Changes to the invoicing of periodically settled transactions

As already highlighted in previous Newsletters the VAT treatment of periodically settled transactions is about to change fundamentally as of 1 January 2016. The changes won’t bring any novelties for tax advisors, accounting offices and audit firms as they have been obliged to apply the modified rules since 1 July 2015.

The main rule of the new scheme is simple to summarize: for periodically settled transactions the tax date is deemed to be the last day of the settlement period.

Unfortunately the applicability of the general rule will be extremely limited due to the existence of the following exceptions:

 

  • the tax date shall correspond to the invoice date when the last day of the settlement period is preceded by both the invoice date and the due date
  • the tax date shall correspond to the due date when the due date falls after the last day of the settlement period with the stipulation that the tax date cannot be later then the 30th day following the end of the settlement period.

 

Please note that a recently proposed Tax Bill aims to extend the above period of 30 days to 60 days. Considering the exceptions, the general rule would only prevail under one single scenario – when the due date corresponds to the last day of the settlement period. In this event the last day of the settlement period will be the tax date.

 

As VAT shall become chargeable at the tax date the modified sequent default penalty payment – payers on occasions of late invoicing. However, the latest draft Tax Bill contains more flexible rules also in this regard. The new regulation will first be applicable for transactions where both the starting dates of the settlement period and the due date of payment fall after 31 December 2015.

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