Lovat Newsletter – March 2023

The most interesting this month: The emergence of a new tool for European VAT number checks, an update to the Magento integration, and new simplified procedures for the importation of retail agri-food products from the UK to Northern Ireland, etc.

New tool: Lovat software website introduces a new tool for european VAT number Checks

The tool is designed to help companies ensure that they are compliant with European VAT regulations and to prevent potential errors or fraudulent activities. The new tool offers a simple and user-friendly interface that enables users to enter a VAT number and instantly receive a confirmation or rejection response. The service covers all 27 EU member states and the United Kingdom and can be used for both B2B and B2C transactions.

With the increasing complexity of European VAT regulations and the rising importance of compliance, this new tool is valuable for businesses of all sizes. It can help streamline the process of verifying VAT numbers, save time and effort, and reduce the risk of penalties or legal issues.

To try out the new VAT number check service

New update: Enhanced Magento integration with new features for streamlined business management

We’re thrilled to announce that we’ve updated our Magento integration with some amazing new features that will make managing your business even easier. The update comes with new features that aim to simplify and streamline business management for online merchants.

One of the significant enhancements is the addition of a tax calculation feature, enabling merchants to calculate taxes more accurately and efficiently. This new feature will save time and prevent errors in tax calculations, making it easier for merchants to manage their finances.

Furthermore, a new plug-in function has been introduced in the administration panel, allowing for more streamlined management of settings and configurations. This feature will enable merchants to customize their Magento integration to meet their specific business needs, improving their overall experience with the platform.

The updated Magento integration is designed to provide a more user-friendly experience for online merchants, empowering them to achieve their business goals more efficiently. With these new features, merchants can save time, reduce errors, and focus on growing their businesses.

Integration link: LOVAT Compliance (magento.com)

🆕 News digest:

👉 The European Union and the United Kingdom have reached an agreement on new simplified rules and procedures for retail agri-food products entering Northern Ireland from the UK

The new measures are expected to ease tensions that had arisen in recent months, as Northern Ireland became a de facto customs border with the UK, following Brexit.

Under the new rules, a common unified certificate will be used for mixed loads of agri-food products, which is expected to streamline the process. The number of identity checks will be reduced to just 5%, with physical checks carried out only on a risk-based and intelligence-based approach. This is expected to cut down on the time and cost of transporting goods across the border.

UK public health standards, such as levels of food additives, will be applied to goods moving for final consumption in Northern Ireland. This means that refrigerated meats that were previously prohibited, such as hot dogs, will now be allowed into Northern Ireland. Organic and wine certificates will also be eliminated, which is expected to further simplify the process.

In addition, the agreement will also allow for the transportation of goods from the rest of the world to Northern Ireland via the UK, where UK conditions are identical to EU conditions. A specific list of products has been identified, including New Zealand lamb and vegetables.

The new measures are expected to come as a relief to businesses in Northern Ireland, who have been struggling with increased bureaucracy and uncertainty since Brexit. The agreement is seen as a positive step towards easing tensions between the EU and the UK and ensuring smooth trade flows between Northern Ireland and the rest of the UK.

Besides, the UK and the European Commission have found solutions to the value-added tax (VAT) issue. Firstly, they have agreed that the UK can apply reduced VAT rates to goods supplied and installed in immovable property located in Northern Ireland, even if the applicable UK VAT is below the EU minimum rates. This applies to assets such as domestic heat pumps or residential wind turbines and does not pose a risk to the single EU market. The UK may also apply reduced VAT rates to more categories of goods than permitted by EU law, as long as they are not a concern for the EU’s own resources.

Secondly, the UK does not need to apply the special EU VAT scheme for small businesses in Northern Ireland. Instead, the UK will implement its own VAT exemption scheme for small businesses, which will comply with EU rules on the annual turnover threshold. This will ensure that larger companies in Northern Ireland cannot be treated as small businesses and benefit from VAT exemptions, protecting a level playing field with the EU.

Lastly, the Commission and the UK government have agreed to explore the possibility of compiling a list of goods that would not be at risk of entering the EU and would not be subject to EU VAT rules. This list could be detailed for a period of 5 years, subject to constant review. Additionally, they will evaluate the existing mechanisms for refunding VAT abroad.

These solutions demonstrate a positive step towards resolving the VAT issue between the UK and the EU, providing clarity and certainty for businesses operating in Northern Ireland.

👉Luxembourg implements temporary VAT rate reduction

Luxembourg has implemented a temporary reduction of most of its Value Added Tax (VAT) rates by 1% as of January 1, 2023. This move is expected to last for the entire year until December 31, 2023.

The standard VAT rate has been reduced from 17% to 16%, while the average VAT rate has been reduced from 14% to 13%. Additionally, the reduced VAT rate has been lowered from 8% to 7%.

The VAT rate reduction is expected to have a positive impact on businesses and consumers. However, businesses in Luxembourg need to be aware of the practical implications of the VAT rate decrease. They must update their internal accounting systems, invoice and contract templates, and agreements in force to ensure that the correct VAT rates are applied.

The reduction of VAT rates is a significant policy change that could potentially affect businesses across Luxembourg. The government has encouraged businesses to take the necessary steps to ensure compliance with the new VAT rates.

Read more about VAT in Luxembourg, including VAT rates, invoicing rules, registration requirements, filing frequency and deadlines in our guide: Luxembourg VAT Information: rates, registration number | Lovat Compliance