On 25 November 2010, the Riigikogu passed the Value Added Tax Amendment Act, the most important changes of which we shall introduce in this document.
1. Changes in application of the special arrangements in VAT cash accounting
2. Changes in filling and submitting of reports on intra-Community supply of goods (VD) and amendments to intra-Community supply reports (VDP)
3. Reverse charge on national transactions
The fundamental change compared to the valid procedures of 31 December 2010 is that special arrangements may be applied by all persons liable to value added tax
Taxable persons shall keep a cash-basis accounting on this limit and shall not include transfer of fixed assets and the incidental transactions of an immovable as goods.
On application of special arrangements, the time of supply is the day:
When there has been no payment made during February and March for goods dispatched in January, the time of supply is 1 April, and the supply is to be declared on the April VAT declaration with a deadline of 20 May.
The right to deduct input value added tax for goods purchased or services received for taxable supply arises in the case of:
Taxable person applying special arrangements has no right to use cash-basis VAT accounting in the case of the following transactions and operations (Value Added Tax Act § 44 (11)):
As an important change, a new obligation is added to taxable persons who apply special arrangements:
The form shows information on the issued and received invoices that are undeclared on the value added tax return (KMD), i.e. invoices that include transactions on which the obligation to declare VAT or the right to deduct input VAT falls to the later period of taxation, since the invoices are entirely or partially outstanding / unpaid.
The KMD INF1 form consists of Parts A and B:
Part A: sales invoices, for which the payment from the buyer has not been received in full or in part; Part B: sales invoices, for which the payment to the seller has not been made in full or in part.
Invoice data are not shown on this form, if the invoice has been
The form shall be submitted together with the value added tax return by the 20th day of the calendar month following the period of taxation as at the last day of the period of taxation, either
The form shall be submitted even when there are no unreceived sales invoices or unpaid purchase invoices (presented by zeros).
To sole proprietors who applied special arrangements before 1 January 2011
A sole proprietor who has informed a tax administrator of the application of special arrangements under provisions that were in force until 31 December 2010, and wishes to continue from 1 January 2011, does not need to submit a new notification, except when the taxable supply of the taxable person exceeds EUR 200 000 as of the beginning of 2010.
If the sole proprietor’s taxable supply exceeds EUR 200 000 from the beginning of 2010 (transfer of fixed assets and incidental transactions of immovable as goods are not included), the sole proprietor is obligated from 1 January 2011 to:
Let us remind you that in the case of continuing application of special arrangements, the use of accounting programmes may result in the need to make changes to the accounting programmes.
Additional information and help is available at:
Declaration of services
A VD-report declares the services that would be taxed in accordance with the so-called main rule (Value Added Tax Act § 10 (4) 9)) by the service recipient in their country of location when referring to a taxable person from another country (Value Added Tax Act § 28 (1) 2).
Therefore, services that are tied to their location, and the place of service is not related to the recipient of service (i.e. immovable-related services), are not to be declared.
Showing credit invoices on the report
If an invoice submitted for supply of goods/provision of services is cancelled or a credit invoice is submitted, the changes occurring due to that shall be shown on the statement about the period of taxation on which the (credit) invoice was submitted (Value Added Tax Act § 28 (3)).
Therefore, the changes occurring due to cancellation of an invoice or submission of a credit invoice are to be declared at the same taxation period on both the value added tax return (KMD) and the report on intra-Community supply (VD).
The declaration period is a calendar month
A report shall be submitted by the 20th day of the next calendar month (Value Added Tax Act § 28 (2)). The first statement on intra-Community supply of goods shall be submitted by 20 February 2011.
Declaration in full euro
On a statement on the transactions of 2011, all sums are stated in full euros (Value Added Tax Act § 28 (6)). In the statement on year 2010, all sums are stated in full kroons.
The Value Added Tax Act was supplemented by section 411, according to which there shall be a so-called buyer’s reverse VAT duty on certain national transactions.
§ 411 of the Value Added Tax Act “Special arrangements for imposition of value added tax on immovables and metal waste” provides that if a taxable person shall transfer an immovable stated in Value Added Tax Act § 16 (3) with VAT to another taxable person, or metal waste in the meaning of the Waste Act § 104, the acquirer of goods shall pay the transferor the sales price without the VAT. The acquirer shall calculate the VAT amount on the transaction invoice to be the VAT amount to be paid by the acquirer instead of the transferor.
Under special arrangements, an immovable or a part of it shall be taxed, the supply of which is usually exempt from tax and on adding VAT to which a taxable person is obligated to inform the tax authority (Value Added Tax Act § 16 (3)). The obligation to inform rests with the transferor of the immovable.
Upon receipt of an invoice with a reference to the transfer of the VAT duty to the acquirer, the acquirer shows the transaction to be taxed in spaces 1, 4 and in the informative spaces 7 and 7.1 of their value added tax return. The acquirer has a right to show the VAT on the invoice as a deductible input VAT in space 5 when using the taxed supply on the immovable or metal waste.
Upon transferral of an immovable or metal waste in use, to a non-taxable entity or a person with limited liability, the regular VAT procedure applies, i.e. the VAT is calculated and paid by the transferor.