KPMG InfoCourier January 2018 | KPMG | EE
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KPMG InfoCourier January 2018

KPMG InfoCourier January 2018

InfoCourier is a monthly newsletter which gives an overview of the latest changes in legislation.

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KPMG InfoCourier January 2018

Changes in the Value-Added Tax Act

Parliament is considering a bill of an Act to Amend the Value-Added Tax Act which will replace the term “plot” with the term “building land” and will remove some metal products from the list of metal products subject to value added tax under a special arrangement. The bill will also specify the time when the tax liability on services provided to a person of another member state arises (the approach will become similar to national transactions).

A detailed overview in Estonian is available here.

For further information, please contact Merike Oja, tax adviser, moja@kpmg.com

Amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act

Before the increase in the alcohol excise duty rate planned for 1 February 2018 could enter into force, amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act were adopted. The amendments lowered the rise in the excise duty rates for beer, other alcohol, and wine and fermented beverages containing up to 6% of ethanol by 50%. 

A detailed overview in Estonian is available here.

For further information, please contact Merike Oja, tax adviser, moja@kpmg.com

Court decision: Purpose of use of an apartment and deduction of input VAT

A company purchased two apartments and deducted the VAT recorded on the invoices as input VAT. The company planned to use the first apartment as an office (to the extent of 50%) and to rent the other one out as commercial space. In the tax authority’s opinion there was not sufficient evidence that the company could use the apartments for taxable supply. The company did not agree with the tax authority and filed a complaint to the Tallinn Administrative Court that agreed with the company partially.

The Supreme Court also drew attention to the importance of the purpose of use of an apartment, which is recorded in the permit of use of the building. If the purpose of use is residential space it may not be possible to use the apartment for other purposes. The viability of the business plan is the responsibility of the company. If the realisation of a business plan is hindered by legislation, it may not be possible to realise it.

A detailed overview in Estonian is available here.

For further information, please contact Merike Oja, tax adviser, moja@kpmg.com

Court decision: Right to deduct input VAT

A non-profit association (MTÜ Rimmu Maaparandusühistu) ordered partial reconstruction of a land improvement system. The purpose was to increase the cultivation value of arable land and, thus, receive compensation for advantages of use from the possessors of the land. The tax authority took the position that the association may not deduct input VAT on the expenses related to the reconstruction work, as the work was related to exempt supply (a service the non-profit association would provide to its members free of charge or for a membership fee). The Supreme Court found that the service was not something that the association would provide to its members free of charge or for a membership fee. Serving the economic interests of the members of the association does not comply with the definition of “supply of goods and services of a social nature”. Therefore, it is not exempt supply. 

A detailed overview in Estonian is available here.

For further information, please contact Merike Oja, tax adviser, moja@kpmg.com

© 2018 KPMG Baltics OÜ, an Estonian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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