Status: Approved
Date of entry into force: 1 January 2020
Scenario before 1 January 2020
In order to apply the zero-rate treatment to intra-community supplies of goods those need to move physically from one to another Member State. This is the requirement which applies before and from 1 January 2020 (i.e. it remained a substantive requirement).
However, before 1 January 2020, the EU VAT legislation did not define what means of proof of the transport should be collected by the businesses, causing a lack of harmonization amongst Member States that have taken divergent approaches via their national rules on the diversity of documents that businesses should collect to prove that the goods have been moved from one Member State to another.
Scenario as of 1 January 2020
This quick fix is about establishing a presumption that the transport of the goods has taken place when the businesses collect a certain number of documents. This presumption should be put in place in all the Member States. However, Member States continue to be allowed to lay down in their national VAT legislations other presumptions which are more flexible than the ones established in the quick fix.
In the case businesses do not meet all the conditions impose by the Implementing regulation does not automatically result in the denial of the zero-rate treatment to the intra-Community supply of goods. In this case, it will remain up to the supplier to prove, to the satisfaction of the tax authorities, that the transport of the goods has happened.
Even in the scenario where the business meets all the requirements for the presumption to apply, the tax authorities can sill rebut that presumption. For this to happen, the tax authorities will need to provide the necessary elements demonstrating that the goods have, in fact, not been dispatched or transported to another Member State. If the tax authorities succeeds in this, the zero-rate application will be denied.
The presumption is based on the following documents which will be relevant when listing below the conditions
| TRANSPORT DOCUMENTS | ADDITIONAL DOCUMENTS |
| Signed CMR (Convention on the Contract for the International Carriage of Goods by Road) document or note, a bill of lading, an airfreight invoice or an invoice from the carrier of the goods. | insurance policy with regard to the dispatch or transport of the goods, or bank documents proving payment for the dispatch or transport of the goods;Official documents issued by a public authority, such as a notary, confirming the arrival of the goods in the Member State of destination;Receipt issued by a warehouse keeper in the Member State of destination, confirming the storage of the goods in that Member State. |
The documents to gather for the presumption to be valid are as follows, depending on whether the transport has been done by the supplier (or by a third party on his behalf) or by the acquirer:
SUPPLIER TRANSPORTING THE GOODS
- the supplier is in possession of at least two items of non-contradictory evidence referring to transport documents (see table above); or
- the supplier is in possession of any single item referring to transport documents (see table above) together with any single item of non-contradictory evidence referring to any additional documents (see table above) confirming the dispatch or transport.
ACQUIRER TRANSPORTING THE GOODS
- a written statement from the acquirer which should be provided to the supplier by the tenth day of the month following the supply of goods, stating that the goods have been dispatched or transported by the acquirer (or by a third party on behalf of the acquirer) and identifying the Member State of destination of the goods. That written statement shall mention (ⅰ) the date of issue of the statement; (ⅱ) the name and address of the acquirer; (ⅲ) the quantity and nature of the goods; and (ⅳ) the date and place of arrival of the goods. In the case of the supply of means of transport, the written statement should also contain the identification number of the means of transport and the identification of the individual accepting the goods on behalf of the acquirer; and
- at least two items of non-contradictory evidence referring to transport documents (see table above) or any single item referring to transport documents (see table above) together with any single item of non-contradictory evidence referring to additional documents(see table above)confirming the dispatch or transport.
In all the above cases, the transport documents as well as the additional documents should have been issued by different parties that are independent of each other, of the supplier and of the acquirer.
Our VATinsights:
- This quick fix enhances legal certainty for operators.
- There is no need for the Member States to transpose this quick fix since Implementing regulations are per se directly applicable and binding in its entirety. However, most of them have opted for its formal transposition into their national legislations.
- Presumption of the implementing regulation and less strict rules at a national level should be compatible. However, we understand that Member States cannot impose stricter conditions than the ones established in the implementing regulation.
- The requirement related to all the documents to be issued by independent parties brings to the table an extra complexity for some businesses which cannot fulfill this condition (e.g. businesses which transport good with their own means). However, businesses will also have the option to rely on the requirement laid down in the local legislations.
- To define independent parties it is necessary to look at article 80 of the VAT Directive. However, since Member States do not have an harmonized approach toward this legal provision, businesses should be diligent and take a look at the domestic legislations.
- This quick fix clearly interacts with the quick fix on the zero-rate treatment to intra-community supplies of goods.
- The Explanatory notes (see link below to the document) state – although not binding for Member States – that in case the acquirer provides the supplier with the written statement after the deadline (10 days), it will be possible for the latter to rely on the presumption, provided all the other relevant conditions are met.
Suggested reading:
Jordi Sol Rosa, 2020 Quick Fixes: Simplification or More Complexity for Businesses? – The Explanatory Notes, 31 Intl. VAT Monitor 3 (2020), Journal Articles & Papers IBFD (accessed 30 May 2020) – https://www.ibfd.org/IBFD-Products/Journal-Articles/International-VAT-Monitor/collections/ivm/html/ivm_2020_03_e2_4.html
Relevant documents and links:
Implementing Regulation 2018/1912
National transposition measures communicated by the Member States concerning VAT quick fixes