Changes in intra-community transactions

Oct. 22, 2019 Poland

On 1 January 2020 a package of new VAT regulations for intra-community transactions, the so-called “Quick fixes”, will come into force. These follow from an amendment to EU Directive and Regulation governing VAT on intra-community transactions.

Under the new regulations all of the following material and formal conditions will have to be met to apply 0% VAT rate for intra-community supplies of goods (“ICS”):

Material conditions

  • The purchaser will need to provide the supplier of goods an appropriate and valid VAT ID number
  • The supplier will need to submit a correct EC sales list to the tax office

Formal conditions

  • The supplier will need to document the ICS transaction with at least 2 specific documents; either two from Group A or one from Group A and one from Group B
  • The documents will need to be issued by two different parties that are independent of each other, of the supplier and of the purchaser

Group A

  • signed CMR document or note
  • bill of lading
  • airfreight invoice or an invoice from the carrier of the goods

Group B

  • an insurance policy with regard to the dispatch or transport of the goods, or bank documents proving payment for the dispatch or transport of the goods
  • official documents issued by a public authority, such as a notary, confirming the arrival of the goods in the EU country of destination
  • a receipt issued by a warehouse keeper in the EU country of destination, confirming the storage of the goods in that EU country

If the purchaser itself, or a third party on his behalf, organizes the transport the supplier will need to receive additionally, by the 10th day of the month following the month of delivery, a detailed written statement by the purchaser confirming that the goods were sent or transported by the purchaser or by a third party acting on its behalf and indicating the EU country of destination of the goods.

What else will change in January 2020?

Chain-supply rules
A presumption will be applied that if the goods supplied between 3 or more entities are delivered by the first entity to the last and the goods are transported from one EU country to another EU country, then a 0% rate should be assigned to the delivery to the first intermediary company. However, if the supplier and intermediary use a VAT ID number from the same EU country, in this case only the delivery made by the intermediary should be recognized as ICS.

Call-off stock procedure
A new call-off stock procedure will enable a taxpayer to buy goods from another EU country and recognize the intra-community acquisition of these goods (ICA), as a rule, at the moment in which he takes the goods out of the call-off stock warehouse. This procedure also may allow the supplier to deregister for VAT purposes in the country of the purchaser or avoid the necessity of VAT registration in the beginning.

How can ASB help you?

The new VAT regulations will require taxpayers to pay increased attention to the proper documentation of intra-community transactions. Furthermore, many tax rulings covering chain-supply transactions will lose their protective value. At the same time the revised call-off stock procedure may be an opportunity to improve the supply chain process.

To help you to adjust to the new regulations ASB can offer:

  • to review your current processes of collecting the required documents,
  • to prepare or update of your internal procedures of conducting ICS transactions,
  • to analyse call-off stock implementation possibilities and benefits,
  • to apply to the tax authorities for a new tax ruling to secure the ICS transactions under new regulations.

If you would like to discuss the impact of these upcoming changes on your business activity, please contact us. ASB can advise you how to implement the changes and revise your intra-community goods transactions in accordance with the new rules.

Please contact one of ASB Tax specialists:

Matthew O`Shaughnessy
Head of Tax

Jarosław Szajkowski
Project Manager

Łukasz Woźniak
Senior Tax Consultant

Photo: Silvan Metzker