Businesses with operations in Italy – possible local tax refund
Businesses that have paid IRAP (a local tax in Italy) are one step nearer obtaining a refund after the ECJ’s Advocate General suggested that the tax contravened EU law. If the ECJ follows the A-G’s opinion, it could cost the Italian Government €120 billion and it would also cast doubt on the legality of other similar taxes elsewhere in the EU. All businesses that have paid IRAP (or similar taxes elsewhere in the EU) should lodge protective claims as a matter of urgency.
Fuel for private motoring
As usual, the fuel scale charges have been increased to take account of changes in fuel prices. The new scales apply for VAT accounting periods beginning on, or after, 1 May 2005. Subject to obtaining permission from the European Commission, it is proposed to move away from scales based on engine size to a charge based on CO2 emissions.
Property disposals
The European Court’s Advocate General has suggested that the tax authorities can claw back VAT where a taxpayer has made a VAT free disposal of a capital asset followed by one subject to VAT. In answer to questions raised by the UK High Court, the A-G has delivered a robust opinion against the taxpayer in the Centralan Properties limited case and if followed by the ECJ, some businesses may be facing increased VAT costs.
Education sector – publicly funded research
Universities which have reclaimed VAT on publicly funded research projects may be facing higher VAT costs after the VAT Tribunal decided in the University of Southampton case that the undertaking of publicly funded research is not subject to VAT. However, the decision might mean that some research buildings can be built VAT free.
Sales in Customs Warehouses
Some businesses will be facing higher VAT costs as a result of new regulations that will allow Customs to deny VAT free status to sales within a Customs warehouse regime. Currently businesses can sell goods VAT free within the regime.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.