Trésorier/Treasurer magazine - N°93 - Apr/May/Jun 2016 - (Page 6)

Lux News Indirect Tax LE MAGAZINE DU TRESORIER / TREASURER MAGAZINE - N°93 - APR / MAY / JUNE 2016 Claiming VAT back when an original invoice is incomplete 6 On 17 February 2016, the Advocate General (AG) released its opinion in the German referral of C-518/14 - Senatex submitted to the Court of Justice of the European Union (hereafter CJEU) concerning the circumstances in which an incomplete invoice can be corrected with retrospective effect, such that the right to deduct input VAT is retained on the basis of the original invoice. Currently, in Germany, if a VAT invoice is incorrect or non-compliant, input VAT is non-deductible. If the invoice is later amended by the supplier, the German Tax Authority considers that input VAT only becomes deductible in the VAT return period when the amendment has been made. In Germany, this is particularly significant as it often results in substantial interest charges for the period in which VAT was claimed without appropriate evidence, as there is an interest rate of 0.5% per month on VAT adjustments, with a 15 month period of grace. According to the Advocate General, if the substantive conditions are met, the correction of only formal requirements on an invoice (such as in the current case to show the correct VAT registration number on the invoice) should be allowed retrospectively, enabling the taxpayer to deduct VAT in the period in which the original invoice was received. However, the Advocate General also considers that Member states may adopt measures to penalise taxpayers who do not meet the invoicing requirements, but suggests that Germany's interest charges may not be in line with the EU law principle of proportionality. The Advocate General opines that Member states may impose a time limit on the possibility of correcting an incorrect or incomplete invoice, provided the EU law principles of equivalence and effectiveness are respected. Assuming the CJEU follows the AG's opinion, businesses operating in Germany (and any other relevant Member States such as Hungary and Cyprus) where interest has been charged as a result of input VAT recovery against a non-compliant VAT invoice may wish to challenge such charges and submit protective claims. Luxembourg has not implemented general VAT invoicing requirements beyond those imposed by the Directive. In Luxembourg, VAT recovery on the basis of a non-compliant invoice could be treated as an over-recovery of input VAT, hence be rejected. If a compliant invoice is subsequently obtained, the taxpayer would be entitled to recover the input VAT in the period in which the correct invoice is obtained. It is thus important to review and (where necessary) re-design the VAT controls within the Accounts Payable function to ensure that non-compliant invoices are detected and rejected, as well as to review and (where necessary) re-design of the invoicing systems to ensure compliance with the Luxembourg invoicing requirements. Directors' fees - direct and indirect tax treatment Considering the lack of clear rules concerning the tax treatment applicable to directors' fees, hence of legal certainty, the Luxembourg professional Association for Directors (hereafter ILA) has set up in 2014 a Working Group to consider this matter. In this context, contacts have been made with the Minister of Finance to submit arguments for a clearer tax treatment for all directors. It seems very likely that the tax treatment of director's fees will have to be reviewed. The Minister of Finance has recently confirmed to the Association that any clarifications concerning the tax treatment of directors' remunerations (whether indirect taxation (VAT) or direct taxation (withholding tax, tax deductibility for the company paying such remunerations), will be an integral part of the upcoming tax reform and will as such become effective at the earliest on January 1st, 2017. Yannick Zeippen, Indirect Tax Leader, EY Luxembourg Jacques Verschaffel, Executive Director, EY Luxembourg

Table of Contents for the Digital Edition of Trésorier/Treasurer magazine - N°93 - Apr/May/Jun 2016

Cover
Table of contents
EDITORIAL
FINANCIAL HIGHLIGHTS Luxembourg Tax News
INTERVIEW David Blair - How should we set up an efficient KYC Process?
FOCUS
IFRS 9: Hedging - Treasurers will love it
From 17 to 16 reLEASE of the new LEASE accounting standard
Block chain - Is this buzz word turning into a reality?
Bank Single Gateway, the Plumbing of Bank Connectivity
FORUM
Geopolitical threats for the year ahead
Treasurers proceed with caution
Des difficultés en série pour les nouveaux entrants
Easing the Burden - Is a global KYC standard needed?
European trade repository of the year
La dette senior Européenne, un regard nouveau sur l'obligataire
CORPORATE FINANCE
Stay connected with cloud treasury technology
From stone age to straight through processing
Differentiators for treasury management systems
Complete securities financing solutions for corporates
A full and balanced "meal" for your retirement?
15 MINUTES WITH FinMetrics
THE FINANCIAL RISK OBSERVATORY
NEWS
LIFE BEYOND NUMBERS

Trésorier/Treasurer magazine - N°93 - Apr/May/Jun 2016