Major differences in the VAT system of the CEE countries to the EU regulations

The 2018 autumn issue of WTS CEE Tax Bridge has been published. It summarizes the most important differences in the VAT system of nine Central and Eastern European countries to the EU regulations: Austria, the Czech Republic, Hungary, Poland, Romania, Russia, Serbia, Slovakia and Slovenia.

In our third issue of the 2018 CEE newsletters we present you the differences in value added tax rules of nine CEE countries. In the European Union, value added tax is probably one of the most harmonised types of tax, yet there are several areas where domestic rules differ somewhat from the EU VAT Directive. In most cases, the differences are allowed in the Member States (some of these are the so-called “may” provisions).

Methods and tools of the VAT system

We find differences in the application of domestic reverse-charge methods, or in the methods and tools used against VAT fraud. This latter topic is probably the hottest issue nowadays, looking at the special online invoicing rules recently introduced in the Hungarian VAT system, or the scoring system in Romania, where the tax authorities can analyse various topics and calculate a score for companies wishing to register in Romania; if the overall score is below 51 points (i.e. negative aspects outweigh the positive aspects), the fiscal risk is high and the VAT registration is rejected (this rule is fortunately not applicable for foreign entities simply wishing to register for VAT purposes in Romania).

It is quite obvious from reading the CEE region articles that VAT compliance and related administration burden is increasing in the region (one unique example is the VAT control statement obligation introduced in the Czech Republic).

You should also read our summary about the latest amendments in the EU candidate country of Serbia from a VAT perspective. Needless to say that a large number of outstanding issues has been solved in the negotiation process, but there are still differences between VAT regulations in the European Union and the VAT system of the Republic of Serbia.

Russia, the biggest player in the CEE region and a third country from an EU perspective, tells us what to do if foreign companies provide, or participate in providing, electronic services in Russia.

It is not possible to list all the differences in the region from a VAT perspective of course. However, I am pretty sure that by looking into the details in these countries you can better understand the discrepancies, prepare for the challenges, and recognise the opportunities if you want to move your business into our region.

You can download WTS CEE Tax Bridge #3/2018 in PDF format here:

VAT system

WTS CEE Tax Bridge #3/2018 (PDF)

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