Source Ksenija Cipek, Dame of Honour

 

I   INTRODUCTION

 

In 1967, when the Council adopted the common system of value added tax (VAT) by means of First Council Directive 67/227/EEC1 and Second Council Directive 67/228/EEC2, the commitment was made to establish a definitive VAT system operating within the European Community in the same way as it would within a single Member State. Since the political and technical conditions were not ripe for such a system when the fiscal frontiers between Member States were abolished by the end of 1992, transitional VAT arrangements were adopted. Council Directive 2006/112/EC3 provides that those transitional arrangements have to be replaced by definitive arrangements.

The current EU VAT system, which was introduced on a temporary or transitional basis back in 1993., in general is based on the taxation of supplies of goods and services in the country where the supplier is established. The new definitive VAT system will be based on the taxation of goods and services in the country of consumption.

Definitive VAT system will be introduced from July 2022 (expectation).

It will replace the temporary system that was introduced in 1993 and introduce a new system known as the ‘destination’ system, whereby the supply of goods and services will be taxed in the country of consumption. In the meantime, the EU has agreed a number of quick fixes designed to simplify the existing VAT system in relation to international trade.

The Council of the European Union, in its conclusions of 8 November 2016, invited the European Commission to make certain improvements to the Union VAT rules for cross-border transactions with regard to the role of the VAT identification number in the context of the exemption for intra-Community supplies, call-off stock arrangements, chain transactions and the proof of transport for the purposes of the exemption for intra-Community transactions.

1 First Council Directive 67/227/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes (OJ 71, 14.4.1967).

2 Second Council Directive 67/228/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes — Structure and procedures for application of the common system of value added tax (OJ 71, 14.4.1967).

3 Council Directive 2006/112/EC of 28 November 2006 on the common system of value added  tax  (OJ L 347, 11.12.2006).

 

In light of the request made by the Council and that it will take several years for the definitive VAT system for intra-Community trade to be implemented, these specific measures, intended to harmonise and simplify certain arrangements for businesses, are appropriate.

European Union (EU) is introducing a four of quick fixes to the existing VAT system which aim to simplify international trade. The changes are to be introduced from 1 January 2020.

 

 

II  LEGAL FRAMEWORK

 

On 7 December 2018, an amending directive and two amending regulations were published in the Official Journal of the EU regarding VAT quick fixes approved earlier in the year.

The amending directive and regulations are as follows:

 

 

The Directive and Regulations apply from 1 January 2020, with EU Member States required to adopt the required laws, regulations, and administrative provisions necessary to comply with the Directive by 31 December 2019.

 

These relate to:

 

  • call-off stock. The text provides for a simplified and uniform treatment for call-off stock arrangements, where a vendor transfers stock to a warehouse at the disposal of a known acquirer in another member state;

 

  • the VAT identification number. To benefit from a VAT exemption for the intra-EU supply of goods, the identification number of the customer will become an additional condition;
  • chain transactions. To enhance legal certainty in determining the VAT treatment of chain transactions, the texts establish uniform criteria;
  • proof of intra-EU supply. A common framework is established for the documentary evidence required to claim a VAT exemption for intra-EU supplies.

 

III   DEFINITION

 

Call-off stock refers to the situation where, at the time of the transport of goods to another Member State, the supplier already knows the identity of the person acquiring the goods, to whom these goods will be supplied at a later stage and after they have arrived in the Member State of destination. This currently gives rise to a deemed supply (in the Member State of departure of the goods) and a deemed intra-Community acquisition (in the Member State of arrival of the goods), followed by a ‘domestic’ supply in the Member State of arrival, and requires the supplier to be identified for VAT purposes in that Member State. To avoid this, such transactions, where they take place between two taxable persons should be, under certain conditions, considered to give rise to one exempt supply in the Member State of departure and one intra-Community acquisition in the Member State of arrival.

As regards the VAT identification number in relation to the exemption for the supply of goods in the intra-Community trade, it is proposed that the inclusion of the VAT identification number of the person acquiring the goods in the VAT Information Exchange System (VIES), assigned by a Member State other than that in which the transport of the goods begins, become, in addition to the condition of transport of the goods outside the Member State of supply, a substantive condition for the application of exemption rather than a formal requirement. Furthermore, the VIES listing is essential for informing the Member State of arrival of the presence of goods in its territory and is therefore a key element in the fight against fraud in the Union. For that reason, Member States should ensure that, where the supplier does not comply with his VIES listing obligations, the exemption should not apply except where the supplier is acting in good faith, that is to say, where he can duly justify before the competent tax authorities any of his shortcomings relating to the recapitulative statement, which could also include at that time the provision by the supplier of the correct

 

information as required under Article 264 of Directive 2006/112/EC (further in the text: Directive).

Chain transactions refer to successive supplies of goods which are subject to a single intra-Community transport. The intra-Community movement of the goods should only be ascribed to one of the supplies, and only that supply should benefit from the VAT exemption provided for the intra-Community supplies. The other supplies in the chain should be taxed and could require the VAT identification of the supplier in the Member State of supply. In order to avoid different approaches amongst Member States, which may lead to double taxation or non-taxation, and in order to enhance legal certainty for operators, a common rule should be established that, provided certain conditions are met, the transport of the goods should be attributed to one supply within the chain of transactions.

 

IV   NEW ARTICLE 17.A OF DIRECTIVE

 

The transfer by a taxable person of goods forming part of his business assets to another Member State under call-off stock arrangements shall not be treated as a supply of goods for consideration (Article 17.a (1) Directive).

According to the Article 17.a (2), call-off stock arrangements shall be deemed to exist where the following conditions are met:

  1. goods are dispatched or transported by a taxable person, or by a third party on his behalf, to another Member State with a view to those goods being supplied there, at a later stage and after arrival, to another taxable person who is entitled to take ownership of those goods in accordance with an existing agreement between both taxable persons
  2. the taxable person dispatching or transporting the goods has not established his business nor has a fixed establishment in the Member State to which the goods are dispatched or transported
  3. the taxable person to whom the goods are intended to be supplied is identified for VAT purposes in the Member State to which the goods are dispatched or transported and both his identity and the VAT identification number assigned to him by that Member State are known to the taxable person referred to in point (b) at the time when the dispatch or transport begins
  4. the taxable person dispatching or transporting the goods records the transfer of the goods in the register provided for in Article 243(3) and includes the identity of the taxable person acquiring the goods and the

 

VAT identification number assigned to him by the Member State to which the goods are dispatched or transported in the recapitulative statement provided for in Article 262(2).

Where the conditions laid down in paragraph 2 are met, the following rules shall apply at the time of the transfer of the right to dispose of the goods as owner to the taxable person referred to in point (c) of paragraph 2, provided that the transfer occurs within the deadline referred to in paragraph 44 (Article 17.a (3)):

  1. a supply of goods in accordance with Article 138(1) shall be deemed to be made by the taxable person that dispatched or transported the goods either by himself or by a third party on his behalf in the Member State from which the goods were dispatched or transported
  2. an intra-Community acquisition of goods shall be deemed to be made by the taxable person to whom those goods are supplied in the Member State to which the goods were dispatched or

No transfer within the meaning of Article 17 shall be deemed to take place where the following conditions are met (Article 17.a (5)):

  1. the right to dispose of the goods has not been transferred, and those goods are returned to the Member State from which they were dispatched or transported within the time limit referred to in paragraph 4, and
  2. the taxable person who dispatched or transported the goods records their return in the register provided for in Article 243(3).

Where, within the period referred to in paragraph 4, the taxable person referred to in point (c) of paragraph 2 is substituted by another taxable person, no transfer within the meaning of Article 17 shall be deemed to take place at the time of the substitution, provided that (Article 17.a (6)):

  1. all other applicable conditions in paragraph 2 are met, and
  2. the substitution is recorded by the taxable person referred to in point (b) of paragraph 2 in the register provided for in Article 243(3).

 

According to the Article 17.a (7), where, within the time limit referred to in paragraph 4, any of the conditions set out in paragraphs 2 and 6 ceases to be fulfilled, a transfer of goods according to Article 17 shall be deemed to take place

4 If, within 12 months after the arrival of the goods in the Member State to which they were dispatched or transported, the goods have not been supplied to the taxable person for whom they were intended, referred to in point (c) of paragraph 2 and paragraph 6, and none of the circumstances laid down in paragraph 7 have occurred, a transfer shall be deemed to take place on the day following the expiry of the 12-month period.

 

at the time that the relevant condition is no longer fulfilled. If the goods are supplied to a person other than the taxable person referred to in point (c) of paragraph 2 or in paragraph 6, it shall be deemed that the conditions set out in paragraphs 2 and 6 cease to be fulfilled immediately before such supply. If the goods are dispatched or transported to a country other than the Member State from which they were initially moved, it shall be deemed that the conditions set out in paragraphs 2 and 6 cease to be fulfilled immediately before such dispatch or transport starts. In the event of the destruction, loss or theft of the goods, it shall be deemed that the conditions set out in paragraphs 2 and 6 cease to be fulfilled on the date that the goods were actually removed or destroyed, or, if it is impossible to determine that date, the date on which the goods were found to be destroyed or missing.

 

V  NEW ARTICLE 36.A AND AMENDING OF THE ARTICLE 138 DIRECTIVE

 

According to the Article 36.a (1), where the same goods are supplied successively and those goods are dispatched or transported from one Member State to another Member State directly from the first supplier to the last customer in the chain, the dispatch or transport shall be ascribed only to the supply made to the intermediary operator.

By way of derogation from paragraph 1, the dispatch or transport shall be ascribed only to the supply of goods by the intermediary operator where the intermediary operator has communicated to his supplier the VAT identification number issued to him by the Member State from which the goods are dispatched or transported. ‘intermediary operator’ means a supplier within the chain other than the first supplier in the chain who dispatches or transports the goods either himself or through a third party acting on his behalf.

Article 36.a shall not apply to the situations covered by Article 14a. Directive. Article 138 is amended as follows:

  1. paragraph 1 is replaced by the following:

‘1. Member States shall exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the Community, by or on behalf of the vendor or the person acquiring the goods, where the following conditions are met:

 

(a) the goods are supplied to another taxable person, or to a non-taxable legal

person acting as such in a Member State other than that in which dispatch or transport of the goods begins;

(b) the taxable person or non-taxable legal person for whom the supply is made is identified for VAT purposes in a Member State other than that in which the dispatch or transport of the goods begins and has indicated this VAT

identification number to the supplier.’

  1. the following paragraph is inserted:

‘1a. The exemption provided for in paragraph 1 shall not apply where the supplier has not complied with the obligation provided for in Articles 262 and 263 to submit a recapitulative statement or the recapitulative statement submitted by him does not set out the correct information concerning this supply as required under Article 264, unless the supplier can duly justify his shortcoming to the satisfaction of the competent authorities.’

 

VI   REPLACEMENT TO THE ARTICLE 262 DIRECTIVE

 

Every taxable person identified for VAT purposes shall submit a recapitulative statement of the following:

  1. the acquirers identified for VAT purposes to whom he has supplied goods in accordance with the conditions specified in Article 138(1) and point (c) of Article 138(2)
  2. the persons identified for VAT purposes to whom he has supplied goods which were supplied to him by way of intra-Community acquisition of goods referred to in Article 42
  3. the taxable persons, and the non-taxable legal persons identified for VAT purposes, to whom he has supplied services other than services that are exempted from VAT in the Member State where the transaction is taxable and for which the recipient is liable to pay the tax pursuant to Article

In addition to the information referred to in paragraph 1, every taxable person shall submit information about the VAT identification number of the taxable persons for whom goods, dispatched or transported under call-off stock arrangements in accordance with the conditions set out in Article 17a, are intended and about any change in the submitted information.

Articles 403 and 404 are deleted.

 

VIII.      AMENDING OF THE ARTICLE 21(2) OF REGULATION (EU) NO 904/2010

 

Every Member State shall grant the competent authority of any other Member State automated access to the information stored pursuant to Article 17.

With respect to the information referred to in Article 17(1)(a), at least the following details shall be accessible (Article 21.(a)):

  1. VAT identification numbers issued by the Member State receiving the information
  2. the total value of all intra-Community supplies of goods and the total value of all intra-Community supplies of services to persons holding a VAT identification number referred to in point (a) by all operators identified for the purposes of VAT in the Member State providing the information

c)             the VAT identification numbers of the persons who carried out the supplies of goods and services referred to in point (b) and the VAT identification numbers of the persons who submitted information in accordance with Article 262(2) of Directive 2006/112/EC about the persons holding a VAT identification number referred to in point (a)

  1. the total value of the supplies of goods and services referred to in point
    • from each person referred to in point (c) to each person holding a VAT identification number referred to in point (a)

e)           the total value of the supplies of goods and services referred to in point

  • from each person referred to in point (c) to each person holding a VAT identification number issued by another Member State and, for each person who submitted information in accordance with Article 262(2) of Directive 2006/112/EC, his VAT identification number and the information he submitted about each person holding a VAT identification number issued by another Member State, under the following conditions:
  1. access is in connection with an investigation into suspected fraud

 

  1. access is through a Eurofisc liaison official, as referred to in Article 36(1), who holds a personal user identification for the electronic systems allowing access to this information, and

 

  • access is only granted during general working

The values referred to in points (b), (d) and (e) shall be expressed in the currency of the Member State providing the information and shall relate to the periods for submission of the recapitulative statements specific to each taxable person which are established in accordance with Article 263 of Directive.

 

IX  THE EVIDENCE (APPLY FROM 1 JANUARY 2020)

 

As cross-border VAT fraud is primarily linked to the exemption for intra- Community supplies, it is necessary to specify certain circumstances in which goods should be considered as having been dispatched or transported from the territory of the Member State of supply. The call-off stock simplification arrangements should be accompanied by appropriate recording obligations in order to ensure their correct application.

In Article 243 of Directive, the following paragraph is added:

„3. Every taxable person who transfers goods under the call-off stock arrangements referred to in Article 17a shall keep a register that permits the tax authorities to verify the correct application of that Article.

Every taxable person to whom goods are supplied under the call-off stock

arrangements referred to in Article 17a shall keep a register of those goods.“.

 

According to the new Article 45.a paragraph 1 of Implementing Regulation5, for the purpose of applying the exemptions laid down in Article 138 of Directive , it shall be presumed that goods have been dispatched or transported from a Member State to a destination outside its territory but within the Community in either of the following cases:

  1. the vendor indicates that the goods have been dispatched or transported by him or by a third party on his behalf, and either the vendor is in possession of at least two items of non-contradictory evidence referred to in point (a) of paragraph 3 which were issued by two different parties that

 

5 COUNCIL IMPLEMENTING REGULATION (EU) 2018/1912 of 4 December 2018 amending Implementing Regulation (EU) No 282/2011 as regards certain exemptions for intra-Community transactions, available on:

https://eur-lex.europa.eu/legal- content/EN/TXT/HTML/?uri=CELEX:32018R1912&from=EN

 

are independent of each other, of the vendor and of the acquirer, or the vendor is in possession of any single item referred to in point (a) of paragraph 3 together with any single item of non-contradictory evidence referred to in point (b) of paragraph 3 confirming the dispatch or transport which were issued by two different parties that are independent of each other, of the vendor and of the acquirer

  1. the vendor is in possession of the following:
    1. a written statement from the acquirer, stating that the goods have been dispatched or transported by the acquirer, or by a third party on behalf of the acquirer, and identifying the Member State of destination of the goods; that written statement shall state: the date of issue; the name and address of the acquirer; the quantity and nature of the goods; the date and place of the arrival of the goods; in the case of the supply of means of transport, the identification number of the means of transport; and the identification of the individual accepting the goods on behalf of the acquirer, and
    2. at least two items of non-contradictory evidence referred to in point (a) of paragraph 3 that were issued by two different parties that are independent of each other, of the vendor and of the acquirer, or any single item referred to in point (a) of paragraph 3 together with any single item of non-contradictory evidence referred to in point (b) of paragraph 3 confirming the dispatch or transport which were issued by two different parties that are independent of each other, of the vendor and of the

The acquirer shall furnish the vendor with the written statement referred to in point (b)(i) by the tenth day of the month following the supply.

According to the paragraph 3, for the purposes of paragraph 1, the following shall be accepted as evidence of dispatch or transport:

  1. documents relating to the dispatch or transport of the goods, such as a signed CMR document or note, a bill of lading, an airfreight invoice or an invoice from the carrier of the goods
  2. the following documents:
    1. 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
    2. official documents issued by a public authority, such as a notary, confirming the arrival of the goods in the Member State of destination

 

  • a receipt issued by a warehouse keeper in the Member State of destination, confirming the storage of the  goods  in  that  Member

According to the new Article 54.a paragraph 1 Implementing Regulation, the register referred to in Article 243(3) of Directive that is to be kept by every taxable person who transfers goods under call-off stock arrangements shall contain the following information:

  1. the Member State from which the goods were dispatched or transported, and the date of dispatch or transport of the goods
  2. the VAT identification number of the taxable person for whom the goods are intended, issued by the Member State to which the goods are dispatched or transported
  3. the Member State to which the goods are dispatched or transported, the VAT identification number of the warehouse keeper, the address of the warehouse at which the goods are stored upon arrival, and the date of arrival of the goods in the warehouse
  4. the value, description and quantity of the goods that arrived in the warehouse
  5. the VAT identification number of the taxable person substituting for the person referred to in point (b) of this paragraph under the conditions referred to in Article 17a(6) of Directive
  6. the taxable amount, description and quantity of the goods supplied and the date on which the supply of the goods referred to in point (a) of Article 17a(3) of Directive is made and the VAT identification number of the buyer
  7. the taxable amount, description and quantity of the goods, and the date of occurrence of any of the conditions and the respective ground in accordance with Article 17a(7) of Directive
  8. the value, description and quantity of the returned goods and the date of the return of the goods referred to in Article 17a(5).

The register referred to in Article 243(3) of Directive that is to be kept by every taxable person to whom goods are supplied under call-off stock arrangements shall contain the following information (article 54.a (2) Implementing Regulation):

  1. the VAT identification number of the taxable person who transfers goods under call-off stock arrangements
  2. the description and quantity of the goods intended for him
  3. the date on which the goods intended for him arrive in the warehouse

 

  1. the taxable amount, description and quantity of the goods supplied to him and the date on which the intra-Community acquisition of the goods referred to in point (b) of Article 17a(3) of Directive is made
  2. the description and quantity of the goods, and the date on which the goods are removed from the warehouse by order of the taxable person referred to in point (a)
  3. he description and quantity of the goods destroyed or missing and the date of destruction, loss or theft of the goods that previously arrived in the warehouse or the date on which the goods were found to be destroyed or

Where the goods are dispatched or transported under call-off stock arrangements to a warehouse keeper different from the taxable person for whom the goods are intended to be supplied, the register of that taxable person does not need to contain the information referred to in points (c), (e) and (f) of the first subparagraph.

 

X   EXAMPLES

 

a)     Example6

Car Manufacturer M in Member State M uses electrical components produced by supplier S in Member State S. The manufacturing occurs “just in time”, i.e. the components must be at hand when needed. M wants to remain flexible with respect to the production and does not want to acquire large amounts of components which may become obsolete if production changes. Therefore, M arranges with S that the latter keeps – at M’s expense – a stock of various components on M’s premises, to which M has access. Under the old rules, S would have recorded an exempt Intra-Community despatch in Member State S and an Intra-Community acquisition of goods in Member State M. When M calls- off stock, S would account for a domestic supply in Member State M and M would account for a domestic acquisition. S would have to register for VAT in Member State M in order to comply with its reporting and payment obligations. Under the new rules, the no supply takes place on the initial despatch of goods from Member State S to Member State M. At the point M calls-off stock, S records an exempt despatch and M an IntraCommunity acquisition for the goods called-off.

 

 

6 Modernising vat EU Policy Developments, Accountancy Europe, February 2019, available on: https://www.accountancyeurope.eu/wp-content/uploads/VAT-Developments-Fact-Sheet.pdf

 

Conditions:

  • the goods are despatched by a taxable person to another Member State and another taxable person is entitled to take ownership of the goods in accordance with an existing agreement
  • the taxable person despatching the goods is not established in the Member

State to which the goods are transported

  • the taxable person despatching the goods knows the identity and VAT identification number of the customer and records this information, together with details of the transaction, in a relevant register
  • if the transported goods have not been supplied to the taxable person due to receive the goods within 12 months of despatch, these arrangements will cease to apply. In such circumstances, a supply of goods for consideration is deemed to take place on the day following the expiry of the 12-month period
  • if the goods are supplied to a different person other than that originally intended, these arrangements will cease to apply, unless: o the conditions specified above (i.e. those in para 2 Article 17a) are met and o the substitution is recorded by the supplier in the register
  • both taxable persons keep a register of all goods supplied under these arrangements
  • the taxable person despatching the goods shall submit a recapitulative statement providing the VAT identification number of the taxable person to which it supplies goods under the call-off stock arrangements.

 

These arrangements will provide a reduction in administrative burdens for the supplier as the supplier will not have to be identified in every Member State where goods have been shipped as part of the call-off arrangement – subject to the time limits above.

 

 

b)     Examples7

  1. General case covered by the simplification

 

Situation:

 

Business A, established in Member State 1 (and not in Member State 2), transports goods in January under a call-off stock arrangement to Member State

7  Explanatory notes on the “2020 Quick Fixes”, DGTaxud, Group on the future of VAT 27 th meeting –

25 September 2019 taxud.c.1(2019)6275014 – EN Brussels, 11 September 2019, available on: https://circabc.europa.eu/ui/group/cb1eaff7-eedd-413d-ab88-94f761f9773b/library/25364e2a-ef5e-43ea- b83a-72f2189ddc77/details

 

  1. These goods are intended for business B which is identified (established or otherwise) in Member State

In September of the same year, B takes ownership (of part) of the goods.

B might use the goods in e.g. his production process or sell them onwards to C (situation in the graph). C’s status (taxable person or private individual) and his place of establishment/residence are not as such relevant for the application of the rules on call-off stock arrangements.

 

VAT treatment of the call-off stock:

 

  • In January, A has to indicate the transport of the goods in the register held by him (Article 243(3), first subparagraph and Article 54a(1)).
  • In his recapitulative statement, A has to mention the VAT number of B, who is the person for whom goods have been sent under the call-off stock arrangements (Article 262(2)).
  • In January, the warehouse keeper (B or third party) has to indicate the arrival of the goods to the stock in the register held by him (Article 243(3), second subparagraph and Article 54a(2) ).
  • In September, A is deemed to make an exempt intra-Community supply in Member State 1 and B an intra-Community acquisition in Member State 2 (Article 17a(3)).
  • Chargeability for VAT purposes will occur no later than on 15 October (Articles 67 and 69).
  • A will have to declare the intra-Community supply in his VAT return and include the transaction in his recapitulative statement by indicating B as the person acquiring the goods as well as the taxable amount for that intra-Community
  • B will have to account for the VAT due on the intra-Community acquisition via his VAT return. A will have to make the necessary indications in the register held by him in order to keep it updated (Article 243(3), first subparagraph and Article 54a(1)(f)).
  • B will have to indicate the goods acquired by him in a register held by him at the time he takes ownership of the goods (Article 243(3), second subparagraph and Article 54a(2)(d)).

 

The supply from B to C, of the goods taken out of the stock, follows its own rules (‘domestic’ supply in Member State 2, intra-Community supply, export) and is outside the scope of the simplification measure for call-off stock.

 

  1. Return of the goods

 

 

Situation:

 

Business A, established in Member State 1 (and not in Member State 2), transports goods in January under a call-off stock arrangement to Member State

  1. These goods are intended for business B which is identified (established or otherwise) in Member State

In September of the same year, it is agreed that A will take back the remaining goods that were not sold or used by B and transport them from Member State 2 back to Member State 1.

 

VAT treatment of the call-off stock:

 

  • In January, A has to indicate the transport of the goods in the register held by him (Article 243(3), first subparagraph and Article 54a(1)).
  • In his recapitulative statement, A has to mention B as the person for whom goods have been sent under the call-off stock arrangements (Article 262(2)).
  • In January, the warehouse keeper (B or a third party) has to indicate the arrival of the goods to the stock in the register held by him (Article 243(3), second subparagraph and Article 54a(2)).
  • Regarding those goods for which B did not take ownership, there is neither an intra-Community supply nor an intra-Community acquisition in the relation between A and
  • Regarding the returned goods, there is also no deemed intra-Community supply according to Article 17 made by A in Member State 1, nor is there any intraCommunity supply according to Article 17 made by A in Member State 2 if A records the return of the goods in the register held by him as provided for in Article 243(3), first subparagraph and Article 54a(1)(h) (Article 17a(5)(b)).
  • Further A will have to mention the VAT identification number of the intended acquirer in his recapitulative statement (which is to be seen as including the identity of the acquirer) and a “flag” indicating that the goods have been returned6 (Article 262(2), since this is a “change in the submitted information” ).
  • The warehouse keeper (B or a third party) will have to adapt the register held by him (Article 54a(2)(e)).

 

  1. Exceeding of the period of 12 months

 

Situation:

 

Business A, established in Member State 1 (and not in Member State 2), transports goods on 5 January of year N under a call-off stock arrangement to Member State 2. The goods arrive in Member State 2 on that same date. These goods are intended for business B which is identified (established or otherwise) in Member State 2.

A year later (year N+1), the goods or part of them have not yet been supplied to B but are still on the territory of Member State 2.

 

VAT treatment of the call-off stock:

 

  • A has to indicate the transport of the goods on 5 January of year N in the register held by him (Article 243(3) and Article 54a(1)).
  • In his recapitulative statement, A has to mention B as the person for whom goods have been sent under the call-off stock arrangements (Article 262(2)).
  • The warehouse keeper (B or a third party) has to indicate the arrival of the goods on 5 January of year N to the stock in the register held by him (Article 243(3), second subparagraph and Article 54a(2)).
  • Concerning the goods for which B has taken ownership before the termination of the call-off stock contract, the rules set out under section

2.3.1 above apply.

  • By the end of 6 January of year N+1 (for the correct calculation of the 12 month, B has not taken ownership of the goods or part of For these remaining goods, there is neither an intra-Community supply nor an intra- Community acquisition in the relation between A and B.
  • As from 7 January of year N+1, the day following the expiry of the 12- month period, the conditions for the call-off stock arrangements are no longer fulfilled and a transfer according to Article 17 by A of the remaining goods is deemed to take place from Member State 1 to Member State 2 (Article 17a(4)).
  • A is deemed to make an exempt intra-Community supply according to Article 17 in Member State 1 and an intra-Community acquisition according to Article 21 in Member State 2. The taxable event takes place on 7 January of year N+1 and the chargeability will occur no later than on 15 February of year N+1 (Articles 67 and 69). In order to declare his intra- Community acquisition in Member State 2, A will have to be identified for VAT purposes in Member State

 

  • A will have to declare the deemed intra-Community supply in his VAT return in Member State 1 and include the transaction in his recapitulative statement by indicating himself, under his VAT identification number in Member State 2, as well as the taxable amount for that supply (Article 76).
  • A will have to account for the VAT due on his intra-Community acquisition via his VAT return in Member State
  • Both the registers of A and of the warehouse keeper (either the intended customer or a third party) will have to clearly reflect the situation of the goods in respect of which the 12-month period has been exceeded (Article 243(3), first subparagraph and Article 54a(1)(c) and (2)(c)).

 

  1. Goods sent to another Member State

 

Situation:

 

Business A, established in Member State 1 (and not in Member State 2), transports goods in January under a call-off stock arrangement to Member State

  1. These goods are intended for business B which is identified (established or otherwise) in Member State 2.

In September of the same year, A takes back (part of) the goods that were not supplied to B from the stock but does not transport them back to Member State

  1. Instead, the goods are transported to Member State 3 where the goods are stored on behalf of A. This situation is different from the situation whereby the remaining goods are transported in the context of a sale to C, a business established in Member State

 

VAT treatment of the call-off stock:

 

  • In January, A has to indicate the transport of the goods in the register held by him (Article 243(3), first subparagraph and Article 54a(1)).
  • In his recapitulative statement, A has to mention B as the person for whom goods have been sent under the call-off stock arrangements (Article 262(2)).
  • In January, the warehouse keeper (B or a third party) has to indicate the arrival of the goods to the stock in the register held by him (Article 243(3), second subparagraph and Article 54a(2)).
  • In September, when the remaining goods are transported to Member State 3, the conditions for the call-off stock arrangements, regarding the transport from Member State 1 to Member State 2, cease to be fulfilled. Therefore, a transfer of goods according to Article 17 from Member State

 

1 to Member State 2 will be taking place. The conditions cease to be fulfilled, and the transfer is therefore deemed to take place, immediately before the dispatch or the transport to Member State 3 starts (Article 17a(7), third subparagraph).

  • The concept of “immediately before”, although not explicitly explained in the Directive, is to be seen, within the overall functioning of the system, as being on the same day as the start of the dispatch or the transport to Member State
  • A is deemed to make an exempt intra-Community supply in Member State 1 (Article 17) and an intra-Community acquisition in Member State 2 (Article 21) of the remaining goods. The taxable event takes place in September and the chargeability will occur no later than on 15 October (Articles 67 and 69). In order to declare his intra-Community acquisition in Member State 2, A will have to be identified for VAT purposes in Member State
  • A will have to declare the supply in his VAT return in Member State 1 and include the transaction in his recapitulative statement by indicating himself, under his VAT identification number in Member State 2, as well as the taxable amount for the supply (Article 76).
  • A will have to account for the VAT due on his intra-Community acquisition via his VAT return in Member State
  • A will also have to make the necessary indications in the register held by him in order to keep it updated (Article 243(3), first subparagraph and Article 54a(1)(g)). B or the third party warehouse keeper will also have to update his register (Article 54a(2)(e)).

 

Others:

A makes another transfer, from Member State 2 to Member State 3, in relation to the transport of the goods to Member State 3 in September. Therefore, A is deemed to make an exempt intra-Community supply according to Article 17 VD in Member State 2 and an intra-Community acquisition according to Article 21 in Member State 3. For the latter taxable event, he will have to be identified for VAT purposes in Member State 3. Declarations in VAT returns and recapitulative statements follow the normal rules and are, as such, not linked to the call-off stock simplification rules.

It might happen that this second transport of the goods from Member State 2 to Member State 3 falls under the rules on call-off stock arrangements provided that all the conditions for that are met. That would however require for A not to be established in Member State 3; there would have to be an existing agreement with an intended customer who would have to be identified in Member State 3;

 

A would have to record the transport in the register held by him and A would also have to mention the new intended acquirer in the recapitulative statement submitted in Member State 2. Any such new situation will need to be subject to an entirely separate assessment.

In case that the goods are directly sold to C (outside the call-off stock arrangements) in Member State 3, the intra-Community supply in Member State 2 and the intra-Community acquisition in Member State 3 follow the normal rules and are, again, not linked to the call-off stock simplification rules.

 

  1. Goods exported

 

Situation: Business A, established in Member State 1 (and not in Member State 2), transports goods in January under a call-off stock arrangement to Member State 2. These goods are intended for business B which is identified (established or otherwise) in Member State 2.

In September of the same year, A, regarding the goods that were not supplied to B, exports them in view of further activities outside the European Union.

 

VAT treatment of the call-off stock:

 

  • In January, A has to indicate the transport of the goods in the register held by him (Article 243(3), first subparagraph and Article 54a(1)).
  • In his recapitulative statement, A has to mention B as the person for whom goods have been sent under the call-off stock arrangements (Article 262(2)).
  • In January, the warehouse keeper (B or a third party) has to indicate the arrival of the goods to the stock in the register held by him (Article 243(3), second subparagraph and Article 54a(2)).
  • In September, when the remaining goods are transported outside the European Union, the conditions for the call-off stock arrangements cease to be fulfilled. Therefore, a transfer according to Article 17 of those remaining goods will be taking place from Member State 1 to Member State 2. Since the conditions cease to be fulfilled upon exportation, the transfer is deemed to take place immediately before the dispatch or the transport to a third country (Article 17a(7), third subparagraph).
  • The concept of “immediately before”, although not explicitly explained in the Directive, is to be seen, within the overall functioning of the system, as being on the same day as the start of the dispatch or the
  • A is deemed to make an exempt intra-Community supply according to Article 17 in Member State 1 and an intra-Community acquisition

 

according to Article 21 in Member State 2. The taxable event takes place in September and the chargeability will occur no later than on 15 October (Articles 67 and 69). In order to declare his intra-Community acquisition in Member State 2, A will have to be identified for VAT purposes in Member State 2.

  • A will have to declare the intra-Community supply in his VAT return in Member State 1 and include the transaction in his recapitulative statement by indicating himself, under his VAT identification number in Member State 2, as well as the taxable amount for the supply (Article 76).
  • A will have to account for the VAT due on his intra-Community acquisition via his VAT return in Member State
  • A will have to make the necessary indications in the register held by him in order to keep it updated (Article 243(3), first subparagraph and Article 54a(1)(g)). B or the third party warehouse keeper will also have to update his register (Article 54a(2)(e)).

 

 

REFERENCES:

 

  1. Baulf,A.: „EU VAT: quick fixes for your international trading“, 9 August 2019, Grant Thornton, available on: https://www.grantthornton.co.uk/insights/eu-vat-quick-fixes-for-your- international-trading/
  2. Council of the European Union, Improvements to the current EU VAT rules for cross-border transactions – Council conclusions (8 November 2016), available on: http://data.consilium.europa.eu/doc/document/ST-14257-2016-INIT/en/pdf
  3. EU VAT Quick Fix Directive and Regulations Published in the Official Journal, Orbitax, available on: https://www.orbitax.com/news/archive.php/EU-VAT-Quick-Fix-Directive-and-34798
  4. European Council, Council of The European Union, VAT: Council adopts short-term fixes to current EU                      system,                   Press       Release,      4       Decembre      ,       available       on: https://www.consilium.europa.eu/en/press/press-releases/2018/12/04/vat-council-adopts- short-term-fixes-to-current-eu-system/#

 

  1. COUNCIL DIRECTIVE (EU) 2018/1910 of 4 December 2018 amending Directive 2006/112/EC as regards the harmonisation and simplification of certain rules in the value added tax system for the taxation of trade between Member States, available on: https://eur-lex.europa.eu/legal- content/EN/TXT/HTML/?uri=CELEX:32018L1910&from=HR

 

  1. COUNCIL IMPLEMENTING REGULATION (EU) 2018/1912 of 4 December 2018 amending Implementing Regulation (EU) No 282/2011 as regards certain exemptions for intra- Community transactions,                                   available                    on:                       https://eur-lex.europa.eu/legal- content/EN/TXT/HTML/?uri=CELEX:32018R1912&from=EN
  2. COUNCIL REGULATION (EU) 2018/1909 of 4 December 2018 amending Regulation (EU) No 904/2010 as regards the exchange of information for the purpose of monitoring the correct application of call-off stock arrangements, available on: https://eur-lex.europa.eu/legal- content/EN/TXT/HTML/?uri=CELEX:32018R1909&from=EN

 

  1. COUNCIL REGULATION (EU) No 904/2010 of 7 October 2010 on administrative cooperation and combating fraud in the field of value added tax (recast), available on: https://eur-europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32010R0904&from=EN