VAT Quick Fixes 2020: Quick Fix #4
Welcome to Daniëlle’s last blog about the quick fixes. In her previous blogs she informed you about the following 3 quick fixes:
Quick fix #1: harmonization and simplification of the rules for providing proof of intra-Community transport of goods
Quick fix #2: simplified treatment of call-off stock in the European Union
Quick fix #3: conditions zero VAT rated intra-Community supply
We have now come to the 4th blog about the quick fixes which will also be the last one. Welcome to this blog about the quick fixes that relates to the new rule for chain transactions.
Chain transactions refer to successive supplies of goods which are subject to a single intra-Community transport, so goods are moved from one EU Member State to another EU Member State directly by the first supplier in the chain to the last customer in the chain. From ECJ Court cases it has been made clear that 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 supplies.
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 businesses, a common rule had to be established that, provided certain conditions are met, the transport of the goods should be attributed to one supply within the chain of transactions.
New rule for chain transactions
Based on the quick fix for chain transactions, where the same goods are supplied successively and those goods are dispatched or transported from one Member State to another Member State directly from the first supplier to the last customer in the chain, the dispatch or transport shall be ascribed only to the supply made to the intermediary operator. The intermediary operator in this sense is a supplier in the chain other than the first supplier, who transports the goods himself or by another party on his behalf. This will only be different if the intermediary operator provides the supplier (so only its supplier) with a VAT identification number issued by the EU Member State from where the goods have been dispatched. In these situations the supply made by the intermediary operator will be the intra-Community supply.
More about this new rule
Based on the new rules, it will be therefore important to establish the chain, who is the intermediary operator, who transports and whether the new simplification is indeed applicable. The new rule can be applied in chains involving at least 3 parties, but there can be a lot more involved, even non-businesses. It seems that chains that involve import and export are excluded from the simplification as the rule required that goods are transported from one EU Member State to another EU Member State. Furthermore the new provision excludes the first supplier from the concept of intermediary operator, so when the first supplier is organizing the transport, the transport can only be ascribed to the supply made by him and that transaction will be the intra-Community supply. Therefore these chains are excluded from the new simplification rule. Just as the situation where the last customer in the chain is arranging the transport.
VAT Seminar coming up
During our VAT Quick Fixes 2020 Seminar on Friday June 14, 2019, we will look into a few chains and the new VAT treatments. Next to this, we will also discuss other quick fixes.
Participation is by invitation only. Did you, however, not receive an invitation and are you an Indirect Tax / VAT Specialist at a multinational company, but would you like to join us during this seminar? Please let us know by leaving your name and email address below! We will contact you as soon as possible to look at the possibilities.