On October 4 2017, the EC released
the proposals for Council Directives and explained the new
system’s basic structure.
In the first phase, the taxation of
intra-community supplies will be converted by 2022.
Cross-border deliveries of goods should be handled in the same
way as domestic supplies in the member state of destination and
be subject to the VAT rate applicable there. Generally, the
supplier should be liable to pay the VAT in its country of
establishment through a one-stop shop. However, during the
first phase, as an exception and transitional solution, the VAT
liability may be shifted to the acquirer if the acquirer has
the status of a certified taxpayer (Article 13a of the VAT
Directive). In order to obtain this status, the taxpayer must
not have committed any serious or repeated infringements of
taxation rules or customs legislation or any serious criminal
offenses relating to the economic activity. He must also be
able to demonstrate a high level of control of his operations
and of the flow of goods, as well as evidence financial
solvency. If the applicant is a taxable person, who has been
granted the status of an authorised economic operator for
customs purposes, these criteria shall be deemed to have been
In the second phase, the
destination principle will be extended to all services. Only
the suppliers should then be liable to pay the VAT for all
supplies of goods and services. However, this extension should
take place, at the earliest, five years after the introduction
and evaluation of the first phase.
While the final VAT system is being
introduced during the next few years, the current system shall
be improved with some quick fixes in the short-term in the
These amendments are expected to come into force
from January 1 2019.
- Consignment stocks (Article 17a of the VAT
Directive): The intra-community transfer of goods to the
member state of destination, followed by the local supply
shall be treated as a direct intra-community supply under
certain criteria. The supplier and the customer must both be
- VAT ID Number (Article 138, paragraph 1 of the
VAT Directive): The VAT exemption for intra-community
supplies should be subject to the requirement that the
customer is registered for VAT purposes in another member
state. In addition, the supply must also be included in the
EC sales list. Hence, the VAT ID number listed in VIES (VAT
information exchange system) is intended to be a material
requirement for the VAT exemption.
- Chain transactions (Article 138a of the VAT
Directive): For chain transactions where the intermediary is
responsible for the transport and the first supplier as well
as the intermediary are certified taxpayers, uniform
regulations as to how the transport is to be ascribed are to
be introduced. The transport is to be ascribed to the supply
of the supplier to the intermediary, if: (i) the intermediary
communicates the name of the member state of destination; and
(ii) the intermediary is registered in a member state other
than that in which the transport begins.
This article was written by Ronny Langer, partner at
Küffner Maunz Langer Zugmaier.