period lasting until June 30, 2022, the envisaged date for entry into force of the definitive VAT regime.
The second amendment, made through Directive 2018/1713 –published in the Official Journal on November 14–, allows any member states that had been charging reduced rates on books on physical means of support (or zero rating them) to give the same treatment to electronic books, except for publications wholly or predominantly devoted to advertising or wholly or predominantly consisting of video content or audible music.