VAT: Latest Developments

L.3763/2009 transposed inter-alia a number of EU Council Directives concerning Value Added Tax.

More specifically:

Article 20 transposed Council Directive 2007/74/EC regarding the rules for the exemption from VAT and Excise duty of goods imported in the personal luggage of individuals travelling from third countries or countries where the VAT /Excise legislation does not apply.
Article 21 transposed Council Directives 2006/112/EC and 2006/69/EC, for which the European Commission has already referred Greece to the European Court of Justice (and therefore it is anticipated that the infringement procedure will cease).
Article 22 transposed Council Directives 2008/8/EC (on the place of supply of services), which together with Council Directives 2008/9/EC (on the conditions and the procedure for the VAT refund by taxable persons not established in Greece) and 2008/118/EC (on the new reporting requirements of the taxable persons) are widely known as the “VAT Package”.

According to article 20 L. 3763/2009 goods being transported in the luggage of individuals (such as tobacco products and alcoholic beverages) are exempt from VAT and Excise duty as long as the goods are of no commercial character, the journey begins or involves transit through a third country and the traveler cannot prove that the goods have been acquired in a European Member State and he is not eligible to claim refund of these taxes.

The exemption from VAT and Excise duty applies only to goods up to a specific value whereas no exemption is available for goods carried by under-aged individuals up to 17 years old.

Based on article 21 of L. 3763/2009 the necessary technical adaptations are made due to the recast of the 8th Directive to Directive 2006/112/EC. In essence article 19 par. 2 indent c’ is amended and the concept of “open market value” used for the self-supply of goods and services as well as for the transportation of own goods within the EU (deemed intra-Community transactions) is redefined. According to the new regulations the term “open market value” shall be the consideration that the buyer of the goods or the recipient of the services should have paid at the same marketing stage and under conditions of fair competition by an independent party. When it is not possible to identify similar transactions (supplies of goods or services) the “open market value” cannot be less than the purchase price of the goods at the time they are supplied or the total cost for the supply of services.

The above are applicable as from 27 May 2009, date of publication of the law to the Government Gazette.

Place of supply of services

With regard to the place of cross-border supply of services (i.e. the supplier and the recipient of the services are established/VAT registered in different countries) and with effect as from 1st January 2010 the following shall apply:

Based on the general rule, as per the new paragraph 2 of article 14 of the VAT Code, the place of supply of services rendered to taxable persons shall be the place where the recipient has established his business. However, if these services are provided to a fixed establishment of the taxable person located in a place other than the place where he has established his business, the place of supply of those services shall be the place where that fixed establishment is located. In the absence of a registered seat or a permanent establishment, the place of supply shall be deemed to be the place of usual adobe or residence of the taxable person that receives the services.

The criterion of the place of establishment of the supplier (as the general rule currently is) applies in cases where the services are supplied to non-taxable persons.

Paragraphs 3 to 16 provide for the rules governing the place of taxation and the exemptions thereto, which are summarized in the following table:

	Nature of services	Place of supply in Greece	Place of supply outside of Greece
1	Supply of services by intermediaries to non taxable persons	When they relate to the main transaction that is performed in Greece	When they relate to the main transaction that is performed outside of Greece
2	Services connected to immovable property irrespective of the capacity of the recipient (taxable or non-taxable person)	When the immovable property is located in Greece	When the immovable property located outside of Greece
3	Supply of passenger transport	For the part of the transport realized within the Greek Territory	For the part of the transport realized outside the Greek Territory
4	Transport of goods to non taxable persons - except from intra- Community transportation	For the part of the transport realized within the Greek Territory	For the part of the transportation realized outside the Greek Territory
5	Transport of goods to non taxable persons –intra-Community transportation	When the place of departure is Greece	When the place of departure is outside of Greece
6	Services ancillary to the transport rendered to non taxable persons	When the place where the services are physically carried out is Greece	When the place where the services are physically carried out is outside of Greece
7	Supply of services related to cultural, artistic, scientific, educational, entertainment or similar activities (irrespective of the capacity of the recipient – taxable or non-taxable person)	When the activities actually take place in Greece	When the activities actually take place outside of Greece
8	Valuations of and work on movable tangible property to non taxable persons	When the place where the services are physically carried out is Greece	When the place where the services are physically carried out is outside of Greece
9	Supply of restaurant and catering services	When the place where the services are physically carried out is Greece	When the place where the services are physically carried out is outside of Greece
10	Supply of restaurant and catering services for consumption on board ships, aircraft or trains	When the place of departure is Greece	When the place of departure is outside of Greece
11	Short term hiring of a means of transport (up to 30 days)	When the place where the means of transport was put at the disposal of the customer is Greece	When the place where the means of transport was put at the disposal of the customer is outside Greece
12	Supply of electronic services to non-taxable person	When the recipient of the service is established Greece and the Supplier is established outside the EU	When the recipient established outside the EU and the supplier is established or has his permanent establishment or usually resides in Greece
13	Supply of services to non-taxable persons established outside the EU (this relates to services of former par. 3, e.g. royalties, advertizing, consulting etc)		The place of supply is outside of Greece
14	Services falling under the general rule, the short term hiring of a means of transport, the services of former article 14 par. 3 to non taxable persons outside the Community	The services are indeed used and enjoyed in Greece

VAT refund to EU taxable persons

Taxable persons established in other Member States are entitled to obtain refund of Greek VAT they incur on the condition that they do not have a permanent establishment in Greece, they did not realize any taxable supplies in Greece during the period in which they claim the refund (excluding some VAT exempt transactions directly linked to exports, imports and the international trade, exempt transactions of article 27 and services for which the recipient is liable to account for VAT) and the goods or services were used for further taxable supplies in the Member State of their establishment. Also import VAT paid in Greece can be refunded on the condition that the final destination of the goods was the Member State where the taxable person is established and the latter can evidence that VAT was paid in that Member State (intra- Community acquisition in the Member State establishment).

In case where the established in the Member State taxable person is covered by the common flat rate scheme for farmers or the special scheme for small enterprises or he carries out only supply of goods or of services which are exempt without the right to deduct, then he is not entitled to claim for a VAT refund in Greece. The taxable person cannot apply for a VAT refund in the following cases.

the amounts of VAT have been incorrectly invoiced
the VAT amounts are related to goods supplied in Greece to be further exported which are or should be VAT exempt or to intra-community supply of goods
the VAT amounts are related to the supply of new transportation means or the transfer of own goods to another Member State

The VAT refund is made through an application of the taxable person. The refund period cannot be more than one calendar year or less than three calendar months. Greek Taxable Persons should file such application for the refund of VAT charged in other Member States to the Greek competent authority by electronic means.

Taxable persons who are not established in a Member State can apply for a VAT refund to the Greek competent authority, as long as the reciprocity condition applies between Greece and the country of establishment of the applicant.

Persons liable to VAT

Based on the new provisions of article 35 par. 1 of the VAT Code, which will come into force as from 1/1/2010, the following will apply:

In cases where, the supplier of services is not established in Greece and the place of supply is Greece then the Greek recipient of the services will be liable to account for VAT (through the reverse charge mechanism). For transactions (local supply of goods and specific services) where the supplier is a taxable person not established in Greece and the place of supply is Greece then the supplier or his fiscal agent shall be liable to account for VAT in Greece.

When the foreign taxable person has a permanent establishment in Greece and carries out taxable transactions in Greece, he may not be considered “established in Greece” (i.e. he will not be liable to account for VAT) if the permanent establishment does not intervene to such taxable transactions.
In cases where a non taxable legal entity (e.g. the Greek State and State organizations), which has obtained a VAT registration number for its intra-Community acquisitions, receives services from foreign taxable persons which are taxable is Greece, then such legal entity is liable to account for VAT.

The Greek taxable person is also liable to account for VAT in Greece for the supply of goods and services by a non established taxable person, who was in principle liable to account for VAT but failed to do so.

Obligation of the taxable persons

Every taxable person that supplies or receives services to/from other taxable persons who are established in another Member State is obliged to:

declare the commencement, change or cease of operations related to services (in essence this means that they need to register with VIES)
use the prefix EL to their tax registration number in their dealings with foreign taxable persons
report all the supplies or receipts of services to/from taxable persons in the EU in the EC Sales/Acquisitions Listing. VAT exempt services in the country of the recipient should not be reported into the Listing

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