Details

  • Service: Tax & Legal, Indirect Tax (VAT, Customs & Excise)
  • Type: Regulatory update
  • Date: 1/16/2014

InfoCourier - January 2014 

InfoCourier - January 2014. InfoCourier is a monthly e-newsletter that overviews some of the latest changes in Estonian legislation.

Amendments to the Minister of Social Affairs regulation no. 63

 

From 1 January 2014, the Minister of Social Affairs regulation no. 63 of 4 December 2006 stipulating medicinal products, contraceptive preparations, sanitary and toiletry products, medical equipment and medical devices subject to value added tax (VAT) at the rate of 9% has been amended. In the amendment obsolete code numbers of absorbent incontinence products and wooden support devices have been replaced with the new ones. Also, skin puncture implements such as lancets and lancet devices used by diabetics for blood glucose monitoring were included in the regulation.

 

For further information, please contact Kersti Tirmaste, ktirmaste@kpmg.com

 


New tax treaties

 

As from 1 January 2014, six new agreements for the avoidance of double taxation entered into force: with Bahrain, Thailand, Cyprus, Mexico, Turkmenistan and Uzbekistan.

 

The tax treaties are available on the Ministry of Finance's website.

 

For further information, please contact Einar Rosin, erosin@kpmg.com

 


Advertisement tax in Tallinn

 

From 1 January 2014 advertisement tax in Tallinn is subject to two tax authorities – the Tallinn City Enterprise Board and the Tax and Customs Board.

 

According to the amendments, from the beginning of 2014 advertisement tax returns are submitted and the tax is paid to the Tax and Customs Board; however, tax supervision function is performed by the Tallinn City Enterprise Board.

 

As regards the tax liability arising for the taxation period up to 31 December 2013, the tax return is submitted and the advertisement tax is paid to the Tallinn City Enterprise Board. As regards the tax liability arising for the taxation period starting from 1 january 2014, the tax return is submitted and the advertisement tax is paid to the Tax and Customs Board.

 

For further information, please contact Kersti Tirmaste, ktirmaste@kpmg.com

 

 

Court judgments

 

Place of supply

 

On 12 December 2013 the Supreme Court passed their judgment in case 3-3-1-54-13 discussing also the place of supply of goods. The Supreme Court explained that based on the destination principle, the supply of goods is usually deemed to be the place where the goods are located. If the goods are not located in Estonia, the value added tax (VAT) paid on the acquisition of the goods cannot be deducted as input VAT in Estonia. Whether or not the seller has paid VAT to the state of Estonia; whether or not the appellant is able to get VAT recovery from the seller; whether the state of Estonia has suffered any damage or gained any benefit; or whether or not the transaction parties have earned unjustified income or gained any tax advantage is not relevant.

 

As regards the transaction in dispute, at the time the purchase and sale contract was made the transferable drill machine was located in Latvia where it was used under a lease contract by Actual Baltic OÜ, whose management board member was also a member of the buyer's management board. Accordingly, the buyer had possession of the drill machine already at the time the transfer transaction was conducted. To transfer possession of the item (including the risk of accidental loss or damage) to the buyer, no additional procedures (including transportation of the machine to Estonia) had to be performed. Based on the above, the alleged transportation of the drill machine to Estonia for issuing certificates of delivery and receipt was not relevant. To transfer ownership, an agreement on transfer of ownership between the transferrer and the acquirer of the item was sufficient. Since the parties had agreed in the contract that ownership of the item would transfer directly after the purchase price was paid and the contract was signed, and as at the time the contract was signed the drill machine was located in Latvia, the place of supply of goods was Latvia.

 

For further information, please contact Kersti Tirmaste, ktirmaste@kpmg.com

 

 

 

 

 

 

InfoCourier does not cover all amendments to Estonian legislation.