VAT quick fixes 2020 part 1 - Simplified proof of intra-Community transport
On 4 December 2018, the Council of the European Union adopted the so-called “VAT quick fixes”. The “VAT quick fixes” aim at simplifying international trade and are to be implemented by the EU Member States by 1 January 2020.
The VAT quick fixes concern the following four changes:
- Simplified treatment for call-off stock
- Uniform rules to simplify chain transactions
- Mandatory VAT identification number to apply the exemption for intra-Community supplies
- Simplified proof for intra-community supplies
In this article, we elaborate on the fourth quick fix aimed at harmonizing and simplifying the rules on proof of intra-Community transport of goods. In order to apply the VAT exemption for intra-Community supplies of goods, the supplier must prove that the goods have actually been transported from one EU Member State to another. The way in which this proof of transport is to be documented is not harmonized and differs from Member State to Member State. The lack of harmonization leads to legal uncertainty for businesses active in the international trade of goods.
Therefore, the Council introduced a rebuttable presumption of intra-Community transport in case the supplier is in the possession of a minimum number of evidential documents. According to the new rules, it shall be presumed that the goods have been transported to another EU Member State when the supplier is in the possession of at least two non-contradictory evidential A-documents (being a signed CMR document, bill of lading, invoice for the freight transport, etc.) or one A-document together with one B-document (B-documents being amongst others insurance documents relating to the transport of the goods, receipt from the warehouse operator, official document issued by a public body, etc.) that were issued by two different parties that are independent of each other, of the supplier and of the acquirer.
If the goods have been transported by the acquirer, or by a third party on behalf of the acquirer, the supplier also needs to be in the possession of a written declaration from the acquirer, stating that the goods have been transported by the acquirer, or by a third party on behalf of the acquirer, and identifying the EU Member State of destination of the goods.
In case the supplier is in the possession of sufficient evidential documents, there is a presumption of intra-Community transport. Note that the current Belgian practices (set of coherent documents proving the transport, the destination document, etc.) remain in place and can continue to be applied. It is however clear that the Belgian VAT authorities may not require more documents to proof the intra-Community transport then foreseen in the quick fix.
If you have questions or would like assistance in implementing the new rules, please contact your local KPMG Tax Adviser.