Following a lack of harmonisation within the EU on how certain intra-EU supplies of goods were treated, the EU developed four quick fixes to simplify and harmonise the EU Member States’ rules, pending the introduction of the definitive VAT system based on the destination principle. These quick fixes came into effect on 1 January 2020 and relate to:
- Simplified treatment of call-off stock – EU businesses will no longer be required to register for VAT in the recipient country if they are operating under call-off stock arrangements. Instead, the recipient will be required to account for VAT in the Member State of destination.
- A requirement to verify the customer’s VAT registration number to apply exemption with recovery on an intra-EU supply of goods.
- Uniform rules for chain transactions to identify which supply qualifies as exempt (as effecting the transport) with input VAT recovery.
- Uniform requirements for proof of movement of goods outside the jurisdiction where dispatch begins – suppliers must be able to produce two items of non-contradictory evidence, prepared by two different independent parties, to prove that a supply is destined for another EU Member State.
A copy of the European Commission explanatory notes in respect of the quick fixes can be found here.
DLA Piper comment: There is a lot of detail in the rules; for example, the call-off stock simplification is subject to conditions and requires detailed recordkeeping and notifications. If you are affected by these changes, you should study the rules effecting implementation in your jurisdiction. The bigger changes – being introduced from 2021 – are now less than 12 months away, and all businesses both in the EU and outside the EU involved with cross-border goods and services into the EU should be reviewing systems and contracts.
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