Selected International VAT news provided by PwC Norway.

1. Table of content
Newsletter - March 2016.................................. 1
1. Resent ECJ cases.......................................2
ECJ supports VAT deduction by 'active' holding
companies........................................................................2
Delivery of fuel to ship's tanks may be zero rated
despite legal chain of supply...........................................2
Input VAT recoverable despite 'missing' supplier .........2
Input VAT recovery in connection with free of charge
supplies............................................................................2
Unused non-refundable air tickets for domestic flights
subject to VAT .................................................................2
Exchanging cryptocurrency is a VAT exempt supply ....2
2. News from EU members ...........................3
Denmark: Holding companies entitled to full VAT
deduction on transaction costs.......................................3
Finland: Active holding companies entitled to full VAT
deduction on acquisition costs........................................3
Sweden: Tax authority's views on implications of
Skandia case ....................................................................3
Latvia: VAT Act changes effective 2016 ......................... 3
Slovakia: VAT Act changes effective 2016 ..................... 3
Bulgaria: Amendments to the indirect tax legislation in
2016 ................................................................................. 3
UK: Reverse charge VAT on wholesale e-
communications from 1 February 2016......................... 3
Russia: VAT on imported e-services from 2017 ............ 4
Hungary: Removal of invoicing obligation for B2C
supplies of telecoms, broadcasting and e-services ........ 4
Germany: VAT-free sales with interrupted delivery ..... 4
Sweden: Abolition of VAT group relief ('slussning') ..... 4
Netherlands: Intra-community supplies of goods –
reduction of monthly reporting threshold..................... 4
Middle East: 5% VAT in UAE from 1 January 2018...... 4
Egypt: Update on introduction of VAT .......................... 4
3. Rates changes ........................................... 5
4. PwC publications ...................................... 5
Contacts .......................................................... 5
Newsletter - March 2016
There have been a number of important news in
the area of international VAT last year. In this
newsletter, we have summarized the most
important news from recent months that could be
relevant for Norwegian multinational companies.
We hope you enjoy the newsletter.

2. 2
1. Resent ECJ cases
ECJ supports VAT deduction by 'active' holding
companies
ECJ case Larentia + Minerva, C-108/14 concerns the
entitlement to VAT deduction of 'active' holding
companies, (i.e. holding companies that actively
manage their subsidiaries, in the sense that they
provide those subsidiaries with administrative and
business services for consideration).
The ECJ has held that holding companies which
actively manage all their subsidiaries are entitled to
recover input VAT incurred in relation to that activity.
However, those which are 'passive' in relation to some
subsidiaries must apportion their input VAT to
acknowledge this 'passive' activity.
Delivery of fuel to ship's tanks may be zero-
rated despite legal chain of supply
ECJ case Fast Bunkering Klaipėda UAB, C-526/13
concerns supplies of fuel for ships delivered directly to
the ships' fuel tanks where legal ownership passes
through intermediaries.
The ECJ has held that in such circumstances, supplies
to and by the intermediaries would qualify for zero
rating, provided transfer to those intermediaries of
ownership of the goods takes place at the earliest at
the same time as the operators of the vessels are
entitled to dispose of the goods as owners. In other
words, delivery of the goods to the ships' tanks and the
passing of legal title in the goods via the
intermediaries should be simultaneous events.
Input VAT recoverable despite 'missing'
supplier
ECJ case Stehcemp, C-277/14 concerns the Polish
Taxpayer that purchased fuel and obtained VAT
invoices that satisfied all the conditions for VAT
recovery. However, the tax authority was unable to
trace the supplier or any evidence that the supplier
actually existed or traded, therefore they sought to
deny VAT recovery.
The ECJ once again held that the right to recovery
could only be denied if the Taxpayer knew, or should
have known, that the supply was connected with VAT
fraud, and that it was immaterial whether or not the
VAT had been paid to the tax authority.
Input VAT recovery in connection with free of
charge supplies
ECJ case Sveda UAB, C-126/14 concerns a Taxpayer
which incurred costs in creating a recreational path to
be used free of charge by the public. The path was
intended to attract visitors who would pay the
Taxpayer for its taxable supplies of tourism-related
goods and services, which would partly fund the cost
of the path. The tax authority decided that the
Taxpayer was not entitled to recover the VAT incurred
on the capital cost of construction of the path, as it
considered that the Taxpayer intended to permit the
public to use it free of charge.
The ECJ held that the cost of the path would form part
of the price of the Taxpayer's overall goods and
services therefore there was a direct and immediate
link between those and the cost incurred on the path.
This analysis was not affected by the free of charge use
of the path. Only exempt use or use for purposes
outside the scope of VAT would prevent VAT
deduction.
Unused non-refundable air tickets for domestic
flights subject to VAT
ECJ case Air France - KLM & Hop! - Brit Air,
C-250/14 & C-289/14 concerns the VAT treatment of
unused non-refundable air tickets for domestic flights,
which in France are subject to a reduced VAT rate.
The ECJ held that there was nothing to indicate that
the amounts retained by the airlines became non-
taxable compensation when the passenger failed to
show up independent of whether the compensation
cover any harm for the airlines for no show up. ECJ
concluded that those amounts remained consideration
for the supply of a right to future travel, and VAT was
due when the tickets were purchased in advance.
Exchanging cryptocurrency is a VAT exempt
supply
ECJ case David Hedqvist, C-264/14 replies to the
question whether exchanging cryptocurrencies such as
'bitcoins' for other currency is a supply for VAT
purposes.
The ECJ has held that such transaction constitutes the
supply of services for consideration, but it is exempt
from VAT under art. 135(1)(e) VAT Directive. It was
made a parallel on how the exchange of legal tender of
another state would be, with the consideration

3. 3
represented by the difference between the business's
purchase cost and sale price for the currency.
2. News from EU Member States
Denmark: Holding companies entitled to full
VAT deduction on transaction costs
In a change to the current Danish VAT practice, the
Danish Tax Authorities (SKAT) have supported the
decision from the ECJ of Larentia + Minerva and
confirmed that, subject to certain conditions, holding
companies are entitled to fully deduct VAT incurred
on costs relating to acquiring shares in subsidiaries.
The active holding companies who have not fully
recovered the VAT incurred on costs may be entitled to
a refund of VAT (including interest) for the past 10
years (i.e. from 1 April / 1 June 2005 onwards). The
refund claim has to be supported by adequate
documentation. The deadline for submission of the
refund claims is 17 May 2016.
Finland: Active holding companies entitled to
full VAT deduction on acquisition costs
Following the decision from the ECJ of Larentia +
Minerva the Finnish Supreme Administrative Court
issued a decision on 15 September 2015 confirming
that active holding companies are entitled to fully
deduct VAT incurred on acquisition costs relating to
acquiring shares in subsidiaries.
Sweden: Tax authority's views on implications
of Skandia case
Swedish tax authority has issued guidance on the
impact of the ECJ's judgment in Skandia America
Corporation USA (C-7/13). The case concerned
supplies between branches and/or head offices where
a Swedish VAT group is involved. The guidance from
the Swedish tax authority, published on 23 November
2015, confirms that such a transaction should be
regarded as a supply for VAT purposes, in the sense of
a supply of a service for consideration (which also
includes cost allocations) and provided that there is a
direct link between the consideration and the service in
question. This applies regardless of whether the
Swedish establishment is the head office or another
establishment (e.g. a branch) and also regardless of
whether the foreign establishment is based within or
outside of the EU. However, still a number of questions
remain unanswered, e.g. from when the Swedish tax
authority will apply the conclusions in the Skandia
case. Businesses involved in such transactions will
have to carefully consider their VAT accounting in
order to comply with the ECJ's judgment.
Latvia: VAT Act changes effective 2016
Latvia extended the domestic reverse charge to
additional goods such as: wood fuel (effective 1
January 2016) smart phones, laptops, tablets, and
integrated circuit devices (effective 1 April 2016). Also
effective 1 January 2016, the percentage of VAT that
can be deducted on the purchase, import and running
costs of a light vehicle has been increased from 20% to
50%.
Slovakia: VAT Act changes effective 2016
A number of significant amendments to the VAT Act
will take effect from 1 January 2016, including new
reverse charge provisions affecting the construction
industry and local supplies of any type of goods by
non-resident suppliers to Slovakian established
businesses. Further changes will take effect from 1
April 2016. More information.
Bulgaria: Amendments to the indirect tax
legislation in 2016
Changes to the indirect tax legislation introduce more
detailed VAT rules regarding private use of business assets,
lower sanctions for late charging of VAT, changes to excise
duty rates, increase of the Intrastat reporting thresholds for
intra-EU arrivals and intra-EU supplies as well as other
amendments. More information.
UK: Reverse charge VAT on wholesale e-
communications from 1 February 2016
From 1 February 2016 the wholesale supplies of
electronic communications services are subject to
reverse charge. It means that the customer needs to
account for VAT instead of supplier. The reverse
charge will apply to the services of routing telephone

4. 4
calls and associated data (text and images) over
landlines, mobile networks or the internet. It will not
apply to non-wholesale supplies or to businesses not
registered or liable to be registered for VAT in the UK.
Russia: VAT on imported e-services from 2017
A draft law has been published, under which foreign
suppliers of e-services to Russian consumers would be
obliged to register and account for local VAT on such
supplies. Services which would be taxable under the
new rules include music, e-books and other electronic
publications, graphics, audiovisual works, games,
films, and rights for the use of software. The new rules
are intended to take effect from 2017, although it
should be noted that the draft law is still at an early
stage and may be subject to change.
Hungary: Removal of invoicing obligation for
B2C supplies of telecoms, broadcasting and e-
services
From 1 January 2016, foreign suppliers of telecoms,
broadcasting and electronic services will not be
obliged to issue an invoice in respect of supplies made
to Hungarian consumers, although invoices will still
be required if requested by the customer. The
exemption is restricted to supplies made using the
Mini One Stop Shop (MOSS).
Germany: VAT-free sales with interrupted
delivery
The Finance Minister has decreed that in certain
circumstances, a 'broken', or interrupted journey of
intra-community or export sales of goods may still be
treated as a single transport, with VAT exemption for
the transaction as an intra-community supply or
export sale, if the final destination is known at the start
of the first movement and legs of the journey are
continuous. However, an interrupted delivery breaks a
triangular transaction so that each link in the chain
becomes a separate sale with its own VAT
consequence.
Sweden: Abolition of VAT group relief
('slussning')
As of 1 January 2016, the regulations on so called
'slussning' will be abolished. These regulations have
made it possible for group companies to deduct input
VAT on another group company's purchase of goods
and services. The government has concluded that such
a system is not compatible with EU-law, and since the
system is not covered by the Swedish regulations on
VAT grouping, abolition of the 'slussning' will result in
non-deductible input VAT related to exempt services
supplied within Swedish groups.
Netherlands: Intra-community supplies of
goods – reduction of monthly reporting
threshold
In response to a request from the European
Commission, the Netherlands has, with effect from 1
January 2016, reduced the threshold for monthly
reporting of intra-community supplies of goods (the
so-called 'Opgaaf ICP') from €100,000 to €50,000.
Middle East: 5% VAT in UAE from 1 January
2018
The United Arab Emirates (UAE) Minister of State for
Financial Affairs has stated that the UAE will
implement VAT on 1 January 2018. VAT is expected to
be introduced at a rate of 5% with some limited
exceptions including basic food items, healthcare and
education. Following the UAE's move, other Gulf
Cooperation Council (GCC) countries may introduce
VAT at the same time or by 1 January 2019 at the
latest. More information
Egypt: Update on introduction of VAT
It is understood that the introduction of VAT in place
of the current Sales Tax is high on the new
parliament's agenda. It is difficult to be precise in

5. 5
terms of timing of an introduction. However, it is
possible that the new VAT could be introduced within
the next two to three months with little or no
transitional period.
3. Rates changes
 Italy: The VAT rate applicable to electronically
supplied newspapers and magazines will be
reduced from 22% to 4% with effect from 1
January 2016.
 EU: The European Commission has published a
proposal for a Directive extending, from 31
December 2015 to 31 December 2017, the period
during which 15% is the minimum permissible
standard VAT rate in the EU.
 Fiji: The VAT rate has been reduced from 15% to
9% with effect from 1 January 2016.
 Japan: The Japanese Consumption Tax (JCT)
increase from 8% to 10% remains on schedule for
1 April 2017.
 Dominican Republic: The special VAT rate
applicable to certain products belonging to the
'market basket' of consumer goods has been
increased from 13% to 16% commencing 1
January 2016. The special rate applies to yogurts,
butter, coffee, oils, sugar, cocoa and chocolate.
4. PwC publications
 US: Doing business in the United States - link
 South Korea: Tax Law changes for 2016 - link
 India: Indirect tax Newsletter – link
 EU: Union Customs Code – link
 Belgium: VAT & Transaction costs – link
 Cyprus: Tax and figures 2016 – link
Contacts
For more information, please contact:
Yngvar Solheim
Partner
+47 95 26 06 57
yngvar.solheim@pwc.com
Espen Qvist
Director
+47 95 26 04 07
espen.qvist@pwc.com
Per Kirknes
Director
+47 95 26 00 99
per.kirknes@pwc.com
Diana Geilhufe
Senior Associate
+47 95 26 04 43
diana.geilhufe@pwc.com
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PricewaterhouseCoopers Accounting AS and PricewaterhouseCoopers Skatterådgivere AS which are member firms of PricewaterhouseCoopers
International Limited, each member firm of which is a separate legal entity.