Filenews 28 July 2022 - by Eleftheria Paizanou
An end to the situation that exists with the taxation of jewellery that was sold by private individuals to jewellers or pawnshops is attempted by a bill to stop the phenomena of tax evasion detected, resulting in the state losing revenue from VAT.
Since 2013, during the period of the economic crisis, the sales of precious metals by individuals increased, due to the financial difficulty they were facing. Used jewellery is sold by private individuals in special stores and then resold to a small number of companies, which after processing and processing them, export them to third countries or to the European Union. Today, the sale of jewellery by a private individual in a goldsmith's shop or a pawnshop is not subject to VAT, since the owner of the jewellery is not subject to Tax. On the other hand, the sale from the goldsmith's shop to the exporter is subject to 19% VAT. At the same time, the exporter claims a tax deduction or even a refund, as the exports or intra-Community deliveries he makes are subject to a zero tax rate.
The way used precious metals are marketed creates risks for the state to lose VAT revenues. Specifically, according to the explanatory report of the bill, it has been found that sales by goldsmiths to exporters are not declared, even if an invoice has been issued, while the Tax Department is required to return to the exporter VAT that has not been collected from the seller. As the Ministry of Finance estimates, this practice causes losses of state revenues, especially at a time when the state's finances are under pressure due to the Russian-Ukrainian conflict.
It is worth noting that under the European Directive on the common VAT system, it is possible to apply the chargeback (VAT refund by the recipient of the goods instead of by the person who delivers them), for supplies of raw and semi-finished metals. The competent ministry, in an effort to protect the state's revenues, proceeds to amend the VAT law. In particular, a new article will be added to the legislation so that when the taxable person buys raw and semi-finished precious metals, he pays VAT by the reverse charge method. The person who will deliver the goods will not pay tax, in order to address the tax evasion problems identified from time to time by the Tax Department, due to the ambiguity in the legal tax regime of this sector.
The new tax change will occur when the Plenary of the Parliament approves the relevant bill, which was submitted to Parliament within the month. After the opening of the House next September, the bill will be put under the microscope of the members of the House Standing Committee on Finance.
