The EU are reviewing the operation of Vat within the European Union. The following proposals have been made:
The Cornerstones of a definitive vat regime
- The principle of taxation at destination for intra-EU cross border supplies of goods. Under this principle the Vat rate of a member state of destination, where the buyer is located, is charged.
- The confirmation that the vendor is liable in the case of an intra-EU supply of goods as a general rule, which means that the seller is responsible for charging and collecting the Vat. However, if the buyer is a ‘certified taxable person’ it is the buyer who is liable for payment of Vat due directly to the treasury of the member state of destination.
- The ‘one stop shop’ will be extended. Businesses will be able to make declarations, payments and deductions for cross-border supplies of goods through a single online portal, as is already the case for the supply of e-services.
The quick fixes
The commission also presented four quick fixes to improve the day-to-day functioning of the current system, until the definitive regime has been fully agreed.
- Simplification of Vat rules for companies moving goods from one member state to another member state where they are to be stored before being supplied to a customer known in advance. This is known as ‘call-off stock arrangements’. The simplification is limited only to certified taxable persons.
- Simplification provided for chain transaction situations identifying the supply with which the intra-community transport of goods should be linked. This simplification is limited only to certified taxable persons.
- Simplification of the proof of transport of goods between two members states needed for the application of the exemption to intra-community supplies. This simplification is limited only to certified taxable persons.
- Certification that, in addition to the proof of transport, the Vat number of the commercial partners recorded in the electronic EU Vat-number verification system (VIES) is required in order to apply the cross-border Vat exemption under the current rules.
A certified taxable person
A business can apply to its national tax authority and become a certified taxable person (CTP) by proving compliance with pre-defined criteria such as:
- Regular payment of taxes
- Internal controls
- Proof of solvency
The status of certified taxable person will be mutually recognised by all EU Member States.
What questions do you have?
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Posted on January 9, 2018 by Nigel Mayberry