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COVID Catch-Up

Kitty Miv, Editor
23 July, 2021

Well, it's been a while (in news cycle terms, at any rate!) since we looked at what governments are doing to mitigate the economic consequences of the ongoing COVID pandemic, so this week we'll dive straight into the EU, where the European Council announced that it had adopted an amendment to the VAT Directive to introduce a temporary VAT exemption on importations and on certain supplies in response to the COVID-19 pandemic.

The "buy and donate" directive, which applies retroactively from January 1, 2021, will make it easier for the Commission and EU agencies to buy goods and services to distribute them free of charge to member states in the context of the ongoing public health crisis.

Through this update, purchases of goods and services by an EU body on behalf of member states to respond to the emergency posed by the COVID-19 pandemic are temporarily added to the list of exempted transactions in the VAT Directive. The new exemption will allow for more donations to member states and their institutions, as it will relieve the EU bodies of the budgetary and administrative burdens that hampered the process.

In the UK, meanwhile, it emerged that, despite infection levels rising once more, HMRC is making a return to previous levels of compliance vigilance. According to a report by accounting firm UHY Hacker Young, the UK tax agency has ramped up its investigations in tax evasion and avoidance in recent months, with new data showing that it opened 102,000 compliance investigations in Q1 2021, up 36 percent from 75,000 in the previous quarter and almost quadruple the low of just 27,000 in the second quarter of 2020.

The extra revenue HMRC brought in from its compliance activity jumped 29 percent to GBP14.2bn in Q1 2021, it also emerged, an increase from GBP11bn in the same period in 2020.

In Belgium, the authorities are taking a different approach, announcing that companies facing financial difficulties as a result of COVID may apply for a lengthy tax repayment plan.

The tax agency said it would consider payment plans of either 12, 24, 36, or 50 months, covering COVID-19-related debts, dating from January 1, 2020.

Most companies will be eligible for a 24-month repayment plan, the tax agency said, with a 36-month plan granted only in exceptional circumstances. Large companies may be afforded up to 50 months to pay.

And last but not least, in Italy, it was announced that the European Commission has approved a EUR2.5bn Italian scheme to support self-employed individuals and certain healthcare professionals in the context of the coronavirus outbreak, by partially exempting them from social security contributions.

The scheme involves exempting self-employed individuals and certain healthcare professionals from social security contributions for the year 2021, up to a maximum annual amount of EUR3,000 per person, and will be open to self-employed individuals who have suffered a decrease in turnover or professional fees of at least one third in 2020, compared with 2019, and whose 2019 overall income subject to such social contributions did not exceed EUR50,000.

Until next week!


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About the Author


Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net

 

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