News
2020 VAT changes – The Quick Fixes
What are these changes related to?
1. Call-Off Stock Arrangements
Under the current VAT rules, such arrangements tend to give rise to VAT compliance obligations for the supplier in the Member State of arrival of the goods, unless a simplification is allowed by domestic legislation. As from 2020, the compliance obligations in that Member State are not necessary if all the stipulated conditions are met. These include the obligation for both parties to maintain a special register documenting the movement of the goods and the submission of a simplified recapitulative statement by the vendor at the point of transportation. Upon the transfer of ownership of the goods, an exempt intra-community supply and acquisition are deemed to be made respectively by the supplier and customer and the usual VAT compliance obligations are applicable.
2. Chain Transactions
The new rules provide for a clarification on the place of supply in the context of cross-border chain transactions by identifying the transaction to which the intra-community transport should be linked. Chain transactions are defined as two or more consecutive supplies of the same goods, where the goods are subject to a single intra-community transport from the supplier to the last customer in the chain. The 'intermediary operator' is the supplier within the chain, other than the first supplier, who transports the goods either himself or through a third party acting on his behalf. The rules stipulate that as a general rule, the intra-community transport of the goods must be attributed to the supply made to the intermediary operator. However, by way of a derogation, where the intermediary operator identifies himself with a VAT number issued by the Member State from which the goods are transported, the transport of the goods is ascribed to the supply made by the intermediary operator. Once that the intra-community transport is linked to the respective supply, the place of supply of the transactions in the chain as well as the liability of the tax may be determined according to the general VAT rules.
3. Exemption on intra-community supplies - Identification of customer's VAT number
In terms of the new rules, EU suppliers must identify and verify through the VAT Information Exchange System (VIES) the VAT number of the person acquiring the goods in order to apply the VAT exemption on intra-community supplies. It is to be noted that the Malta VAT Act already incorporated such condition. However, an additional requirement shall be introduced which stipulates that the VAT exemption is subject to the supplier's declaration of the supply and the correct information thereof in the relative recapitulative statement.
4. Exemption on intra-community supplies - Proof of Transport
These rules lay down the documentation that is to be collected as proof of transport for the purposes of the exemption on intra-community supplies. Where transportation is undertaken by the vendor, at least two items of evidence must be obtained. In the case where the customer undertakes the transport, the vendor must be in possession of a written statement issued by the acquirer in addition to the two items of evidence. The documentation collected must provide non-contradictory information and must be issued by different parties that are independent of each other and of the parties to the transaction.