October 9, 2018
From Netherlands: Agreement Reached on Quick Fixes to Improve the Functioning of the Current EU VAT System - Update
On October 2, 2018, at the ECOFIN meeting the European Union (EU) ministers of finance agreed on the implementation of a number of quick fixes to the current EU VAT system per January 1, 2020. These quick fixes were introduced on October 4, 2017 in a proposal of the European Commission towards a definitive VAT system for intra-EU trade of goods.
The four quick fixes agreed are:
- simplified and uniform VAT treatment for vendors that transfers their stock to a warehouse at the disposal of a known customer in another EU member state;
- proposal requiring the VAT identification number of the customer to be an additional and official condition to benefit from the VAT exemption / zero rate for intra-EU supply of goods;
- proposal establishing uniform criteria for determining the VAT treatment of chain transactions;
- common framework for the documentary evidence required to claim a VAT exemption for intra-EU supplies.
In the original proposal of the EU Commission, these quick fixes were introduced together with the concept of Certified Taxable Person (CTP). The simplification rules introduced with the quick fixes could only be used if companies involved in the transaction are CTP’s. In order to get CTP status from their national tax authorities, companies should prove their compliance on a number of harmonized criteria, including: regular payment of taxes, reliable internal control systems and proof of solvency. Although the concept of CTP was dropped in regard to the agreed quick fixes, it remains one of the essential elements in the (definitive) VAT system. Furthermore, it is agreed that the quick fixes enter into force on January 1, 2020 instead of January 1, 2019.
Please click here to read more about the quick fixes.