Finally, ECOFIN has agreed on VAT quick fixes!
On October 2, 2018 the Ecofin has agreed on the 4 quick fixes for specific VAT issues and agreed to align the VAT rates for electronic and physical publications. The four quick fixes will now apply as from 1 January 2020 instead of the first aimed date of January 2019.
- Additional conditions to apply the exemption In case of an exempt/zero rated intra Community supply, at this moment the customer VAT-identification number and the inclusion of the supply in the European Sales Listing are administrative requirements. As from 2020, the supplier should have a valid VAT-identification number of the recipient of the goods and report this VAT number in the European Sales Listing as a condition to be able to apply the zero VAT rate/exemption (substantive condition).
- Proof of transport For the exemption/zero VAT rate to apply, goods are required to have been dispatched to another EU Member State. The supplier should be in the possession of two non-contradictory documents. Example of these documents are outlined (CMR, statement from Notary or other official body etc).
- Chain transactions Chain transactions refer to successive supplies of goods which are subject to a single intra-Community transport. The intra-Community movement of the goods should only be ascribed to one of the supplies, and only that supply should benefit from the VAT exemption provided for the intra-Community supply of goods. The other supplies in the chain should be taxed and may require the VAT identification of the supplier in the Member State of supply. In order to avoid different approaches amongst Member States, which may lead to double or non-taxation, and in order to enhance legal certainty for operators, a common rule should be established that, provided certain conditions are met, the transport of the goods should be attributed to one supply within the chain of transactions. The main rule is that the first supply from A to B will be the intra Community supply. This can shift to the supply from B to C if B provides the supplier A with a Vat number issued to B in the country of departure of the transport.
- Call-off stock – simplification to avoid registration Uniform simplifications are introduced for the VAT treatment of call-off stock. Call-off stock relate to arrangements where companies move goods from one Member State to another where the goods are stored before being supplied to a business customer known at the time of transport to the other EU Member State. This currently gives rise to a deemed supply (in the Member State of departure of the goods) and a deemed intra-Community acquisition (in the Member State of arrival of the goods), followed by a 'domestic' supply in the Member State of arrival and requires the supplier to be identified for VAT purposes in that Member State. To avoid this, these transactions, where they take place between two taxable persons should be, under certain conditions, considered as giving rise to one exempt supply in the Member State of departure and one intra-Community acquisition in the Member State of arrival at the time the goods are actually transferred in ownership to the customer. Conditions are that the customer is known at the time of transfer, the supplier is not established nor has a fixed establishment in the Member State where the stock is transported to, the supplier keeps a register and the ownership of the goods in transferred within 12 months after the transfer to the know VAT identified customer based on an agreement.
VAT rates for electronic publications
To align VAT rules for electronic and physical publications, the EU Member States will be allowed to apply reduced, super-reduced or even zero VAT rates to electronic publications.
In addition, the Council reached political agreement on the "e-publication" regulation: it will allow member states to apply non-standard VAT rates to electronic publications and potentially align VAT rules between physical and electronic forms for publications. This file is part of the EU's wider efforts to modernize value added tax for the digital economy in the context of the EU's digital single market strategy.
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