The following measures will become effective on January 1 2020:
- The first measure relates to the VAT exemption on intra-community supplies of goods, i.e. goods dispatched or transported from one EU member state to another member state. In particular, sellers can face difficulties when confronted with contradictory requests for proof of transport by the different member states. The EU Council has agreed on common evidence the seller must maintain to prove the intra-community transport to be able to exempt these supplies. Thus, tax administrations in the EU no longer should require evidence not included in this list.
- The second measure relates to 'call-off' stock, i.e. a stock of goods owned by a seller where a buyer can take and use the goods as needed for its own activities. If the stock owned by the seller is located in another member state, the seller generally must register for VAT in that state and charge local VAT to its customer. Some but not all member states provide an exemption from registration and shift the payment of VAT to the customer. Under the new rules, all member states will be required to apply this regime, thus shifting the payment of VAT to the buyer of the goods.
- The third quick fix relates to chain transactions, i.e. successive supplies of goods that are made via a single intra-community transport. This transport can be ascribed to only one supply, and only this supply can be VAT-exempt as an intra-community supply, which often leads to difficulties for taxpayers. Under the new rules, the transport will be ascribed to the first supply in the chain, i.e. the sale from the first seller to an intermediary. However, if the intermediary is registered in the member state of the first seller and has properly communicated its VAT number, the intra-community transport will be ascribed to the last supply in the chain, i.e. the sale made by the intermediary to the final buyer. It should be noted that the new rules address chain transactions with only one intermediary.
- The fourth measure is reserved for member states experiencing substantial VAT fraud (e.g. Greece, Italy, Poland and Romania, among others). Under strict conditions, these member states may introduce a temporary 'general reverse charge mechanism' for all local supplies of goods or services valued at greater than €17,500 ($20,000) between persons registered for VAT in their member state. Under this mechanism, sellers and service providers no longer will have to charge VAT to their customers; instead, the customers will have to pay the VAT directly to the national treasury.
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