Quick Fixes for EU cross-border trade
From 1st January 2020 four “Quick Fixes” are being introduced with an aim to simplify and harmonise the VAT rules across the EU for the intra-EU supply of goods covering:
- Proof of intra-EU supplies
- VAT number requirement
- Call off stock simplification
- Chain transactions
This affects any business moving goods throughout the EU and it is recommended that a review is made of current supply chains and systems to ensure commercial and contractual issues are ironed out before the changes take place.
Proof of intra-EU supplies
The most important quick fix is a change that requires all countries to adopt the same requirement for documentation when goods are transported to another member state. The seller must now be in possession of 2 non-contradictory items of evidence from a prescribed list. This evidence must be issued by 2 different parties that are independent of each other, and unconnected with the seller and the customer.
VAT number requirement
A further fix applies to cross-border sales of goods. In order to qualify for zero-rating the customer’s VAT registration number must be collected by the seller and shown on the sales invoice. Alternative evidence that the seller is in business will no longer suffice. In addition to this, the transaction must also be included on the seller’s EC Sales List.
Call-off stock simplification
This quick fix proposes to reduce foreign EU VAT registrations and harmonise the “call-off stock” rules. The supplier will make an intra-EU supply and the customer will make an intra-EU acquisition only when they take the goods out of stock (or after 12 months, whichever is first). Both parties are obligated to keep a “call-off stock” register, but this should help avoid the need for additional VAT registrations in the customer’s country.
The final quick fix applies where a chain of transactions only involves a single movement of goods and where the intermediary operator arranges the transport of goods; supply between the first seller and intermediary qualifies as the zero rated intra-community supply of goods. It also says that the subsequent sale by the intermediary is a local sale of goods in the country of the final customer. However, if the intermediary is VAT registered in the initial seller’s country then the intermediary’s supply becomes the zero rated supply rather than the first seller’s supply.
For further information on the changes to cross-border trade, please contact Alan Rolfe on 023 8046 1200.