EU ‘quick fixes’ changes on cross-border transactions from 1 January 2020

24 December 2019

From 1 January 2020, all EU member states will introduce four ‘quick fixes’ applicable to certain business to business (B2B) cross-border transactions between EU member states. These quick fixes are:

1. Harmonisation of proof of transport for intra-EU supplies of goods

   Currently, EU member states have different requirements on the transport evidence required to validate a zero rated delivery of goods from one EU country to another. From 1 January 2020, all member states will harmonise their evidence requirements making it easier for businesses that trade in multiple EU jurisdictions to stay compliant.
    

2. Mandatory VAT ID number verification for zero-rating of intra-EU supplies of goods

   Currently, some EU member states allow an intra-EU supply of goods to be zero-rated, even when the customer in the transaction does not hold a valid EU VAT number.  This is due to current EU VAT law allowing companies to prove the business-to-business nature of the supply in other ways.

   From 1 January 2020, it will be mandatory for the supplier in the transaction to obtain the customer’s valid EU VAT registration number to include both on their invoices and in their EU Sales reports.
    

3. Harmonisation of the EU cross-border call-off stock rule

   Call-off stock occurs when a supplier sends goods to a client’s premises in another EU member state. The client then stores the goods and has full control over them, but does not take title to the goods until they decide to use these and draw them from the stock.   

   The current rules on call-off stock arrangements vary between EU member states, resulting in uncertainty as to whether or not call-off stock gives rise to a VAT registration requirement for supplying goods domestically in the country of the customer.

   From 1 January 2020, new rules will be introduced to align VAT treatments of call off stock across the EU to prevent suppliers from having to VAT register in the customer’s country when selling under these arrangements.  The recipient will be required to account for the VAT in the Member State of destination as an EU acquisition.
    

4. Harmonisation of the EU cross-border chain transaction rules

   A chain transaction occurs when goods are sold between multiple businesses, but there is only one intra-EU movement of goods.  The current EU rules surrounding these types of transactions means that it can sometimes be difficult to know which business is makesing the zero- rated intra-EU supply and which is selling domestically.

   From 1 January 2020, EU member states will implement new rules harmonising VAT treatments for businesses involved in chain transactions.  The new rules will clarify which business is making the zero rated intra-EU supply to prevent businesses from having to register in multiple jurisdictions.
    

Please contact us for more information on these ‘quick fixes’.  

The new rules are aimed at fixing some practical issues currently experienced by businesses, prior to the introduction of the EU’s VAT reform planned for January 2021.