The amendment to the Goods and Services Tax Act makes significant changes to the determination of the moment when the tax obligation arises. Amendments entering into force of the VAT Act on the day 1 January 2014, they also cover specific cases, including rules for establishing the tax obligation for construction and assembly services.
General principles in the VAT Act
Under the new general rules, the tax obligation will arise at the end of the month in which the goods were delivered or the service was made (new Article 19a(1) VAT Act). However, it should be borne in mind that for certain types of benefits specific rules are provided for the formation of a tax obligation. Such services include construction and construction and assembly services.
Tax liability for construction and assembly services
To the end 2013 the date of issue of the invoice was not relevant - the tax obligation in the case of construction or construction and repair services was created upon receipt of all or part of the payment, but no later than 30 the day from the date of the service.
From 1 January 2014 in the case of the provision of construction and construction and assembly services, the VAT tax liability will arise when the invoice is issued (Article 19a(5)(3) point a).
Tax payers providing construction and construction and assembly services should point out that the invoice should be issued no later than 30. the day after such service has been provided.
In cases where the provider of the above services does not issue an invoice or issue it with a significant delay, the obligation to demonstrate VAT due will arise 30. the date from the date of performance of the service, the fact that the service provider received the claim is irrelevant.
Consequences of changes in practice
In accordance with the provisions in force until the end 2013, if the trader did not receive payment for the construction or assembly services provided within the time limit, he could postpone the time limit for the tax obligation to be imposed the following month after the month in which the service was performed. The VAT invoice was not relevant for the existence of a tax obligation.
The moment of the obligation is now closely linked to the date of the invoice. An entrepreneur providing such services may issue an invoice within the time limit 30. days from the date of performance of the service - it is possible to shift the moment when the tax obligation is incurred to the next month after the service. However, this involves a longer waiting period for payment.