VAT Expert Group: sintesi dell`attività in corso 25

Transcription

VAT Expert Group: sintesi dell’attività in corso
25 marzo 2014
Premessa
Nel corso della seconda metà del 2012 la Commissione europea ha promosso la costituzione del VAT Expert
Group (VEG)1, composto di rappresentanti del mondo imprenditoriale2 e professionale, con l’obiettivo di
assistere la Commissione stessa nella fase preparatoria di nuove iniziative di policy nel campo dell’imposta
sul valore aggiunto.
L’attività del gruppo di lavoro – il cui mandato biennale è in prossimità di scadenza – si è concentrata, in
particolare, sulle principali criticità che caratterizzano l’attuale sistema transitorio di tassazione degli
scambi intracomunitari di beni, con l’obiettivo di ipotizzare ed analizzare soluzioni per superare le difficoltà
odierne.
Nello specifico, i principali problemi che caratterizzano l’attuale sistema impositivo sono stati identificati
nell’alto livello di incertezza normativa (es. prova delle cessioni intracomunitarie, verifica della cortezza ed
esistenza del numero di partita IVA di un operatore economico) e negli eccessivi costi di compliance per la
gestione dell’IVA comunitaria, dovuti a regole complesse, applicate in modo difforme da parte degli Stati
membri e che mal si adattano ai modelli di business sempre più flessibili adottati dalle imprese (es.
trattamento delle operazioni a catena, difficoltà di qualificare determinate operazioni come cessioni di beni
o prestazioni di servizi, obblighi di registrazione nello Stato membri di destinazione, in relazione a
particolari operazioni).
Il sistema di tassazione degli scambi intracomunitari di beni: ipotesi analizzate
Diverse sono state le opzioni oggetto dell’indagine da parte del gruppo di lavoro. Di seguito se ne fornisce il
quadro di sintesi, indicando per ciascuna i principali punti di forza e di debolezza individuati.
1) Mantenimento dello status quo: rendere definitivo l’attuale sistema transitorio.
Pro:
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continuità delle norme sia per le imprese che per le amministrazioni fiscali;
controllo del flusso dei beni, indipendentemente dal luogo di stabilimento dei soggetti coinvolti
nell’operazione;
Contro:
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Si veda la Decisine della Commissione europea n. 2012/C 188/02 del 26 giugno 2012.
Confindustria ha designato come proprio rappresentante ai lavori del VEG il dott. Pierpaolo Maspes, partner di S.C.G.T. Studio di
Consulenza Giuridico-Tributaria, Roma e come suo sostituto Raffaele Corso, Area Politiche Fiscali di Confindustria.
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le operazioni intracomunitarie sono trattate diversamente dalle operazioni domestiche;
elevati costi di compliance;
le imprese percepiscono il sistema come penalizzante per gli scambi comunitari;
incertezza operativa;
favorisce le frodi carosello.
2) Adattare le regole in vigore, sempre seguendo il flusso dei beni.
L’imposta può essere versata, alternativamente:
a) dal fornitore, mediante un meccanismo di sportello unico;
b) dal cessionario, con il meccanismo del reverse charge.
In questo scenario si ipotizza il venir meno della distinzione tra cessione esente ed acquisto
intracomunitario imponibile, con previsione di una sola operazione tassata nello Stato membro di
destinazione dei beni.
Pro:
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si concentra l’attenzione solo su di una operazione;
si può seguire sempre il flusso dei beni, indipendentemente dal luogo di stabilimento dei
soggetti coinvolti nell’operazione;
nell’ipotesi a), si consente uguale trattamento ad operazioni domestiche ed intracomunitarie;
nell’ipotesi a), si evita una interruzione nella catena di riscossione dell’imposta;
si semplificano gli obblighi di compliance;
Contro:
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il controllo del flusso dei beni è sempre problematico e costoso in termini di compliance;
l’ipotesi a) è complessa per il fornitore che deve conoscere tutte le aliquote in vigore nei diversi
Stati membri ed applicarle correttamente.
3) Applicare anche alle operazioni B2B le regole di cessione dei beni usate per le operazioni B2C.
Le operazioni di cessione intracomunitaria di beni sarebbero tassate nello Stato membro di arrivo del
trasporto ma solo nell’ipotesi in cui il trasporto sia organizzato dal fornitore. In sostanza si seguirebbe il
flusso dei beni, ma solo nell’ipotesi in cui sia il fornitore ad organizzare il trasporto. Nelle altre ipotesi, il
luogo di tassazione è quello in cui i beni si trovano al momento in cui inizia il trasporto o la spedizione.
Pro:
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si concentra l’attenzione solo su di una operazione;
si può seguire sempre il flusso dei beni, quando il cedente si incarica del trasporto,
indipendentemente dal luogo di stabilimento dei soggetti coinvolti nell’operazione;
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facile applicazione nel caso in cui il cessionario si incarichi del trasporto dei beni, dal momento
che il cedente applicherà l’IVA se stabilito nel luogo in cui avviene l’inizio del trasporto o della
spedizione;
nell’ipotesi a), si evita una interruzione nella catena di riscossione dell’imposta;
si semplificano gli obblighi di compliance.
Contro:
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il controllo del flusso dei beni è sempre problematico e costoso in termini di compliance;
una porzione consistente delle operazioni B2B è tassata all’origine, senza controllo sull’effettiva
destinazione finale dei beni (a meno di imporre nuovi obblighi sui contribuenti);
aumenta la necessità di utilizzo della procedura di rimborso dell’imposta;
le regole IVA perdono di neutralità circa la scelta su come le parti si accordano sulle modalità di
gestione del trasporto;
Stati membri ed applicarle correttamente.
4) Applicare agli scambi intracomunitari di beni le regole usate per la tassazione dei servizi.
In questa ipotesi, le cessioni di beni sarebbero tassate nel luogo di stabilimento del cessionario; il flusso dei
beni non verrebbe più seguito.
Pro:
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viene meno la necessità di distinguere tra cessioni di beni e prestazioni di servizi;
si basa su concetti già noti;
la scelta di non seguire il flusso dei beni può semplificare gli obblighi degli operatori economici;
nell’ipotesi a), si garantisce la parità di trattamento tra operazioni domestiche e intracomunitarie;
nell’ipotesi a), si evita una interruzione nella catena di riscossione dell’imposta.
Contro:
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può comportare degli effetti nell’allocazione dell’IVA tra gli Stati membri;
Stati membri ed applicarle correttamente;
il sistema è comunque a rischio di frodi carosello, nell’ipotesi b).
5) Seguire il flusso contrattuale
In questa ipotesi, si propone di seguire, in luogo del flusso fisico dei beni, quello contrattuale. In altri
termini, si prevede che le cessioni siano tassate nel luogo in cui il cessionario previsto dal contratto sia
stabilito, indipendentemente dal flusso fisico seguito dai beni.
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Pro:
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viene meno la necessità di distinguere tra cessioni di beni e prestazioni di servizi;
la scelta di non seguire il flusso dei beni può semplificare gli obblighi degli operatori economici;
nell’ipotesi a), si garantisce la parità di trattamento tra operazioni domestiche e intracomunitarie
nell’ipotesi a), si evita una interruzione nella catena di riscossione dell’imposta.
Contro:
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ha degli impatti sulla modifica delle regole di tassazione delle prestazioni di servizi;
può comportare degli effetti nell’allocazione dell’IVA tra gli Stati membri;
Stati membri ed applicarle correttamente;
il sistema è comunque a rischio di frodi carosello, nell’ipotesi b).
6) Viable integrated VAT (VIVAT)
Tutte le operazioni B2B, sia domestiche che intracomunitarie, sarebbero soggette ad una unica aliquota
IVA: è necessario un meccanismo di clearing che consenta l’applicazione di tale aliquota uniforme e
ripartisca le posizioni nette creditorie e debitorie tra gli Stati membri. Ai fini applicativi sono necessari
specifici obblighi di compliance che consentano di stabilire il luogo di destinazione dei beni.
Pro:
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ci si concentra solo su di una operazione di cessione imponibile ad IVA, come per le prestazioni di
servizi;
si segue il flusso delle operazioni, indipendentemente dal luogo di stabilimento dei cessionari;
si evita una interruzione nella catena di riscossione dell’imposta;
si assicura parità di trattamento tra operazioni domestiche ed intracomunitarie.
Contro:
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il monitoraggio del flusso dei beni è comunque costoso in termini di compliance;
necessità del sistema di clearing e rischio di obblighi di compliance ulteriori;
aggiustamenti necessari nel caso di aliquota IVA scelta dallo Stato membro diversa dall’aliquota di
riferimento.
7) Compensating VAT (CVAT)
E’ un sistema che, nelle operazioni intracomunitarie, prevede che il cessionario addebiti l’IVA sulle sue
operazioni e l’acquirente detragga l’IVA addebitata; si utilizza un’aliquota uniforme a livello comunitario. E’
quindi molto simile alla VIVAT, ma limitata alle sole operazioni intracomunitarie; è necessario quindi anche
in questa ipotesi, l’uso di un meccanismo di clearing.
Pro:
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ci si concentra solo su di una operazione di cessione imponibile ad IVA, come per le prestazioni di
servizi;
si segue il flusso delle operazioni, indipendentemente dal luogo di stabilimento dei cessionari;
Contro:
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il monitoraggio del flusso dei beni è comunque costoso in termini di compliance;
necessità del sistema di clearing e rischio di obblighi di compliance ulteriori;
aggiustamenti necessari nel caso di aliquota IVA scelta dallo Stato membro diversa dall’aliquota di
riferimento.
8) Single European VAT Area (SEVA)
Si ipotizza l’armonizzazione complessiva delle aliquote IVA utilizzate dagli Stati membri. L’allocazione delle
risorse ai singoli Stati membri sarebbe basata su di un mix di indicatori macroeconomici in grado di
riflettere al meglio il livello dei consumi in ogni Stato membro.
Pro:
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sistema pienamente neutrale rispetto alle scelte degli operatori economici;
ridotti obblighi di compliance per gli operatori economici;
semplicità di gestione per le amministrazioni fiscali;
Contro:
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è necessaria la completa armonizzazione, specie sulle aliquote IVA;
è necessario l’uso di un sistema di clearing per attribuire le risorse agli Stati membri;
è necessaria grande fiducia reciproca tra gli Stati membri.
Ipotesi oggetto approfondimento specifico
Dopo approfondite valutazioni e scambi di opinioni nell’ambito del VEG, la Commissione europea ha
reputato opportuno demandare ad una società di consulenza esterna la realizzazione di uno studio
finalizzato ad approfondire alcune delle ipotesi ritenute degne di maggior interesse. Ai fini
dell’approfondimento sono state pertanto selezionate le seguenti:
1) Mantenimento dello status quo: rendere definitivo l’attuale sistema transitorio (ipotesi 1);
2) Adattare le regole in vigore, sempre seguendo il flusso dei beni, nella variante che prevede che
l’IVA sia addebitata dal cedente e che sia utilizzato un meccanismo di sportello unico (ipotesi 2a);
3) Applicare agli scambi intracomunitari di beni le regole usate per la tassazione dei servizi, nella
variante che prevede l’utilizzo del meccanismo dell’inversione contabile (ipotesi 4b);
4) Seguire il flusso contrattuale nella variante che prevede che l’Iva sia addebitata dal cedente e che
sia utilizzato un meccanismo di sportello unico (ipotesi 5a).
Secondo l’opinione della Commissione europea, l’approfondimento di tali ipotesi copre una ampia
combinazione dei principali problemi che tutte le diverse varianti ipotizzate sollevano, con particolare
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riferimento ai problemi legati al luogo di tassazione degli scambi e ad al soggetto obbligato al pagamento
dell’IVA.
L’obiettivo dell’analisi affidata al consulente esterno è quello di:
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quantificare i principali problemi che le ipotesi pongono e le divergenze tra trattamento delle
operazioni domestiche e trattamento delle operazioni intracomunitarie;
identificare l’impatto che l’adozione di ciascuna ipotesi può comportare e le differenze sia positive
che negative rispetto al sistema vigente, prendendo in considerazione sia la prospettiva degli
operatori economici, sia quella degli Stati membri.
Lo studio è stato commissionato lo scorso 21 novembre 2013 e, pertanto, i risultati non saranno disponibili
nel breve termine.
Approfondimento degli aspetti maggiormente problematici dell’attuale sistema impositivo
Nel corso del dibattito seguito alla presentazione di queste diverse ipotesi, alcuni partecipanti hanno inoltre
espresso la necessità di approfondire meglio alcune tematiche relative all’attuale sistema impositivo
utilizzato, ipotizzando che possa essere sufficiente solo un aggiustamento dello status quo, limitato ai
principali problemi che gli operatori economici e le amministrazioni finanziarie nazionali riscontrano. E’
stata pertanto espressa la necessità di un approfondimento di tre tematiche ritenute cruciali per il
funzionamento del vigente sistema impositivo degli scambi intracomunitari di beni:
1) la prova delle cessioni intracomunitarie di beni;
2) il trattamento delle operazioni a catena;
3) il trattamento delle operazioni di consignment stock.
La Commissione europea ha pertanto deciso di promuovere la costituzione di tre sottogruppi di lavoro,
finalizzati ad approfondire tali tematiche: il primo composto principalmente da rappresentanti del VAT
forum, il secondo ed il terzo, costituiti invece prevalentemente da membri del VEG e del Group on the
future of VAT. Tutti i sottogruppi di lavoro coinvolgono sia rappresentanti del mondo imprenditoriale3 e
professionale, sia rappresentanti delle amministrazioni finanziarie.
Le conclusioni raggiunte dai tre sottogruppi di lavoro sono state presentate nel corso dell’ultima riunione
del VEG, tenutasi lo scorso 6 febbraio. Per una sintesi delle stessa ed una analisi più approfondita dei lavori
svolti d si rinvia ai documenti di seguito allegati. (documenti VEG da 26 a 29).
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Ai lavori del sottogruppo di lavoro impegnato ad analizzare i profili relativi alle transazioni a catena ha contribuito, in
rappresentanza di Confindustria, il dott. Pierpaolo Maspes.
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EUROPEAN COMMISSION
DIRECTORATE-GENERAL
TAXATION AND CUSTOMS UNION
Indirect Taxation and Tax administration
Value Added Tax
VAT Expert Group
7th meeting – 6 February 2014
taxud.c.1(2014)154616 – EN
Brussels, 22 January 2014
VAT EXPERT GROUP
VEG NO 026
B2B supplies of goods – Taxation at destination
Option 1B – Sub-groups – Overview of the outcome
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INTRODUCTION
As mentioned in working documents No 0134 and 0225, during discussions in a previous meeting of
the Group on the Future of VAT (GFV), several delegates considered that option 1 (status quo)
should be complemented by an ‘option 1b’, which would consist in improving the current rules as
regards intra-EU B2B supplies of goods without modifying them fundamentally.
Delegates in the GFV identified three priority areas in which improvements of the current rules
could be undertaken, namely (i) the proof to support the exemption of intra-EU B2B supplies, (ii)
the VAT treatment of chain transactions and (iii) consignment stock.
Some members of the VEG also suggested examining the possibility to improve the current system
while preserving its main principles.
The Commission services therefore presented a working document for discussion with the GFV and
the VEG (VEG No 013) on this possible new option to try to define its exact content and workings.
Several possible ways forward to address each of these issues were tabled.
However no consensus was reached during the discussions held in March 2013. Therefore, as
requested by some delegates, in April 2013, the Commission services decided to set up three
smaller groups of experts or sub-groups to examine these issues in detail in order to make
‘option 1b’ a valid option to consider in the short term. In the meantime the work on the other
options would continue at their own pace without awaiting the outcome of the work of the subgroups.
Three sub-groups were therefore set up. Two sub-groups were composed of members of both the
VEG and the GFV to examine the VAT treatment of chain transactions and of consignment stock.
The third sub-group in charge of examining the burden of proof was composed of members of the
EU VAT forum. The EU VAT forum is made up of representatives from the tax authorities and the
business and it had already put this issue on its agenda.
Each sub-group had to examine the precise problems faced by business and tax administrations,
look at practical examples and identify possible ways to address these problems without
jeopardising the fundamental principles of the current EU VAT system.
As mentioned in the Commission services’ notes setting up those sub-groups6, they had to report
back with their recommendations to both the VEG and GFV by the end of 2013.
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B2B supplies of goods – Taxation at destination – Additional option – Improvement of current rules
B2B supplies of goods – Taxation at destination – Option 1B – State of play
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Note to the fiscal attachés of 15 April 2013 No BL/mve taxud.c.1(2013)765928 and note to the VEG members
of 15 April 2013 No BL/mve taxud.c.1(2013)766162.
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1.
COMPOSITION AND OVERVIEW OF THE WORK UNDERTAKEN
1.1.
Sub-groups of the VEG and GFV
The sub-group on chain transactions was made up of 4 individuals, 6 organisations and 7 Member
States (AT, BG, DE, HU, LU, NL and UK).
The sub-group on consignment stock was made up of 3 individuals, 6 organisations and 3 Member
States (BE, FI and IT).
The membership lists for both sub-groups are available in annex.
Each sub-group held five meetings in Commission premises with their first meeting taking place
respectively on 18 and 19 June 2013. In both groups a rapporteur from the Member States and
another from the stakeholders were nominated by consensus.
Each sub-group laid down their own terms of working. However they both found that to be able to
properly assess the current situation it would be useful to get the views of Member States on what is
the VAT treatment of two typical chain transactions and of a typical call-off stock scenario under
the current rules of each Member State.
Therefore, several questionnaires were sent to the members of the GFV. The sub-groups processed
these replies in particular to try to identify best practices.
1.2.
EU VAT forum sub-group
The sub-group of the EU VAT forum on the proof of exemption of intra-EU supplies was made up
of 9 organisations and 15 Member States (AT, BE, BG, DE, DK, ES, EE, IE, HU, IT, LT, PL, PT,
NL and SK).
The membership list of this sub-group is in annex as well.
Its first meeting was held on 31st July 2013. Two further meetings took place. Two questionnaires
were sent to all participants to enable members to understand the current practices in the Member
States.
The report was presented by two rapporteurs (one from the tax administrations and one from the
business members) in a plenary meeting of the EU VAT forum on 3 December 2013. The report
was then finalised and sent to the GFV chair.
2.
OUTCOME - SUB-GROUPS CONCLUSIONS AND RECOMMENDATIONS
2.1.
Proof of exemption
The members came to the following conclusions:
 Currently, there is a failure to properly implement the (transitional) intra-EU VAT system which,
taking into account the purpose of the internal market that is intended to facilitate intra-EU trade,
often cannot be fully complied with, even by legitimate businesses.
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 Moreover, all the suggestions considered by the sub-group do not change anything in regard to
the vulnerability of the present intra-EU trade VAT system to fraud.
 Therefore it is considered that the work of the Group on the Future of VAT and the VAT Expert
Group should now concentrate on more promising scenarios, which necessarily imply
legislative changes to the existing rules for intra-EU trade in goods.
Notwithstanding any legislative changes the group nevertheless identified issues for further
discussion in the EU VAT Forum. In particular “further harmonisation/consistency should be
achieved” regarding the existing documentation. The questionnaire to Member States revealed
different approaches concerning the means of proof for exemption of intra-EU supplies and the
documentation required. Further work to make information on these various approaches publically
available could be considered as well (e.g. via a VAT web portal).
2.2.
Chain transactions
The members came up with the following three sets of recommendations. Two members from the
Member States expressed reservations concerning recommendations 2 to 8 and a further member
from one Member State had a reservation for recommendations 3, 4, 5 and 8.
2.2.1. Recommendations for clarification and consistent approaches
Recommendation 1: the members agreed that it would be advisable to have a common
interpretation that would consistently allow attributing the intra-EU supply to one7 supply within
the chain of transactions.
Recommendation 2: the members considered it advisable:
 to clarify the application of Articles 141 and 197 of the VAT Directive, especially with regard to
requirements of Article 141(d), i.e. to clarify that Article 141(d)
o does not require that the person to whom the subsequent supply is to be made is
established in the Member State of arrival of the goods, and
o requires that this person is identified for VAT purposes in this Member State, regardless
of his establishment;
 and to check that Articles 141 and 197 might also be applied in a chain of transactions where
there are three or more parties involved, provided that the simplification of Article 141 is applied
to a supply of goods subsequent to an intra-EU supply, and thus only once within a chain of
transaction.
Recommendation 8: members from businesses preferred that the intra-EU supply is attributed to
the first supply within the chain of transactions as a solution for the problems relating to the
different approaches of Member States regarding this attribution.
Alternatively, members agreed that it should be considered:
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That is one and the same supply.
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 Recommendation 6: whether the intra-EU supply could be attributed to the supply to the
taxable person arranging the transport/dispatch of the goods by means of a defined but rebuttable
presumption, with that taxable person providing its supplier with a VAT identification number of
the Member State of departure of the goods as defined proof to rebut the presumption; or
 Recommendation 7: as a second best alternative to recommendation 8, to provide at least a
definition of the evidence to be provided by the taxable person in order to conduct the “overall
assessment of all circumstances of the case” for attributing the intra-EU supply to one of the
supplies in the chain of transactions.
2.2.2. Recommendations to make better use of the options granted to the Member States by the
VAT Directive
Considering the analysed scenarios, the members would encourage Member States to review the
possibility to use the options granted by the VAT Directive in the context with chain transactions,
particularly:
 Recommendation 3 made by members from businesses only:
o Article 194 – domestic reverse charge for non-established taxable persons;
o Article 204(1) – which allows the non-established taxable persons liable for VAT,
pursuant to Articles 141 and 197 of the VAT Directive as the person to whom the goods
are supplied under the conditions of Article 141, to appoint a tax representative;
 Recommendation 4: Article 164 – to grant taxable persons carrying zero-rated supplies (exports
and intra-EU supplies) a licence to receive supplies, prior to these zero-rated supplies, with 0%
VAT;
 Recommendation 5: Article 157(1)(b) – to use the VAT warehousing rules for chain
transactions, in which the taxable person withdrawing the goods from the warehouse performs
the intra-EU supply8.
2.2.3. Recommendations requiring an amendment of the VAT Directive
Members from businesses recommended an amendment of Articles 41 and 138(1) of the VAT
Directive as a simplification rule extending the current simplification of Articles 141 and 197 of the
VAT Directive in chain transactions. An alternative proposal would be to apply Article 32(2) of the
VAT Directive by analogy to chain transactions where the flow of goods is within the EU.
These recommendations would require more in-depth analysis, which could not be carried out
within the restrictive time-frame of the sub-group. The same applies to proposals for warehousing
rules, which the members of the sub-group from businesses deemed to merit recommendations.
The members noted that in order to attribute the intra-EU supply to a pre-defined supply within the
chain of transactions in order to get legal certainty, one possibility is to change the VAT Directive.
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This would imply that transactions taking place while the goods are still under warehousing would be subject
to less obligations.
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2.3.
Consignment stocks
The sub-group reached the following conclusions:
1) The cross-border VAT treatment of call-off stock (where the buyer is known) and other kinds
of consignment stock (where the buyer is unknown) is complex for businesses, in terms of both
the concepts and the interpretation of VAT legislation.
2) Various formal and informal practices applied in the Member States have led to widely varying
VAT rules and conditions for transactions relating to this stock.
3) The differences between the Member States give rise to increased costs of VAT accounting,
increased risks of VAT fraud and avoidance, inconsistencies in VIES, reduced auditability for
Member States, systems issues, legal uncertainties and distortions of competition between
businesses. SMEs suffer more under the situation than large business and domestic suppliers
have an advantage over non-resident suppliers.
4) The approaches that Member States have taken can be grouped into four different categories,
each with their own characteristics.
1. Deemed intra-EU supply/acquisition followed by a domestic supply;
2. Deemed intra-EU supply/acquisition followed by a domestic supply but with reverse charge
by buyer;
3. Intra-EU supply/acquisition at time the goods are transferred;
4. Intra-EU supply/acquisition at the time the goods are taken out.
5) For businesses compliance costs, cash flow, systems implementation and legal certainty are the
most important issues. SMEs and even large business indicate that for them consistency and
(legal) certainty are very important, especially from a systems and implementation perspective.
6) From the Member States’ point of view a common simplification system would be needed in
order to increase the credibility of the VIES system and reduce the risks of fraud. The present
situation may also have prevented Member States from providing clear legislation or guidance
which would have taken both simplification and control issues into account. The common
simplification should be accomplished by amending the VAT Directive.
7) The sub-group suggests a common simplification approach, that takes into account the interests
and concerns of both Member States and businesses.
On the basis of these conclusions the sub-group came to the following recommendations:
1) A common simplification approach qualifies as a potential future regime for call-off stock
situations, where it is a given that the buyers are known in advance. In this model, the
cross-border transfer of goods is treated as a regular intra-EU supply at the time that the
buyer takes the goods from the stock. The model is built on the assumption that the common
regime would be laid down in the VAT Directive. The sub-group expresses the strong wish that
the suggested solution for call-off stock receives wide support from both Member States and
business. This support is vital in order for the solution to be taken to the next stage.
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2) Given the inherent risks and financial interests that are at stake for both Member States and
businesses, an impact assessment on the preferred approach is recommended. The results
of this assessment should allow the Commission to add the required level of detail to its
proposal for the new regime for call-off stock.
3) The collected information on the VAT treatment of consignment stock and call-off stock
in the Member States should be made public and, preferably, be updated, in anticipation of a
common regime.
4) The application of a similar simplification to other kinds of consignment stock could be said to
represent a deviation from the logic of the existing VAT Directive. The sub-group believes that
a study should be carried out to assess whether the solution proposed for call-off stock
could be applied for consignment stock more generally.
3.
NEXT STEPS WHICH COULD BE CONSIDERED
In the Commission services’ view, the outcome of the work of the sub-groups as regards the
recommendations which do not go beyond the remit of the sub-groups, i.e. which would not change
the principles of the current VAT system, has demonstrated that option 1b would be extremely
limited in scope and would have little chance of success as a short-term gain.
Indeed, it has to be recalled that the sub-group on the proof of exemption of intra-EU supplies has
been unable to come up with concrete measures within the current system to tackle this highly
problematic issue. Despite much effort by the rapporteurs, the sub-group on ‘Chain Transactions’
has been unable to reach a consensus except to advise Member States to have a common
interpretation in order to allocate the intra-EU supply to the same transaction in the chain.
The consensus reached in the ‘Consignment Stock’ sub-group can be welcomed but it is worth
mentioning that it was limited to three Member States out of twenty eight. Moreover the measure
suggested is similar to one already proposed by the Commission to the Member States, in particular
in the Working Party No 1 in 2009 and in the GFV in 20139, and on which no consensus could be
reached.
Therefore, a consistent approach would be to see the work of the sub-groups, while instructive, as
not meriting further attention within the scope of the design of a definitive VAT regime. That is to
say that the three options already identified as the most promising remain the most promising and
that no further options to be assessed in more detail are needed.
However, another approach could be to consider that some of the recommendations which do not go
beyond the remit of the sub-groups, could qualify to make option 1b a valid option, albeit extremely
limited in scope and with little chance of success, and therefore could be considered in the future
with the other options.
Now that the Member States and business representatives have completed their work, the
Commission services could therefore envisage studying further the precise workings in order for
them to be assessed. Thereafter their appropriate follow up could be discussed and decided upon.
9
Option 2 suggested in VEG No 13 and GFV No 22, p. 5 & 6.
13
To gain time, the Commission services could envisage extending the scope of the on-going study on
the more ambitious options in order to get a proper assessment of these measures by the end of
2014. This would also provide a complete picture of all the options which remain on the table.
Besides these two approaches (no further action or inclusion in the on-going study), for those
recommendations for which no legislative change is needed it could be considered appropriate to
look at clarifying the rules through other means such as the VAT Committee or guidance notes, as
was the case with invoicing or with the mini-One Stop Shop. Any interested Member State has
anyway the right to submit a document to the VAT Committee for clarification of the current rules.
However, it needs to be considered that this will not necessarily improve the situation through a
more consistent approach nor will it be necessarily an easy task to achieve a short-term gain.
4.
LESSONS LEARNED FROM THE USE OF JOINT VEG-GFV SUBGROUPS
In the Commissions services’ view, the use of joint sub-groups made up of representatives of the
business (VEG) and from the tax authorities (GFV) to address these issues has proven to be fruitful
in general.
Indeed despite the short timeframe allocated to each sub-group to carry out their tasks, they all
delivered in time an in-depth report on each of their issues with conclusions and recommendations.
Discussions during the meetings were on the whole open and constructive. Some members, in
particular the rapporteurs, worked very hard to meet the deadline and the qualitative requirements
expected of them which was key to providing on time good quality reports.
However, it was unfortunate to see that the participation of Member States and businesses was not
balanced in all sub-groups. For example, only very few Member States volunteered to participate in
the sub-group on consignment stock which raises concerns about how representative the final
conclusions are. Also, several members who had volunteered either did not attend the meetings (see
in annex) or did not participate actively.
Despite the non-binding feature of the reports and their non-scientific and purely informative
nature, it was also unfortunate to see that the sub-groups were often unable to reach a consensus on
possible ways forward which could possibly suit both tax authorities and business interests and on
the next steps to be taken within the VEG and the GFV.
It seems in particular that the experts from the Member States had different approaches: some
attended to provide the group with their expertise within the field whilst logically focusing on tax
administrations’ needs; others came with a political and procedural approach.
In the Commission services’ view only the members’ technical expertise within the field was
relevant to carry out their task. The political agenda of each of the members of the subgroup should
have been put aside.
5.
QUESTIONS TO THE EXPERTS
The experts are invited to express their views on:
14
1) The content and specifically the recommendations set out by the sub-groups;
2) The appropriate follow up which should be given to these recommendations and in particular
on the two approaches set out in the present document;
3) The lessons learned from the use of joint sub-groups.
***
15
ANNEX
Sub-group ‘Chain Transactions’
Individuals and their alternates
1.
2.
3.
4.
Ashworth Elisabeth
Bouchard Jean-Claude
Lejeune Ine
Maunz Stefan
Reinbold Corinne (attended one meeting)
Courjon Odile
Van Kesteren Herman
Zugmaier Oliver
Organisations
5. Confederation of Netherlands Industry and Employers (VNO-NCW) & the Royal Dutch
organisation for small and medium sized enterprises (MKB – Nederland) (attended one
meeting)
6. Confederation of Swedish Enterprise
7. Confindustria
8. European VAT Club
9. Federation of German Industries (BDI) & Association of German Chambers of Industry and
Commerce (DIHK)
10. General Electric Company
Member States
11. Austria
12. Bulgaria (attended one meeting)
13. Germany
14. Hungary
15. Luxembourg
16. Netherlands
17. United Kingdom
16
Sub-group ‘Consignment Stock’
Individuals and their alternates
1. Gómez Barrero Carlos
2. Parolini Andrea
3. Schellmann Gottfried
Gardeta González Eduardo
Arginelli Paolo
Bürgler Christian
Organisations
4.
5.
6.
7.
8.
9.
BUSINESSEUROPE
Chartered Institute of Taxation (CIOT)
Ernst & Young
Eurochambres (no attendance)
KMPG (attended one meeting)
Tax Executives Institute (TEI)
Member States
10. Belgium
11. Finland
12. Italy
17
EUROPEAN COMMISSION
DIRECTORATE-GENERAL
Value Added Tax
VAT Expert Group
7 meeting – 6 February 2014
th
taxud.c.1(2014)57825 – EN
VAT EXPERT GROUP
VEG NO 027
Option 1B - Sub-Groups report – Proof of intra-EU supplies
18
EUROPEAN COMMISSION
DIRECTORATE-GENERAL
Tax administration and fight against tax fraud
[Annex to D-47090]
EU VAT FORUM N° 3/9 (final)
WORKING DOCUMENT
FOR OFFICAL USE ONLY
EU VAT FORUM
Report to the Group on the future of VAT and the VAT expert group
1.
INTRODUCTION AND MANDATE
In discussions within the Group on the future of VAT and the VAT expert group,10 Member States
wanted to ascertain whether it is possible to improve the functioning of the current VAT
“transitional” system with regard to intra-EU supplies.
As a consequence, the EU VAT Forum set up a specific working group to consider the proof of
despatch or transport to another EU Member State (‘proof’) required to VAT exempt intra-EU
supplies of goods.11 The aim of this sub-group was to analyse best practices and the possibilities for
cooperation in order to improve the functioning of the current VAT system. 13 Member States12
and representatives from 9 business organisations13 participated in the working group.
Based on an understanding of business models and different intra-EU scenarios, which correspond
to the current practices of Member States regarding the proof required for intra-EU supplies, the
sub-group sought to identify possible ways to be more efficient on both sides.
It was agreed that the sub-group should report back its findings to the EU VAT Forum to enable the
EU VAT Forum to issue recommendations in this field in time for the next meetings of the Group
on the Future of VAT and the VAT Expert group.
10
11
12
13
Discussions based on working document GFV 22 - Group on the future of VAT + VAT expert Group.
As set down in article 138 of Directive 2006/112/EC.
BE, BG, DK,DE,IE,ES,EE,IT, LT,AT,HU,PL,PT,NL,SK.
Business Europe, CBE, CFE, EEA, EPMF, FEE, IVA, Siemens, TEI.
19
2.
WORKING METHOD
Three meetings of the sub-group took place14. In addition, two questionnaires15 were sent to all
participants, to enable members of the sub-group to gain an understanding of current practices in
Member States. Business members also shared information on the commercial documentation
which could be provided in different scenarios as proof of the despatch or transport of goods in case
of an intra-EU supply.
2.1.
Information sharing
Business and Member States participants agreed to base their discussions on a set of business
models corresponding to different scenarios for B2B intra-EU supplies of goods, which varied from
the simplest (two party transactions) to the more complex supply chains. The aim was to identify
those situations where properly documenting intra-EU supplies were likely to be more difficult.
Business also provided the group with a detailed end to end process map of internal controls applied
to manage risk, and the related documents produced, when carrying out an intra-EU supply of
goods.
2.2.
Identification of the most difficult situations to be documented
Among the different scenarios, it was considered that the supplier’s obligation to provide evidence
of an intra-EU supply of goods was straightforward in transactions involving two parties where
transportation of the goods is handled by a third party.
However, two other scenarios of intra-EU supplies were considered to be problematic, as follows:
-
when the supplier, or the customer, transports the goods using his own means of transport; and
-
when goods are sold “ex works”.
In both cases, tax authorities require proof that the goods have physically left the territory of the
Member State of the supplier16 to be despatched or transported to another EU Member State.
The group did not discuss in depth the other condition necessary for the VAT exemption of intraCommunity supplies (i.e. the customer’s status as a taxable person). However, the sub-group
acknowledged that this issue was relevant to the wider issue of the prevention of fraud.
In relation to the controls undertaken and documents generally available, the participants of the subgroup acknowledged that there were no substantial differences between SMEs’ and larger
companies involved in intra-EU trade. The requirements of Tax authorities for businesses to
provide proof are almost identical for both categories of enterprises. However, it was
acknowledged that SME’s often find it more challenging to gain access to appropriate information
and, in consequence, have less of an understanding of their legal obligations.
14
15
16
31 July 2013, 4 October 2013 and 20 November 2013.
Note dated 19 June 2013 with reference taxud.c.4/HM/LV/tm (2013)2394405 and e-mail of 14/10/2013.
Article 138(1) of Directive 2006/112/EC.
20
2.3.
Appointment of rapporteurs
Two rapporteurs (one from the tax administrations and one from the Business members) were
designated to summarize the discussions and report to the EU VAT Forum.
It was agreed that the report should be circulated among the members of the sub-group by the
secretariat for comments and suggestions, so that it can be adopted by consensus by the sub-group.
If it is not possible to finalise the report, the remaining issues could be discussed at the EU VAT
Forum plenary meeting.
3.
STATE OF PLAY
3.1.
General remarks
The efficient operation of the internal market is essential for business in order to create growth and
employment. The tax environment in which businesses operate, provided by tax authorities, can
have a direct impact on competition between companies, as well as between Member States.
Therefore, the principles of fairness, tax neutrality, legal certainty, legitimate confidence and
proportionality must be applied and respected by tax authorities (as well as judges). At the same
time tax authorities are under considerable pressure to recover VAT more efficiently and to ensure
that all taxpayers are treated fairly and equally, which implies that fraud has to be combated even
more effectively.
In recent years, many Court cases at the EU level in the field of VAT have concerned the issue of
fraud. Carousel fraud and substantial disruption to certain markets by fraudulent operators have
been reported. Consequently, the fight against tax fraud is currently a major issue at both national
and EU level.
However, combating fraud should not lead us to overlook the fact that the vast majority of
businesses comply with the rules.
In considering whether the VAT exemption should be applied to the intra-EU supply of goods, the
business representatives view this as comprising three elements as follows:
i.
whether, in principle, the transaction falls within the scope of the legislation;
ii.
whether the supplier has carried out all reasonable steps to verify the good faith/
standing of his customer (the ‘knowledge test’); and
iii.
whether the supplier holds the required proof that the goods have left the Member
State of dispatch, to be delivered/transported to another EU Member state.
Business representatives believe that the use of documentation (either in terms of a different format,
or additional information) is not an effective means to combat fraud as, in practice, the fraudsters
will hold, or provide, perfect documentation (which does not affect the possibility for the Member
States to ask for documentary evidence). Preferably, the detection and prevention of fraud, which is
an issue for both legitimate business and tax authorities, needs to be dealt with at an earlier stage in
21
the process (i.e. the point at which goods are being dispatched and invoiced is too late). For
example, although this is an issue which the business participants believe should be considered by
the proposed sub-group on fraud, effective controls by a business as part of the knowledge test
could prevent fraud. Consequently, in considering the issue of proof, the sub-group has focussed on
situations where fraud is not present. In any event, it is observed in practice that holding the
required proof (in whatever format) did not enable the supplier to VAT exempt its supply if the
business failed the “knowledge test”. Consequently, the distinction to be made between legitimate
business and fraudsters is a major issue for both parties and should be further explored.
3.2.
Means of proof, documentation, setting the scene
3.2.1. Diversity of documentation
The answers to the questionnaire reflected different approaches in Member States. Some Member
States are less demanding than others regarding the means of proof of an intra-EU supply and the
documentation that has to be provided in this respect, accepting various forms of alternative
evidence.
However, in most cases there is no single document which would be sufficient but a number of
different types and formats, which may or may not be listed in national legislation, or alternatively
used in practice. For instance17: commercial documents relating to contractual commitments, an
invoice mentioning the fact that it relates to an exempt intra-EU supply; a document signed by the
purchaser (or authorized person) acknowledging the receipt of the goods in the other Member State;
a payment document proving that the purchaser has paid for the goods received, proof that the
transaction has been correctly reported in the VAT returns and in the intra-EU sales listing of the
supplier; proof of the VAT registration of the purchaser in another Member State at the time of the
supply; the Intrastat listing; bank documents proving payment by the customer; etc…
3.2.2. Documentation concerning the transport of the goods outside the territory of the Member
State of the supply into another Member State
Several documents may be requested by tax authorities, depending on national legislation and
practice. For instance18: bills of lading; airway bills; a signed CMR; consignment note; the invoice
from the carrier, as well as the evidence of payment of the carrier invoice; a receipt issued by the
customer; order document; delivery docket; supplier’s invoice; evidence of transfer of foreign
currency for payment; drivers logs (tachograph); diesel records; an insurance policy with regard to
the international transport of the goods; also reliable third party documents; verification (by an
authority, or a notary) of the delivery to, or the arrival in, another Member State; a storage receipt
issued in the Member State of destination (or the storage contract) mentioning the goods specified
according to types, quantity, value and quantities; a certificate issued by a professional body of the
Member State of destination (for example: chamber of commerce or industry); a minute, or other
certification, of the escrow account of a solicitor; etc…
17
18
This list corresponds to the answers given by the Member States to the two questionnaires. It is not
exhaustive and contains no ranking.
See foot note 8 above.
22
3.2.3. Media and format of the documents
In most cases, Member States will accept the documents provided as proof in any available format.
Only a few Member States require the document to be provided through an electronic portal.
However, in the event of an audit, Member States require “readable” documents be made available
to the tax authorities. Therefore, it is for taxpayers to ensure that documentation is accessible either
electronically, or physically, to the tax authorities until the end of the limitation period laid down in
the national legislation.
In the context of intra-EU trade, some Member States have now issued national forms which may
be used by the supplier in certain circumstances (e.g. ex-works, and goods transported by the
supplier or the purchaser without a third party). In one case, the tax authority concerned underlined
that these forms are optional and that they constitute non-exclusive means of proof. They are meant
to help the supplier to provide evidence. Some tax authorities expressed an interest in this initiative.
From a business perspective, it was acknowledged that such forms were helpful in providing
certainty to the supplier in certain scenarios, but that care needed to be taken to avoid such
documents becoming mandatory in practice (e.g. in the event of an audit). Accordingly, the ability
to provide alternative proof should be available to suppliers.
3.2.4. Time to provide the documentation to the tax authorities
There are also differences between the Member states as to when the documentation should be
provided. For some Member States, in principle, all evidence must be provided at the time the
supply is carried out. In other Member States, part of the proof can be provided later (e.g. the VAT
number which was not known at the time of carrying out the supply).
In their reply to the first questionnaire, some Member States took the view that complete proof
should exist at the moment of an audit. One Member State observed that, as tax authorities must
have full evidence that the conditions were fulfilled at the time of delivery, the original signature of
the entrepreneur, or a person acting on his behalf, who receives goods must be given at the time of
delivery of the goods. A later confirmation, or a qualified statement, would not be possible in that
case. On this point, the Commission drew the sub-group members’ attention to the well-established
case law of the ECJ (in particular the Collée judgment).
From the perspective of business representatives any requirement that full information must be
available at the time of delivery is simply not practical. A supplier has a legitimate expectation that
he should have certainty as to the VAT treatment of a supply at the time an invoice is issued (which
will often occur before the delivery is physically made, or completed) and be able to VAT exempt a
supply, even if documentary proof that goods have left the Member State of dispatch is received
later.
3.2.5. Authentication of the documents
Some Member States have additional requirements regarding the necessity to have documents
signed. Specifically, these include a requirement for an original signature from the entrepreneur, or
a person acting on his behalf, who receives goods. In the case of signatures, providing them
23
subsequently is not accepted. On this point, the Commission informed sub-group members of a
preliminary request currently pending before the ECJ (C-492/13, Traum).
Some Member States have now issued a new national form which can (or should) be used by the
supplier, which can assist suppliers in providing proof (e.g. where the supplier, or customer uses
their own means of transport). Tax authorities concerned see these as a useful additional source of
information (e.g. because they contain a delivery address, vehicle type and registration number) and
tax auditors could expect that these forms are part of the body of documents that taxpayers should
be able to provide in the course of an audit. From their point of view, these forms may help the
taxpayers who don’t have any other available means, to establish the despatch or transport of the
goods from the Member State of supply to another Member State.
However, from a business perspective, any requirement to provide additional information in respect
of a supply (e.g. place of delivery, vehicle registration number, identity of the driver) could only
ever identify a potential fraud after the event and does not assist in the prevention of fraud, or
prevent a loss of tax if the supplier has taken all reasonable steps such that it passes the ‘knowledge
test’.
3.2.6. Proof value of the documents
The answers from business to the questionnaire have highlighted an important difference, compared
to tax authorities, in the status and the commercial weight placed on the receipt of payment for a
supply from a customer. Business would stress that this fact is a key element in their business
process giving a tangible indication that the intra-EU supply of goods has taken place according to
the contract agreed between the supplier and his customer.
Of course, as part of the normal commercial process, full or part payments can and are sometimes
requested from new or existing customers in advance of the delivery of goods. In such cases,
business accepted that receipt of a payment could not be used as part of the proof that goods have
been dispatched from a Member State.
However, Member States pointed out that in the current state of the legislation, payment as such is
not on its own adequate to document the physical movement of the goods properly as required by
Article 138(1) of directive 2006/112. Some Member States take the view that no single document
is sufficient to prove an intra-EU movement of goods and that it is essential to consider all the
commercial documentation available. In such cases, documentation from a third party (e.g.
transport documents, such as a CMR) are viewed as having more weight.
4.
LEGAL ISSUES
4.1.
General remarks
Given the absence of any specific provision in the VAT Directive, Member States are free to ask for
documents to support the right to exempt intra-EU supplies, in accordance with Art. 131 of that
directive, but bearing in mind the tax neutrality and proportionality principles.
24
Business representatives insisted that the level of demands from tax authorities to document intraEU trade should not systematically be upgraded because of recent fraud cases. One reason for not
escalating this is that very few fraud cases were discovered on the basis of missing documents. It
was generally acknowledged that fraudsters usually provide almost impeccable documentation and
are able to provide all sorts of documentation at short notice.
Nevertheless, in recent years, it seems that the line of reasoning developed by the Court of Justice
of the European Union in situations of fraudulent chain transactions, is also now being used in a
broader context where errors, or failure to comply with formal obligations, have been identified (see
case C- 284/11, 12 July 2012, para. 74). A number of requests for proof by tax authorities seem to
be driven more by fears of a worst case scenario rather than by a risk analysis strategy.
Precisely with the aim of fighting fraud, one Member State has made recent legislative changes
whereby the supplier is now required to document not only the transport of goods outside the
territory but also the fact that the goods have reached their destination19. Another Member State is
currently considering whether to introduce a requirement that, where the buyer pays in cash, or with
debit or credit card, the person collecting the goods will be required to present proof of identity to
the seller. If the person collecting the goods is not the owner of the business buying the goods then
the person will have to demonstrate that they have the legal power to represent the buyer, to the
seller.
Accordingly, it is clear that paper documents are still important to many Member States.
Furthermore, some Member States impose conditions as to the authenticity of the signature of the
person acquiring the goods. Setting aside the question of the proportionality of such demands (see
preliminary ruling request in case C-492/13), the EU digital agenda should be considered.
However, aspects relating to the EU digital agenda were not evoked by the sub-group participants.
4.2.
Guiding principles, Internal market context – Free movement of goods - ECJ Case law
“The position of economic operators should not be less favourable than it was prior to the abolition
of frontier checks between the members states, because such a result would run counter to the
purpose of the internal market which is intended to facilitate trade between them.
In the absence of intra-Community frontiers, the transitional intra-Community supplies schemes
should not be more cumbersome for economic operators than before. Whilst it is true that the
regime governing intra-Community trade has become more open to fraud, the fact remains that the
requirement for proof established by the Member States must comply with the fundamental
freedoms established by the EC treaty, such as, in particular, the free movement of goods.
Under Article 28(8) of the sixth Directive, the Member States may impose the obligations which
they deem necessary for the correct collection of the tax and for the prevention of evasion, provided
that such obligations do not, in trade between Member States, give rise to formalities connected
with the crossing of frontiers.” (C-409/04 Teleos, paras. 62-64).
19
See C-430/09, Euro Tyre, para. 38 quoting C-409/04, Teleos, para. 67 “… once the supplier has fulfilled his
obligations relating to the evidence of an intra-Community supply, where the contractual obligation to
dispatch or transport the goods out of the Member State of supply has not been satisfied by the
purchaser, it is the latter who should be held liable for the VAT in that Member State.”
25
4.2.1. What should be documented with regard to intra-EU trade?
“Apart from the requirements relating to the capacities of the taxable persons, to the transfer of the
right to dispose of goods as owner and to the physical movement of the goods from one Member State
to another no other conditions can be placed on the classification of a transaction as an intraCommunity supply or acquisition of goods” (C-409/04 Teleos, para. 70).
4.2.2. Who should provide the evidence of the intra-EU supply?
It is for the supplier of the goods to provide the proof that the conditions are met.
“Once the supplier has fulfilled his obligations relating to the evidence of an intra-Community
supply, where the contractual obligation to dispatch or transport the goods out of the Member State
of supply has not been satisfied by the purchaser, it is the latter who should be held liable for the
VAT in that Member State. See Teleos case C-409/04 para. 67.”(C-184/05 Twoh para. 26).
4.2.3. How is this proof to be provided and the documents been assessed?

In the Meilike judgment (C-262/09, 30 June 2011), the Court stresses that the assessment of
the means of proof must not be conducted too formalistically (para 46) (direct taxation).

“Transactions should be taxed taking into account their objective characteristics (see, in
particular, Optigen and Others, paragraph 44, and Kittel and Recolta Recycling, paragraph 41).
(…) since it is apparent from the order for reference that there is no dispute about the fact that an
intra-Community supply was made, the principle of fiscal neutrality requires – as the Commission
of the European Communities also correctly submits – that an exemption from VAT be allowed if
the substantive requirements are satisfied, even if the taxable person has failed to comply with some
of the formal requirements. The only exception is if non-compliance with such formal requirements
would effectively prevent the production of conclusive evidence that the substantive requirements
have been satisfied. However, that does not appear to be so in the main case”. (Case C-146/05
Collée, paras 30,31).

“The first subparagraph of Article 28c(A)(a) of the Sixth Council Directive 77/388/EEC of
17 May 1977 ... must be interpreted as precluding the refusal by the tax authority of a Member
State to allow an intra-Community supply – which actually took place – to be exempt from value
added tax solely on the ground that the evidence of such a supply was not produced in good time”
(C-146/05 Collée, first para of the operative part).
4.2.4. Good faith, proportionality
“However, any sharing of the risk between the supplier and the tax authorities, following fraud
committed by a third party, must be compatible with the principle of proportionality (Teleos and
Others, paragraph 58).
“That will not be the case if a tax regime imposes the entire responsibility for the payment of VAT
on suppliers, regardless of whether or not they were involved in the fraud committed by the
purchaser (see, to that effect, Teleos and Others, paragraph 58). As the Advocate General has
pointed out in point 45 of his Opinion, it would clearly be disproportionate to hold a taxable person
liable for the shortfall in tax caused by fraudulent acts of third parties over which he has no
influence whatsoever.
26
Accordingly, the fact that the supplier acted in good faith, that he took every reasonable measure in
his power and that his participation in fraud is excluded are important points in deciding whether
that supplier can be obliged to account for the VAT after the event (see Teleos and Others,
paragraph 66).” (Case C-271/06, Netto, judgment of 21.02.2008, paras. 23 to 25).
It is for national authorities and national courts to decide whether the supplier has taken every
reasonable measure in his power, or has exercised all due commercial care, when applying the
principle of proportionality. The objective elements are to be weighted according to the merits of
each case. But also when it comes to deciding whether an operator has acted in good faith, a
subjective aspect comes into play. In cases such as ‘ex works’ sales, or 3-party transactions, this
notion could be interpreted in a different way by tax authorities and national courts. Therefore,
suppliers are put in a risky situation against which the sole real remedy for a supplier (within the
current legal framework) is either not agreeing to the transaction, or trying to charge VAT of the
Member state of the supply to the purchaser and for the latter to ask for a reimbursement of the
VAT initially charged once adequate evidence is provided to the supplier.
However, business representatives emphasised that the commercial reality is that a supplier is
rarely, if ever, able to charge VAT on an intra-EU supply pending the receipt of acceptable proof
from his customer that the goods have been despatched or transported out of the Member state of
the supplier. The reality is that the customer will invariably refuse to pay the VAT element shown
on an invoice with the result that the supplier is left with the VAT liability irrespective of whether
he has passed the ‘knowledge test’ and despite a legitimate expectation that he should be able to
VAT exempt the supply. At best this dilemma leaves the supplier with a cashflow cost and, at
worst, means he bears the full risk of the VAT. In such cases, a business (especially an SME) might
feel that their only option is to decline the transaction.
4.2.5. Legal certainty: when is a business on the safe side?
The EUCJ stressed that: “...it would be contrary to the principle of legal certainty if a Member
State which has laid down the conditions for the application of the exemption of supplies of goods
for export to a destination outside the Community by prescribing, among other things, a list of the
documents to be presented to the competent authorities, and which has accepted, initially, the
documents presented by the supplier as evidence establishing entitlement to the exemption, could
subsequently require that supplier to account for the VAT on that supply, where it transpires that,
because of the purchaser’s fraud, of which the supplier had and could have had no knowledge, the
conditions for the exemption were in fact not met (see, to that effect, Teleos and Others, paragraph
50).” (Netto C-271/06, paras 26, 27).
In several EUCJ cases (e.g. C-409/04, Teleos, para. 48; C-273/11, Mecsek Gabona, para. 39) it has
been stressed, that the principle of legal certainty requires that taxable persons are informed about
their tax obligations before concluding a transaction.
5.
ROLE OF THE TAX AUTHORITIES, ADMINISTRATIVE COOPERATION
If the supplier is not able to establish the existence of an intra-EU supply, there is no obligation for
the tax authorities of the Member State of dispatch or transport to request information from the
authorities of the destination Member State in order to assist the supplier (C-185/04 Twoh, paras.
27
28-38). However, neither this case law, nor the administrative cooperation channels and rules,
prevent tax authorities from making use of data available to them in cases where a supplier was not
able to document an intra-EU supply. Some Member States of the group acknowledged that a better
use of administrative cooperation tools could be beneficial. 20 Nevertheless, it should be borne in
mind that most tax authorities do not have the necessary (human) resources to undertake such a
process.
5.1.
Role of third parties such as Transporters, shipping agents
The sub-group did not deal with this item in depth given the short time frame available and the fact
that, in the context of proof, ex-works supplies and arrangements involving ‘own transport’ were
perceived to be more problematic. However, it might be important to assess if third parties such as
transporters and shipping agents can play a larger role in giving trust and assurance and how this
can influence the compliance costs compared to the benefits for business and for the tax authorities.
5.2.
Special regime for ‘group’ companies
None of the 11 Member States that have answered the questionnaire allow specific and/ or lessburdensome requirements for proof on intra-EU movement of goods between members of the same
corporate group. Some members of the sub-group invoked the principle of equal treatment.
However, where a risk analysis was being undertaken by a tax authority (or horizontal monitoring is
applied ), the risk of fraud may be different between members of the same corporate group, or
between parties with a long established trading relationship, and that the tax administrations’
limited resources should be targeted accordingly.
6.
CONCLUSIONS
6.1.
General conclusion
Currently, there is a failure to properly implement the (transitional) intra-EU VAT system which,
taking into account the purpose of the internal market that is intended to facilitate intra-EU trade,
often cannot be fully complied with, even by legitimate businesses.
Moreover, all the above-mentioned suggestions do not change anything in regard to the
vulnerability of the present intra-EU trade VAT system to fraud.
Therefore, it is considered that the work of the Group on the Future of VAT and the VAT Expert
group should now concentrate on more promising scenarios, which necessarily imply legislative
changes to the existing rules for intra-EU trade in goods.
20
Question n° 8 of the first questionnaire: “Do you think that administrative cooperation arrangements can
be useful to check information provided by suppliers? Do you use administrative cooperation
arrangements at the request of suppliers?”
28
6.2.
Issues for further discussion in the EU VAT Forum (or a sub-group)
The discussions of the sub-group identified a number of areas, in relation to the intra-EU trade in
goods, that would be suitable for discussion either within the main EU VAT Forum, or as part of a
sub-group (e.g. in relation to the fight against fraud), as follows:
6.2.1. Optimizing existing documentation and controls in place in business, changing the
approach.

The diversity of approaches across EU Member States generates costs and increases risks for
business operating in different Member States. Ideally, further harmonisation /consistency should
be achieved.

The diversity in the approach to intra-EU trade can be a particular challenging for SMEs,
who generally have less access to information outside their own Member State and, therefore, may
not be aware of all their legal obligations. Further work in making information publically available
needs to be considered (e.g. discussions relating to the VAT Portal).

The exchanges in the group showed that lots of the documents and information requested by
tax authorities are already part of business controls. However, the answers to the questionnaire
show one important difference between businesses and tax administrations in relation to the status
and the commercial weight placed on the receipt of payment from a customer. Business stresses
that this fact is a key element in their business process giving a tangible indication that the intra-EU
transaction took place in accordance with the contract agreed between the supplier and acquirer.
Member States pointed out that in the current state of the legislation, payment as such is not
adequate to document the physical movement of the goods properly as required by Article 138 of
Directive 2006/112.

The requirement to provide proof in relation to an intra-EU supply of goods made under ExWorks delivery terms, or where there is no third-party transport carrier involved, can be particularly
problematic. The use of agreed documents in such cases to ‘certify’ that goods have left the
Member State of dispatch can assist in providing a supplier with some certainty as to the VAT
treatment, so long as these are optional and alternative evidence is still acceptable. The use of such
documents could be considered in conjunction with an appropriate application of the ‘knowledge
test’.
6.2.2. Increase the efficiency of tax administrations: Promote a risk based strategy in tax
administrations?
From the discussion, it emerged that a minority of Member States have introduced their own end-toend risk analysis system.
The advantage of such tools was stressed on numerous occasions by business. Some of the
advantages of a robust IT risk based analysis, put forward include:
- monitoring of registration conditions, reliable VIES numbers, efficient deregistration measures;
- enabling some transactions to be cleared in advance, or in real-time, which brings legal certainty
for both parties;
29
- enabling tax authorities to concentrate their resources on targeted audit when needed;
- improving the conditions for fair competition and the competitiveness of legitimate business;
- it is a cost effective investment: the costs of the system, resources and IT is compensated for by
an increase in tax yield/collected (in the experience of one Member State in four months);
- enabling authorities to know more about the taxpayer and to assess the risks across a broad range
of fiscal obligations and relationships. For example, the existence of a long lasting confidence
based relationship between businesses partners (or transactions within corporate groups) could be
taken into consideration by tax authorities.
6.2.3. Exercise of Controls by Businesses and Tax Authorities: Preventing and Tackling Fraud
Although the focus of the sub-group was the proof requirements for intra-EU supplies of goods,
assuming trade between legitimate businesses, it was recognised that the promotion of an effective
single market requires that both businesses and Member States work together to tackle and prevent
fraud.
Although there has been an increasing focus on proof and additional information requirements to
tackle fraud, such an approach can only detect fraud after the event. Accordingly, any expert group
on the fight against fraud should consider what measures could be taken to prevent fraud, which
may include the following:

what controls do businesses currently undertake as part of their internal risk management
process that demonstrate that they have taken every reasonable step to verify the good
standing of their customer and what would be considered best practice?;

how would, or should, those controls be different in the case of a new customer, or where
there is a long standing commercial relationship between the parties?;

are there practices, or internal controls, applied by businesses that would be of assistance in
tackling fraud if adopted by Tax Authorities?;

what best practices could tax authorities adopt to check the status of a taxable person before
it assigns that person a VAT identification number, or in the case of a change of ownership?;

how can communications between businesses and tax authorities be improved to aid the
effective fight against fraud, taking into account that the fact of it’s often changing nature?
6.3. CLOSING CONSIDERATIONS FROM A BUSINESS PERSPECTIVE
-
Business representatives believe that the level of demands from tax authorities to document
intra-EU trade should not be upgraded systematically because of recent fraud cases. One reason
for not escalating this is that very few fraud cases are discovered on the basis of missing
documents and that additional information can only detect fraud after the event, rather than
prevent it, as the fraudster is able to provide impeccable documents. Intelligence about the
companies seems to be more effective in identifying clients at risks.
30
-
There is also a need for further guidance to improve clarity and legal certainty in the
interpretation and practice of certain tax authorities following recent CJEU case law. The
concept of good faith is fairly subjective; the other conditions (for instance “all due commercial
care”) are also very general and leave a wide margin of interpretation to national tax authorities
as well as to national judges.
-
Business representatives believe that proof of an intra-EU supply of goods should, where
possible, be based on documents that are produced in the context of a legitimate commercial
arrangement. Documents that are not part of the normal commercial environment are easier for
the fraudster to replicate and place additional cost burdens on legitimate businesses.
-
Some participants raised questions about recent changes in national legislation leading to new
documents, or certificates, being used in certain circumstances. Provided that those measures
are in line with EU law, the trend towards more complex and demanding procedures in the
Member States as proof of intra-EU supplies is not a good signal as compliance costs are
involved. It could be a deterrent for SME’s in particular to develop their activities within the
EU.
-
Business representatives believe that a supplier should have certainty as to whether he can VAT
exempt a supply at the time at which an invoice is raised. Although the option of charging VAT
and then crediting such VAT when additional proof of an intra-EU supply has been provided by
a customer is often suggested, the commercial reality is that this puts the supplier in the worst of
both worlds in that the customer will invariably refuse to pay that VAT and the supplier is left
with the risk of being liable for VAT if the proof is not provided (notwithstanding having taken
reasonable steps to verify the good standing of his customer).
31
Sub-group ‘Proof of exemption of intra-EU supplies’
Organisations
1.
2.
3.
4.
5.
6.
7.
8.
9.
BUSINESSEUROPE
Confederation of British Industry (CBI)
Confédération Fiscale Européenne (CFE)
European Express Association (EEA)
European Precious Metals Federation (EPMF)
Federation of European Accountants (FEE)
International VAT Association (IVA)
Siemens
Tax Executives Institute (TEI)
Member States
10. Austria
11. Belgium
12. Bulgaria
13. Denmark
14. Estonia
15. Germany
16. Hungary
17. Ireland
18. Italy
19. Lithuania
20. Nederland
21. Poland
22. Portugal
23. Slovakia
24. Spain
32
EUROPEAN COMMISSION
DIRECTORATE-GENERAL
Value Added Tax
VAT Expert Group
th
taxud.c.1(2014)27553 – EN
VAT EXPERT GROUP
VEG NO 028
Option 1B - Sub-Groups report - Consignment stock
33
CONTENT
Page
1. Introduction and mandate
3
2. Acknowledgement and way of working
3
3. Current state description – Problems and issues
4
4. Relevant legal framework
6
5. Current approaches: survey and summary
8
6. Assessment of the current state
12
7. Suggestion for a common simplification
14
8. Conclusions and recommendations
23
9. Next steps
24
Annex A
Overview of meetings and conference calls and of participants of the subGroup and organisations that they represent
Annex B
Survey of the current situation in Member States [Excel file available in
CIRCABC]
34
1.
INTRODUCTION AND MANDATE
The Commission has been carrying out a dialogue with Member States in the Group on the future
VAT (“GFV”) and stakeholders in the VAT Experts Group (“VEG”) examining the different
possible ways to implement the destination principle in intra-EU trade of goods between businesses.
During the discussions several Member States and some members of VEG considered that there
should also be an option which would consist in improving the current rules without modifying
these fundamentally.
The Commission prepared a document setting out problems with the current system on the basis of
the contributions received from stakeholders during the public consultation on the Green Paper on
the future of VAT. Members of GFV and the VEG identified three priority areas in which
improvement of the current rules should be undertaken.
As regards the VAT treatment of consignment stock, which is one of the priority areas, the
document mentions as problems in the first place that there are no clear and simple rules for
consignment stock and, secondly, that only some Member States provide simplification measures
that allow non-established businesses holding a stock of goods not to register for VAT. The third
problem that is mentioned is that there are large divergences in consignment stock arrangements
between Member States. This seems to be a result of the first two problems.
The Commission called members of GFV and VEG to take part in two sub-groups, one dealing with
the VAT treatment of chain transactions and the other one with VAT treatment of consignment
stock (“the sub-Group”). The sub-groups’ aim was to discuss the problems faced by businesses and
tax administrations across the EU, look at practical examples and identify possible ways to address
those problems. The sub-groups were required to report back with their recommendations to both
GFV and VEG by the end of 2013. This is the report on Consignment Stock.
2.
ACKNOWLEDGEMENT AND WAY OF WORKING
Once acknowledged the merit of a more harmonised VAT treatment of consignment stock the subGroup itself established agendas for each meeting and, more generally, how to identify the different
systems in place in Member States, asses them and process alternatives for recommendations. The
members of the sub-Group communicated with each other also by means of e-mails, bilateral calls
and conference calls. In Annex A the meeting dates, conference calls, participants and the
organisations that they represent are mentioned.
The sub-Group learned that the control and audit aspect for tax administrations is of the same
importance as simple compliance, flexibility and certainty for business operators.
It was decided to make an assessment of the current state of affairs in all Member States first. This
was done via a survey that should make clear how big the variances between the Member States are
and what exactly these variances are. The survey, enclosed as Annex B, has no official status and
does not intend to provide the reader with definite answers on the VAT treatment of transactions in
the various Member States.
35
For the purpose of the survey a list of questions on the VAT treatment of consignment stock and
more in particular call-off stock was prepared. In view of time it was decided to prepopulate the
survey with input from external consultants rather than let the Member States start from zero.
The first draft answers to the questionnaire were provided by a network of independent indirect tax
lawyers known as The European VAT Club for which hard work we are thankful for. For the Baltic
countries EY Lithuania coordinated the input and we thank them for this as well. The input from the
consultants was then submitted to the Member States for validation. You will find the results of the
survey in Annex A.
The various regimes applicable in the Member States were then grouped into four main types of
approach. The representatives of industry were then asked to give an assessment of all four types of
approach, using a fixed set of criteria. The above steps were set in order to see whether there is one
type of approach that could potentially serve as a best practice.
In the course of the process the discussions concentrated on finding a solution for call-off stock.
Call-off stock forms a species of consignment stock; the term ‘call-off stock’ is reserved for
consignment stock situations where the Buyer is already known. Reference is made to Section 5.
Apart from these ‘grouping’ and assessment exercises, a more fundamental debate was held at the
legal side. The question was asked whether it would be possible to find a potential common
approach as an alternative to the existing (widely varying) approaches. The sub-Group believes that
this is possible, although not every member of the sub-Group believes that the result can be
achieved within the existing legal framework of today’s VAT Directive21.
Finally, the legal analyses, the survey, the types of approach, the assessments and the common
simplification were discussed within the sub-Group. This has led to a set of conclusions and
recommendations as well as suggested next steps.
3.
CURRENT STATE DESCRIPTION – PROBLEMS AND ISSUES
According to the Commission documents GVF 022 and VEG 013 a consignment stock is a special
type of contract under which the Supplier sends goods to his Buyer without transferring the
ownership of the goods to the Buyer. The goods are simply put at the disposal of the Buyer, usually
in the Buyer’s premises who can take the ownership of the goods at the time he needs them. The
supply of the goods takes place after the transport.
According to www.businessdictionary.com a consignment stock is defined as “goods in possession
of a party that is not the goods’ owner or titleholder”. Similar definitions can be found in several
other sources.
A number of Member States, but not all, recognize a distinction between call-off stock and
consignment stock. Below follows a description of both. We note that civil law systems and
definitions in Member States differ, hence, the description below is a working definition for the
purposes of the work of this sub-Group only. Additionally, we mention the problems and issues that
Member States and businesses encounter with both types of stock.
21
Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (Recast)
36
The main issue that industry faces is that there is no harmonization of the VAT rules applicable to
consignment stock. This means that it puts a high burden on industry to be compliant, leading to
high costs and large risks for mistakes. The high costs are triggered by the need to obtain expert
advice per country and setting the transactions up in administrative systems.
The varying obligations per country are particularly onerous for small and medium-sized enterprises
(“SMEs”). For larger businesses the issues exist in the fact that they are doing business in many
countries and with higher volumes.
Member States indicate that their purpose is also to assure the auditability of each transaction and,
in order to achieve that, to have all necessary information about the goods which are stored on their
territory. Due to this non-harmonization, transactions do not always receive the same VAT
treatment in the different Member States and information is not always made available correctly.
The latter adversely affects the completeness, reliability and comparability of the VIES data.
Therefore, Member States have also for reasons of VAT control an interest that consignment stock
and call-off stock transactions are treated in a similar way in the Member states.
Call-off stock
Several industries traditionally apply call-off stock scenarios. This is the model where a Supplier
transfers goods to a known Buyer without transferring the ownership of the goods. The Buyer has a
right to take the goods from the stock at his own discretion. Supplier invoices Buyer periodically for
the goods taken out of the stock by the Buyer. Quite often the invoice is drawn up by the Buyer
himself instead (self-invoicing).
In domestic relationships, the use of this model does not lead to any specific VAT issues. But once
the Supplier and the Buyer are situated in different Member States, VAT issues arise. The main
issue that industry faces is that there is very little uniformity in the application of VAT. Some
Member States require the Supplier to register for VAT in the country of the Buyer and to account
for a deemed intra-EU acquisition when the goods arrive into that Member State and then account
for VAT on the subsequent domestic supply to the Buyer. Other Member States allow for simply
applying the rules for an intra-EU acquisition by the Buyer.
There are many variances and different requirements in Member States to treat the supply of goods
in a call-off stock scenario as an intra-EU supply by the Supplier and an intra-EU acquisition by the
Buyer. These variances are further explained and illustrated in Section 5, where the approaches of
the Member States have been grouped, and in Annex B.
Consignment stock
A more general concept of stock that is often applied by industry is consignment stock, which
concept comprises also call-off stock situations. Consignment stock stands for the model where the
Supplier moves stock into a Member State where he is not established.
The differentiating factor between call-off stock and other kind of consignment stock is that with
the latter type of consignment stock, the identity of the Buyer is not known at the time when the
goods are moved by the Supplier to another Member State. Only very few Member States allow this
transaction to be treated as a normal intra-EU supply carried out by Supplier and an intra-EU
acquisition carried out by Buyer. Most Member States, including those that recognise call-off stock
as giving rise to a normal intra-EU transaction, require the Supplier to be VAT registered in this
situation and to account for an intra-EU acquisition when the goods arrive.
37
4.
RELEVANT LEGAL FRAMEWORK
Article 14(1) of the VAT Directive provides that a ‘supply of goods’ shall mean the transfer of the
right to dispose of tangible property as owner. A supply of goods dispatched or transported from
one Member State to another Member State by or on behalf of the vendor or the person acquiring
the goods for another taxable person is an exempt intra-EU supply under Article 138 of the VAT
Directive. The mirroring transaction in the Member State where the transport ends is an intra-EU
acquisition of goods by the Buyer. Article 20 provides that the “intra-EU acquisition of goods”
shall mean the acquisition of the right to dispose as owner of movable tangible property dispatched
or transported to the person acquiring the goods, in a Member State other than that in which
dispatch or transport of the goods began.
In order to ensure that the continuity of fiscal sovereignty is maintained the provisions on intra-EU
transactions have been built so that at the moment that an exempt supply occurs in the Member
State of Departure, a taxable acquisition takes place in the Member State of Arrival. At any moment
either of these Member States is independently able to tax the intra-EU transaction.
According to Article 63 the chargeable event shall occur when the goods are supplied.
Consequently, the intra-EU supply takes place when the right to dispose of the goods as owner is
transferred.
According to Article 68 the chargeable event occurs when the intra-EU acquisition of goods is
made. The intra-EU acquisition of goods shall be regarded as being made when the supply of
similar goods is regarded as having been effected within the territory of the relevant Member State.
According to the Court of Justice of the European Union (“CJEU”) in Case C-118/11 (Eon Asset
Management) the concept of a supply of goods does not refer to the transfer of ownership in
accordance with the procedures prescribed by the applicable national law, but covers any transfer of
tangible property by one party which empowers the other party actually to dispose of it as if the
recipient were the owner of the good. In that case the Court went on to say that where a lessee is to
possess all essential powers of ownership and, in particular, that substantially all rewards and risks
incidental to legal ownership are transferred and that the present value of the amount of the lease
payments is practically identical to the market value of the property, the transaction must be treated
as an acquisition of goods.
The concept of the transfer of the right to dispose of goods as owner is in practice to a certain extent
open to interpretation. The owner can give the recipient rights of a different grade or different
bundles of rights i.e. the ownership can be transferred gradually.
In order to be a normal intra-EU supply of goods two conditions must be met: the right to dispose of
the goods as owner must be transferred and the transport to another Member State must be ascribed
to this supply (CJEU in Case C-430/09) i.e. the transport must be ascribed to the transfer of the
right to dispose of the goods as owner. This applies naturally also to the intra-EU acquisition.
If the transfer of the right to dispose of the goods is not ascribed to the transport of the goods to
another Member State, then the transfer is, according to the main rule, a deemed intra-EU
transaction.
According to Article 17(1) of the VAT Directive the transfer by a taxable person of goods, forming
part of his business assets, to another Member State shall be treated as a supply of goods for
consideration. “Transfer to another Member State” is defined as the dispatch or transport of
movable tangible property by or on behalf of the taxable person, for the purposes of his business, to
38
a destination outside the territory of the Member State in which the property is located, but within
the EU. The transfer of the goods is deemed to be an exempt intra-EU supply according to Article
138(2)(c), carried out by the taxable person in the Member State of Departure. The situations which
are not considered to be transfers are listed in the second paragraph of Article 17.
The application by the taxable person of “own” goods in the Member State of Arrival is deemed to
be an intra-EU-acquisition according to Article 21 of the VAT Directive. The application by a
taxable person, for the purposes of his business, of goods dispatched or transported by or on behalf
of that taxable person from another Member State, within which the goods were produced,
extracted, processed, purchased or acquired within the meaning of Article 2(1)(b), or into which
they were imported by that taxable person for the purposes of his business, shall be treated as an
intra-EU acquisition of goods for consideration.
There would be a mirroring transaction subject to tax in the Member State of Arrival even without
Article 21. According to Article 23 of the VAT Directive Member States shall take the measures
necessary to ensure that a transaction which would have been classified as a supply of goods if it
had been carried out within their territory by a taxable person acting as such is classified as an intraEU acquisition of goods.
Articles 17 and 21 of the VAT Directive apply to situations where the supply of the goods, i.e. the
transfer of the right to dispose of them as owner, only takes place after those goods are transferred
from one Member State to another. This means that the transport of the goods is not based on a
sales agreement of the goods. The transfer of the right to dispose of the goods as owner carried out
later in time is in this situation a domestic supply carried out by the supplier.
The reason for stipulating in the Directive that transfers of own goods are treated as intra-EU
transactions is that the tax administrations in the Member States of arrival of the goods are notified
and are able to monitor the subsequent supply of the goods or, in the case of capital goods, to
control the exercising of the right of deduction and its possible subsequent adjustment. Without the
provisions of Articles 17 and 21 (and 23) such transfers would escape effective monitoring for VAT
purposes.
The problems and issues that were described in Section 3 follow from the question when an intraEU supply and acquisition take place and by whom. Does the deemed intra-EU supply and
acquisition of Article 17 and 21 already take place at the time that the goods are transported by the
Supplier from one Member State to a call-off stock or consignment stock in another Member State?
Or could a normal intra-EU supply and acquisition take place after that transport, either at the time
that the goods are put into the stock or at the time that the Buyer takes the goods from the stock?
As explained above, the answer to this question depends on the fact whether the transport of the
goods to another Member State is ascribed to the transfer of the right to dispose of the goods as
owner or whether the transfer of that right takes place after the transport. The Member States have
different interpretations of this.
5.
CURRENT APPROACHES: SURVEY AND SUMMARY
The sub-Group decided to conduct a survey of the current practices in the EU Member States. The
questions were designed to firstly identify the VAT treatment of a very simple “call-off stock”
39
scenario and then to ask whether changes to the basic scenario would shift the VAT treatment in the
case.
5.1
Basic scenario
This basic scenario can be illustrated the following way and covers question 1 to 6 in the
questionnaire:
MS 1
Supplier
MS 2
Warehouse
Buyer
Following a discussion in the sub-Group we designed a questionnaire which the members of the
sub-Group pre-populated in order to accelerate the validations from the Member States.
To date the pre-filled answers were verified by 24 Member States; the coverage of the survey
includes all Member States. Cyprus, Latvia, France and The Netherlands did not respond. It was
assumed by the sub-Group that these Member States had accepted the pre-filled answers.
Below, you will find a diagram that illustrates the overall approach for the 28 Member States,
taking the answers to questions 1 through 6.The divergence in treatment is immediately noticeable.
The Member States’ approaches seem to divide into four different categories. The summary below
reflects the sub-Group’s analysis of the Member States’ practices.
40
Q1: Does the transfer of goods to warehouse in constitute a
deemed EU acquisition of own goods in MS2 for the supplier?
YES (9 MS)
Q2: Is there a reverse charge in
place on the actual local supply
between Supplier and Buyer in
MS2?
YES (4 MS)
Belgium
Portugal
Spain*
Sweden
NO (5 MS)
Denmark
Germany
Greece
Luxembourg
Malta
Model 2
Model 1
NO (19 MS)
Q3: Does the transfer of goods to warehouse in
MS2 constitute an Intra EU Supply / Intra EU
acquisition at the time when the goods arrive in
the warehouse?
YES (8 MS)
Q5: Is there a time-limit
within which the goods needs
to be taklen out by Buyer?
Model 3
YES (1 MS)
Lithuania
NO (7 MS)
Bulgaria
Cyprus
Czech Republic
Estonia
Finland
Latvia
UK
NO (11 MS)
Q4: Does the transfer of goods to
warehouse in MS2 constitute an
Intra EU Supply / Intra EU
acquisition at the time when the
goods is taken out of the
warehouse by the buyer?
YES (11 MS)
Q5: Is there a
time-limit within
which the goods
needs to be
taklen out by
Buyer?
YES (4 MS)
Austria
France
Italy
Poland
NO (0 MS)
Model 4
No (7 MS)
Croatia
Hungary
Ireland
Romania
Slovakia
Slovenia
The
Netherlands
* On a case by case basis, if the contractual relationships show that the customer may dispose of the
goods as an owner when they are dispatched to Spain, this would be treated as a direct intra-EU
acquisition by the customer (changing Q1 and Q2 to "No" and Q3 to "Yes"). Consequently, Spain
may belong to Model 3 on a case-by-case basis.
The four Models can be named and described as follows:
Model 1: Deemed intra-EU acquisition (Supplier to warehouse) – [no reverse charge]
(warehouse – Buyer)
41
This is the basic Model with no special schemes in place. The transfer to the warehouse is simply
treated as an acquisition of own goods. As a consequence, the Supplier would have to register for
VAT in MS2 and account for VAT on the acquisition. The subsequent local sale from the
warehouse to the Buyer is subject to normal VAT.
Model 1 is currently in use in 5 MS as indicated above.
Model 2: Deemed intra-EU acquisition (Supplier to warehouse) –[reverse charge] (warehouse
– Buyer)
In Model 2, the transfer from MS1 to MS2 is still treated as a deemed intra-EU transaction.
However, the local sale is now subject to a reverse charge and in most Member States a VAT
registration by Supplier in MS2 is required.
Model 2 is currently in use in 4 MS as indicated above. In three of the four Member States applying
it Model 2 seems to be a general reverse charge scheme for non-established suppliers rather than a
consignment stock simplification.
Model 3: The transparent warehouse – Intra-EU acquisition by the Buyer at the time when
the goods arrive at the warehouse
In Model 3, there is no deemed intra-EU transaction but a normal intra-EU supply by the Supplier
and an intra-EU acquisition by the Buyer at the time the goods are transferred to the warehouse.
Model 3 is currently in use in 8 MS as indicated above. Out of these 8 Member States, one Member
State has a time limit of one year in place.
Model 4: The transparent warehouse – Intra-EU acquisition by the Buyer at the time when
the Buyer takes the goods out of the warehouse
In Model 4, there is again no deemed intra-EU transaction. In this Model the normal intra-EU
supply and acquisition are considered to take place at the moment that the Buyer takes the goods
out of the warehouse.
Model 4 is currently in use in 11 MS as indicated above. Out of the 11 MS, 4 MS have a time limit
in place ranging from 90 days to two years.
These four Models will be used in the rest of the analysis as they represent the two conceptually
different approaches combined, with two distinct differences. Some simplification systems applied
by Member States may not be fully covered by these four Models, but this classification gives us
the possibility to structure the analysis.
The first conclusion from the study is clearly that the current VAT treatment is fairly diverse, to the
extent that the basic scenario alone essentially has four different VAT treatments and all of these
four Models have a fair amount of uptake in the Member States. From a business perspective this
makes it difficult to translate commercial decisions of setting up a consignment stock operation with
a major buyer or subcontractor to a streamlined VAT treatment. Member States also have concerns
about the different provisions in force because these may well affect the completeness, reliability
and comparability of the VIES system.
42
A full summary of the survey is in Annex B to this Report.
5.2
Variations of the basic scenario
The questionnaire included also questions with which the group wanted to find out whether the
answers to questions 1 through 6 would change if slight changes to the basic scenario were made
i.e. whether the simplification procedure could be maintained or not. If not, the VAT treatment
would revert to the Model 1 (or Model 2) situation. As a consequence a VAT registration would be
needed.
The replies to question 9 revealed that the simplification is limited to a specific type of goods in
only one MS. The type of goods is not a decisive factor in setting up a simplification procedure.
Likewise, only two MS indicated in their answers to question 9 that, if the buyer was not
established, but only VAT registered in MS2, the simplification would not be available.
The decisive factors are rather changes in the facts concerning the Supplier (VAT registration), the
management of the warehouse (the Supplier assumes control instead of the Buyer) and the Buyer
(either having more known Buyers or not knowing the Buyer at the time of transportation or not
knowing the Buyers in advance). These variations are explained below.
Variation 1 – Supplier is already registered as a non-established taxable person in MS2
In question 7 the MS were asked to indicate whether a current VAT registration in MS2 of the
Supplier would change the answers. In half of the Member States (14 MS) the answer was ‘Yes’:
this would change the treatment and the simplification would not be available. The changes
appeared in 2 of the 4 MS applying Model 2, 4 of the 8 MS applying Model 3 and 8 of the 11 MS
applying Model 4. Only 9 MS would maintain the simplification.
Variation 2 – Supplier (or a third party on his behalf) manages the warehouse
Question 8 inquired whether the VAT treatment would change if the Supplier managed the
warehouse. In 10 MS the response was that this would change the treatment and the simplification
would not be available. The changes appeared in 2 of the 4 MS applying Model 2, 3 of the 8 MS
applying Model 3 and 5 of the 11 MS applying Model 4. It should be noted that there is only partial
overlap between the 14 MS that answered ‘yes’ in question 7 above and the 10 MS mentioned here,
which is a further illustration of the fact that the current practices are very diverse.
Variation 3 –Several known Buyers
In question 15 we have released the restriction on the number of Buyers by asking about the
consequences of having multiple known Buyers. The consequence is that this would change the
VAT treatment in 15 MS, leaving only 8 MS with unchanged simplification procedures in place.
The changes appeared in 1 of the 4 MS applying Model 2, 5 of the 8 MS applying Model 3 and 9 of
the 11 MS applying Model 4.
Variation 4 – the Buyer is not known at the time of transportation
43
Question 16 concerns a situation where the Buyer is not known in advance. In this situation the
VAT treatment would change in 18 MS applying Model 2, 3 or 4, leaving only 2 MS with full
simplification under Model 4 and 3 MS with the limited Model 2-simplification.
Variation 5 – Several unknown Buyers
Question 17 concerned a case of a consignment stock situation where the Buyers are not known in
advance. In this situation the VAT treatment would change in 17 MS, leaving only Bulgaria, Ireland
and The Netherlands with full simplification and Sweden, Portugal and Spain with a limited
simplification consisting of a reverse charge.
A full summary of the survey is in Annex B to this Report.
6.
ASSESSMENT OF THE CURRENT STATE
6.1
Assessment criteria for businesses
In order to be able to give a more structured assessment of the identified current models the below
list of simplification criteria, in order of importance, was put together, from the perspectives of
industry:
-
1. compliance, filing obligations and compliance burden (costs, additional work)
2. financial aspects and cash flow
3. systems and automation aspects
4. legal certainty
5. accounting obligations
The representatives of the three business organisations which were members of the sub-Group did a
limited survey and discussed the topics with relevant expert groups within their respective
organisations or took soundings from individual advisors or business representatives. In doing this,
they attributed a score between 1 and 3 to the four current Models in order to be able to compare the
feedback. A score of 3 would indicate that the model is conceived as favourable, 2 would be
average and 1 would be below average.
6.2
Outcome of the assessment by business representatives
The business organisations representatives have assessed the models both from the perspective of
the Supplier and the Buyer as the Buyer needs to find the model attractive before entering into a
consignment or call-off stock arrangement. Below we have inserted the consolidated results of the
assessment. Due to the limited statistical basis, we have illustrated the answers by colour coding
(3=dark blue; 2=yellow; 1=dark orange).
44
Model 1
Model 2
Model 3
Model 4
Businesses – Supplier
1. compliance, filing obligations and
compliance burden (costs, additional
work)
4. legal certainty
Average
Businesses – Buyer
1. compliance, filing obligations and
compliance burden (costs, additional
work)
4. legal certainty
Average
Business overall average
Although the number of responses cannot be classified as representative for the European business
community, the results do show a trend. This trend is favouring Model 4. In general, Model 4 is
seen as a significant simplification and has beneficial cash flow aspects.
From a Supplier perspective Model 4 provides a simplification due to the fact that the VAT
treatment follows the commercial transactions and the Supplier would not need to get registered.
From the Buyer side, Model 4 is attractive for the same reasons.
As a consequence Model 4 combines the advantages of treating call-off stock transactions as intraEU supplies, linking the taxable event to the moment in the buy/sell process when the parties
exchange invoices for business reasons. This Model does not create VAT reporting that is not
aligned with business processes.
Model 4 is also attractive for SMEs as it gives them the level playing field of being able to enter
into a call-off stock set-up in order to meet the commercial requirements from their Buyers without
having to get registered or without a separate document flow.
However, Models 1 and 2 are from the perspective of the Buyer similar to normal business
transactions and therefore these Models are also perceived to be attractive from a VAT perspective.
Having said this, Models 1 and 2 do in reality not align the VAT treatment with the commercial
reality of consignment stock, but are rather seen as a more general solution that also caters for
warehouses.
6.3
Assessment by Member States representatives
45
The fact that the Member States have interpreted the provisions of the VAT Directive applicable to
consignment stock quite differently and apply various kinds of provisions is in itself a shortcoming
which complicates the VAT system and creates additional compliance costs and legal uncertainty
for businesses. These differences are also problematic as regards a VAT neutral treatment of EU
businesses.
The present situation is also problematic for Member States. The uncertainty of the correct
interpretation of the Directive may have prevented Member States from providing clear legislation
or guidance on consignment stock which would have fulfilled both simplification and control needs.
The information collected on the intra-EU supplies and acquisitions should mirror each other in
order to enable effective cross-checking. Where the Member State of Departure and the Member
State of Arrival apply different systems as regards goods placed in consignment stock, the
information received on intra-EU supplies and acquisitions might not be comparable e.g. as regards
timing. In addition as some Member States apply simplification systems where the recapitulative
statements and VAT returns on intra-EU transaction are only given at the time when the goods are
taken out of the warehouse, there may well be a significant delay before the Member State of
Arrival is informed about the arrival.
It is obvious that the different provisions in force in Member States can affect the completeness,
reliability and comparability of the VIES system, and create possibilities or risks of fraud.
During recent years it has been considered important to speed up the collection and exchange of
information on all intra-EU-transactions by reducing the period for declaring intra-EU-supplies in
recapitulative statements and the period for transmission of this information between Member
States.
It is clear that a common solution is needed.
The common simplification model should cater for the control needs of the tax authorities. The tax
authorities of the Member State of Arrival should have information on the goods transferred from
another Member State to a call-off stock. This information would enable the Member State of
Arrival to carry out specific controls where considered necessary. The Member State of Arrival
should receive this information at least within a time period in which it would receive the
information based on normal recapitulative statements for deemed intra-EU supplies.
Member States have differing views on what kind of a simplification is possible according to the
present rules of the VAT Directive and have different systems in place. Discussions have been
carried out between the Member States without reaching a common view on this subject. In addition
it may be difficult to achieve a fully harmonised and detailed system through non-legislative means.
The common simplification should be realized by amending the VAT Directive.
7.
SUGGESTION FOR A COMMON SIMPLIFICATION
7.1
The case for change
As stated above, the variances between Member States as to how call-off stock transactions are
treated cause problems both to businesses and Member States.
Therefore the sub-Group proposes to introduce the following common simplification of call-off
stock transactions. Taking into account the various interpretations of the VAT Directive by the
46
Member States, the suggestion is built on the assumption that the common model would be
stipulated in the Directive and possibly, in addition, in the VAT Implementing Regulation 22.
7.2
Summary of the suggested simplification
7.2.1. Scope of the simplification
The simplification applies to call-off stock transactions as described in Section 3. This means that
the Buyer has to be known at the time that the transport begins and that he has to have a right to
take goods out of the warehouse at his own discretion. This includes the situation where there are
several identified Buyers. In that particular situation it is required that the goods are identified as
destined for an identified Buyer. For the application of the simplification, it is irrelevant who
manages the warehouse but the Buyer should be aware of the quantities of goods available for him
in the warehouse.
The simplification could be applied only if the Supplier is not established and the future Buyer is
registered in the Member State where the warehouse is located.
Consequently, the simplification would cover variations 1 through 3 of the basic scenario but not
variations 4 and 5, as described in Section 5.2.
7.2.2. Description of the simplification
The transfer of goods to another Member State where the call-off stock is held is ignored. If and
when the Buyer takes goods from the call-off stock two taxable events are considered to take place:
(i) an intra-EU supply of the goods carried out by the Supplier and (ii) an intra-EU acquisition of
the goods carried out by the Buyer.
The Supplier would not be required to get registered for VAT and account for a deemed intra-EU
acquisition nor for a domestic supply of goods in the Member State where the call-off stock is
located. Neither would he be required to account for a deemed intra-EU supply in his recapitulative
statement.
All regular obligations concerning normal intra-EU transactions would apply. This would mean:
-
-
in the VAT return covering the period during which the goods have been taken out of the
stock, the Supplier accounts for an intra-EU supply and the Buyer accounts for an intra-EU
acquisition;
the Supplier should report the intra-EU supply in his recapitulative statement;
the time limit for issuing an invoice concerning the intra-EU supply would start running
when the goods are taken out of the stock.
7.2.3. Specific administrative requirements
The following specific administrative obligations would be laid down:
22
Council Regulation (EU) No 282/2011 of 16 March 2011 laying down implementing measures for Directive
2006/112/EC on the common system of value added tax (Recast)
47
-
-
The Supplier should keep a register as described in Article 243(1) of the VAT Directive of
all goods dispatched or transported to a call-off stock in another Member State. This register
must also mention the address(es) where the call-off stock is. The Buyer would be required
to keep storage accounts as described in Article 243(2) of the VAT Directive, if he manages
the warehouse where the goods are stored. If the warehouse is managed by the Supplier or a
third party on his behalf this obligation would be on him.
The Supplier would be required to give a notification of the VAT number of the Buyer to
the Member State of Departure.
Depending on the notification option to be chosen, also the Buyer would have to give a
notification of the VAT number of the Supplier to the Member State of Arrival.
There are two options on which the notification obligation could be built:
1.
A pre-notification before the supplier starts to transport goods to a new call-off
customer and a notification when the call-off stock arrangements with that customer
cease. No notifications should be given during the time when the call-off stock
arrangements with a notified customer apply. There are two different alternatives for
stipulating this obligation:
 including the VAT identification numbers in the recapitulative statement (see more
in Section 7.3.3),
 a separate notification by the Supplier to his tax administration. In this case also the
Buyer would have an obligation to notify his tax administration of the VAT number
of the call-off supplier before shipments to the stock begin and when the call-off
arrangements end;
2.
A monthly notification in a recapitulative statement covering all call-off customers to
which the Supplier has transported goods during each month.
Neither of these notification possibilities needs to contain values of the transactions. The
notifications would simply be a list of the VAT registration numbers of the Buyers at the disposal of
which the call-off stock is put.
If the other conditions are adopted, there seems not to be enough reasons to set a time limit.
The possible rules concerning goods which disappear from the warehouse should be discussed as
well.
7.2.4 Conclusion
With all the specific obligations and details of the system suggested above it could be concluded
that the fact that the goods would be sent to another Member State under a common simplification
scheme would not increase possibilities for fraud but would instead be a considerable step forward
compared to the present situation. This would be due to several reasons.
The harmonised simplification model suggested above would be a substantial step forward, also as
regards businesses. The harmonised system would reduce the administrative burden of businesses
and offer equal treatment and legal certainty in all Member States. The obligation to keep a register
and storage accounts would not mean additional administrative burdens for the Supplier and the
Buyer because they would do it already for commercial and bookkeeping reasons. The obligation to
48
pre-notify the VAT numbers of call-off stock customers should generally not be a considerable
burden for Suppliers.
7.3.
The reasoning behind the suggested simplification
7.3.1 The justification and scope of the simplification
A call-off stock was defined in Section 3 as a situation where the Supplier transfers goods to the
Buyer without transferring the ownership of the goods and where the Buyer has a right to take
goods out of this stock at his own discretion.
Detailed conditions applicable to call-off stock are normally agreed between parties. The contract
specifies usually e.g. where the goods should be kept, the quantities of goods to be continuously
kept in the stock by the supplier and who is the party carrying the risk for damages to the goods in
the warehouse. The supplier is normally given a right to make audits in the warehouse.
Because there is no binding sales agreement yet, the Buyer does not have an obligation to take the
goods and the Supplier has a right to e.g. return the goods to the Member State of Departure. In
practice though, since the Supplier is contractually obliged to keep certain amounts of goods in
stock, he usually only takes goods from the warehouse if the Buyer rejects them.
The situation of a call-off stock could be seen economically as comparable to a normal sales
contract and could, in a way, be seen as one stage in transferring the ownership. The goods are in a
warehouse managed by the Buyer, the Buyer has an exclusive right to take goods out of the
warehouse and as of that moment the Buyer may also carry the risk for damages to the goods.
This could be seen as an argument for treating this specific situation similarly to cases where the
goods are supplied to Buyer without applying a call-off stock. Similar treatment would mean that
instead of an intra-EU transfer and a following domestic supply, only a normal intra-EU supply and
acquisition would take place.
In the case of a call-off stock as described above the future buyer is always known at the time of the
transport. The question arises whether the simplification should cover other kinds of consignment
stock. If the future buyer is not yet identified at the time of the transport, there is no Buyer with the
right to take goods from the warehouse at his discretion. When the Buyer is found and the sales
agreement has been made, either the Supplier or the Buyer or a third party on behalf of either
transports the goods from the warehouse.
The argument of comparing the transfer of goods as regards call-off stock to a normal supply of
goods to the buyer does not apply as such to other kinds of consignment stock. The only exception
in the existing VAT Directive to the rule of treating the transfer of own goods to another Member
State as a deemed intra-EU-transaction concerns cases where the transfer is only temporary.
Consequently, the application of a similar simplification to these kinds of consignment stock could
be said to represent a deviation from the logic of the existing Directive. This situation would require
further studies.
The first task then is to define the scope of the simplification. Above a description of a call-off
stock as well as an argument why a simplification would be justified was given. This should form
the basis of the scope.
The goods should be stored in a place identified as the place of storage in the contract concerning
the stock separately from goods owned by the Buyer.
49
The future Buyer of the goods should be known at the time of transport. The simplification would
cover also a situation where the goods intended for several Buyers are kept in the same warehouse
on the condition that it is identified which goods are intended for which Buyers.
The Buyer has to have a right to take the goods at his own discretion from the warehouse. In the
case of several Buyers, this right covers the goods identified for each Buyer. If the Buyer applies
this right, the goods have to be physically removed from the place identified as the place of storage
in the contract.
The warehouse could be managed also by the Supplier, or by a third party on his behalf, if all other
conditions are met. In order that this situation is similar to a normal call-off stock situation and the
Buyer is in practice able to use his right to take goods from the stock, an additional condition should
be laid down: the Buyer should be aware of the quantities of goods available for him in the
warehouse.
The main reason for the simplification is to alleviate the administrative burden of the Supplier by
releasing him from the obligation to get registered in the Member State of Arrival. However, the
application of the simplification could be useful for the Supplier even in a situation where he is
already registered in the Member State e.g. the Buyer may prefer for cash flow reasons an invoice
without VAT. The sub-Group considers that the registration of the Supplier should not prevent the
application of the simplification.
The simplification should not apply if the supplier is established in the Member State where the
warehouse is located.
For control reasons the simplification should apply only if the future Buyer is VAT registered in the
Member State where the warehouse is located.
7.3.2 Basic options for the simplification
As explained in the Commission documents GFV 022 and VEG 013, there are two basic options for
a simplification. Instead of an intra-EU transfer and the subsequent domestic supply of goods
carried out by the supplier there would be only one single transaction subject to VAT, an exempt
intra-EU supply carried out by the supplier and an intra-EU acquisition carried out by the buyer.
The chargeable event of the transaction would be
-
either the actual transfer of the goods to a warehouse in another MS;
or the point in time when the goods are taken out of the warehouse which is usually at the
same time of the transfer of the ownership.
Albeit that also the first option would free the Suppliers from the biggest administrative burden, the
VAT registration, this option may be seen as not a real simplification for them. The goods may not
necessarily be finally purchased by the Buyer. The goods may be faulty or the Supplier may
allocate the goods elsewhere (provided the agreed minimum stock levels are maintained). This
would mean that both the Buyer and the Supplier would have to make corrections to recapitulative
statements and VAT returns. In addition, the final price is not necessarily known when the goods
arrive in the warehouse. The invoice would for commercial reasons be issued, often drawn up by
the Buyer via a self-invoice, only when the goods are taken out of the warehouse. The application
of this option would, however, mean that the time limit for invoicing stipulated in Article 222
would start running at the time of arrival of the goods in the warehouse. Meeting the time limit for
issuing an invoice would be problematic if the goods are not taken out of the warehouse or the
relevant information for invoicing is not available yet.
50
In order to be a real simplification for the businesses, the intra-EU supply and intra-EU acquisition
should be considered to take place at the moment when the goods are taken out of the warehouse by
Buyer.
From the Member States’ point of view this option could be seen as problematic because this model
allows the transfer of goods to another Member State without informing that Member State of the
arrival of the goods on its territory. However, as said above, also the present situation where
Member States have their own simplifications in place has the same drawback. In addition the
conclusion was already made above that the common simplification system should make sure that
the Member State of Arrival is given such information which would enable it to carry out specific
controls where needed and that this information is received at the latest when the information based
on normal recapitulative statements on deemed intra-EU transactions would have been received.
Therefore a common simplification system based on a model where the intra-EU transaction takes
place at the moment when the goods are taken out of the warehouse would be better than the present
situation also from the perspective of the Member States if the system would take care of the need
of the Member State of Arrival to receive necessary information in time.
7.3.3 Specific administrative obligations
A register and storage accounts
According to Article 243(1) every taxable person shall keep a register of the goods dispatched or
transported by him, or on his behalf, to a destination outside the territory of the Member State of
Departure but within the Community for the purposes of transactions consisting in valuations of
those goods or work on them or their temporary use as referred to in points (f), (g) and (h) of Article
17(2). Here it is a question of situations which are exceptions to the rule of a deemed supply,
triggered by the transfer of own goods to another Member State.
It would be reasonable to impose a similar obligation on the Supplier, which uses the simplification
for goods sent to call-off stock. This obligation would not mean an additional administrative burden
for the Supplier because he is expected to keep this kind of register already for commercial and
bookkeeping reasons. The register should identify the quality and quantity of the goods transported
to a call-off stock, the VAT identification number of the Buyer, the time of the transport and the
time when the supply to the customer is made or the goods have been returned. Also the addresses
of the warehouses should be given.
According to Article 243(2) every taxable person shall keep accounts in sufficient detail to enable
the identification of goods dispatched to him from another Member State, by or on behalf of a
taxable person identified for VAT purposes in that other Member State, and used for services
consisting in valuations of those goods or work on those goods.
A similar obligation could be justified for the Buyer or the Supplier, if he manages the consignment
stock. This obligation would not create an additional administrative burden because such storage
accounts are kept already for commercial reasons. The storage accounts should identify the quality
and quantity of the goods located in the warehouse, the VAT identification number of the Supplier
(or Buyer), the date on which the goods arrived in the warehouse and the date on which the goods
were taken out of the warehouse.
51
An obligation to notify the Member State of Arrival
As concluded above the Member State of Arrival needs information on the fact that goods are sent
to a consignment stock located on its territory. This information enables it to carry out further audits
where necessary. The information should be received at the latest when the information based on
the normal recapitulative statements would be received.
There are two basic alternatives on either of which such an obligation could be built. The first is
here called as a pre-notification option and the second as a monthly notification option.
In the pre-notification option the Supplier would have an obligation to declare in a recapitulative
statement the VAT identification numbers of those new Buyers with which he has concluded a
contract according to which the Buyer has the right to take goods out of a call-off stock at its own
discretion. This information would be marked with a code which refers to the call-off stock
simplification.
This information should be given by the Supplier only once i.e. before he starts to send goods to a
new Buyer. According to Article 263(1) of the VAT Directive the recapitulative statement shall be
drawn up for each calendar month within a period not exceeding one month. In other words, the
VAT number of a Buyer should be reported in a recapitulative statement given for the month which
is two months prior to the month during which the transport of the goods to the warehouse starts.
For example, if the first shipment takes place on the 15th of January, the pre-notification needs to
be given in December in the recapitulative statement for November. Another alternative would be
to require the information to be submitted in a recapitulative statement given for the month which is
one month prior to the month during which the transport of the goods to the warehouse starts. This
alternative would mean that the Supplier should give the information during the same month he
starts the shipments. If the first shipment takes place on the 15 January, the pre-notification needs to
be given in January, in the recapitulative statement for December. According to Article 20 of the
Regulation on the Administrative Cooperation23 the Member States must submit the information
given in recapitulative statements to the other Member States within one month.
If the call-off stock arrangements with a Buyer come to an end, the Supplier should notify this. He
should do this by stating in the recapitulative statement given for the last month of the arrangements
applying the VAT number of the customer and a code referring to the end of the call-off stock
simplification.
In the monthly notification option the Supplier would have an obligation to submit each month in a
recapitulative statement the VAT numbers of those Buyers in other Member States, to which he has
sent goods in that month, and which have a right to take goods out of the stock at their own
discretion. This information would be marked with a code which refers to the call-off stock
simplification.
Both of these options would have the following advantages:
-
the obligation would be fulfilled by applying existing procedures;
23
Council Regulation(EU) No 904/2010 on administrative cooperation and combating fraud in the field of
valued added tax
52
-
the handling of the information could be as far as automated as possible for both taxable
persons and the tax authorities;
both the Member State of Departure and the Member State of Arrival would be informed;
the obligation would rest upon the Supplier who is the one benefiting the most from the
simplification and, hence, the supplier would be in control of legal certainty;
the information given would be limited but sufficient to enable the Member State of Arrival
to carry out further audits by means of e.g. checking the information of storage accounts and
the register. The Member State of Arrival receives the VAT numbers of the future Buyers;
in the present system based on intra-EU transfers and later domestic supplies this
information is not given in the recapitulative statements.
It seems that neither of these options would mean an excessive administrative burden for the
Supplier. The pre-notification option seems to be slightly easier in this respect.
The pre-notification model would be a better model from the perspective of the tax authorities in
that it would allow them to receive the information earlier than in the other option. This fact would
be an essential benefit for the controls exercised by tax administrations. Risk analysis and the
choosing of targets for investigation is a crucial stage in the VAT control. The earlier the tax
administration would receive the information, the better this is for purposes of control and
auditability.
Both of these options would require some adjustments to the IT-systems of the tax administrations
because of the extra code in the recapitulative statement. The pre-notification option would also
require that a link to a separate data base would be established.
Another alternative to realise the pre-notification option would be to oblige both Supplier and Buyer
to submit to their tax administrations a separate pre-notification of the VAT identification number
of the other party. The Supplier could require the Buyer to send him a copy of the Buyer’s
notification for his legal certainty. This alternative would require manual work, but each tax
administration could at its own discretion transfer the information to their electronic databases in
order to improve the use of the data. This alternative has the benefit of more flexibility for business.
The existing obligation to report the values of the transferred goods has been found very
burdensome by businesses. There do not seem to be strong enough reasons to require these to be
given when the notifications of the VAT numbers of the call-off stock customers are given. The
values based on invoices are not necessarily available at the time of the notifications. In addition,
the values of the goods sold later to the customers are given in the normal recapitulative statements.
Normal VIES obligations
In addition to the specific obligations explained above, the Supplier and the Buyer would have all
normal obligations according to the existing VAT Directive e.g. the Supplier would have to report
the intra-EU supplies in his recapitulative statements and the Buyer the intra-EU acquisitions in his
VAT Return.
7.3.4 Returned goods
If the Buyer rejects the goods or the Supplier transports the goods for other reasons back to the
Member State of Departure, no specific effects would occur. Naturally, the Buyer has to add this
53
information to the storage accounts and the Supplier to his register, but there is no need to consider
a deemed intra-EU transaction.
7.3.5 Time limit and missing goods
It needs to be considered whether there should be a time limit or not. The speed at which the stored
goods circulate is normally quite high. However, some businesses require the presence of spare
parts for immediate repairs of crucial machinery. In this case, if the goods exceed their economic
lifetime period, the goods will be either returned or disposed of locally.
The supplier usually carries out a count of the goods located in consignment stock at the end of each
accounting year (inventory count). This helps the Supplier in respecting a possible time limit. In
order to give the Supplier some time to react after the inventory count, the time limit should be
longer than a year. If the goods would not be taken out of the warehouse either by Supplier or Buyer
within the time limit, an intra-EU supply and acquisition would be deemed to take place on the day
following the end of the time limit. Since the supplier owns the goods, these intra-EU transactions
would be deemed to be made by the supplier i.e. a transfer according to Article 17 and 21 would be
deemed to take place on that date. This provision would be similar to Article 17(3) according to
which the goods shall be regarded as having been transferred to another Member State if one of the
conditions of 17(2) is no longer met. In such cases, the transfer shall be deemed to take place at the
time when that condition ceases to be met.
However, it could be said that there is no need for a time limit for control reasons. The most
important issue to the Member States as regards call-off stock is that they receive information on a
call-off stock as early as possible. If this is taken care of, the Member State is able to carry out
further control measures if considered necessary by means e.g. of checking whether the storage
accounts, registers, commercial documents and the goods actually kept in the warehouse match.
Normally the goods do not stay in the warehouse very long, but, as indicated above, in certain cases
longer storage periods are necessary for business reasons. A time limit, which would not give much
added value to the tax administrations, would prevent businesses from applying the simplification
in these cases.
If the other suggestions of the sub-Group would be adopted, there do not seem to be sufficiently
strong reasons to set a time limit.
The question whether there should be common rules concerning goods which disappear from the
warehouse should be discussed.
8.
CONCLUSIONS AND RECOMMENDATIONS
The sub-Group on Consignment Stock has reached the following conclusions:
-
The cross-border VAT treatment of call-off stock and other kinds of consignment stock is
complex for businesses, in terms of both the concepts and the interpretation of VAT legislation.
-
Various formal and informal practices applied in the Member States have led to widely varying
VAT rules and conditions for transactions relating to this stock.
54
-
The differences between the Member States give rise to increased costs of VAT accounting,
increased risks of VAT fraud and avoidance, inconsistencies in VIES, reduced auditability for
Member States, systems issues, legal uncertainties and distortions of competition between
businesses. SMEs suffer more under the situation than large business and domestic suppliers
have an advantage over non-resident suppliers.
-
The approaches that Member States have taken can be grouped into four different categories,
each with their own characteristics.
-
For businesses compliance costs, cash flow, systems implementation and legal certainty are the
most important issues. SMEs and even large business indicate that for them consistency and
(legal) certainty are very important, especially from a systems and implementation perspective.
-
From the Member States’ point of view a common simplification system would be needed in
order to increase the credibility of the VIES system and reduce the risks of fraud. The present
situation may also have prevented Member States from providing clear legislation or guidance
which would have taken both simplification and control issues into account. The common
simplification should be accomplished by amending the VAT Directive.
-
The sub-Group suggests a common simplification approach, that takes into account the
interests and concerns of both Member States and businesses.
On the basis of these conclusions the sub-Group has come to the following recommendations:
1.
The common simplification approach, as described in Section 7 of this Report, qualifies as a
potential future regime for call-off stock situations, where it is a given that the Buyers are
known in advance. In this model, the cross-border transfer of goods is treated as a regular intraEU transaction at the time that the Buyer takes the goods from the stock. The model is built on
the assumption that the common regime would be laid down in the VAT Directive. The subGroup expresses the strong wish that the suggested solution for call-off stock receives wide
support from both Member States and business. This support is vital in order for the solution to
be taken to the next stage.
2.
Given the inherent risks and financial interests that are at stake for both Member States and
businesses an impact assessment on the preferred approach is recommended. The results of this
assessment should allow the Commission to add the required level of detail to its proposal for
the new regime for call-off stock.
3.
The collected information on the VAT treatment of consignment stock and call-off stock in the
Member States should be made public and, preferably, be updated, in anticipation of a common
regime.
4.
The application of a similar simplification to other kinds of consignment stock could be said to
represent a deviation from the logic of the existing Directive. The sub-Group believes that a
study should be carried out to assess whether the solution proposed for call-off stock could be
applied for consignment stock more generally.
55
9.
NEXT STEPS
The sub-Group’s Report will be sent to the VEG and GFV and be made public via CIRC-ABC. The
Report will be presented and discussed in their meetings of 6 February 2014 subsequently 10
February 2014. The presentation will be done by delegated members of the sub-Group.
The Commission Services will take note and collect the reactions from both GFV and VEG and
suggest follow-up actions.
Annexes:
A. Overview of meetings and conference calls and of participants of the sub-Group
and organisations that they represent
B. Survey of the current situation in the Member States [Excel file available in
CIRCABC]
*
*
*
56
Annex A
Overview of meetings and conference calls and of participants of the sub-Group and
organisations that they represent
The Sub-Group Consignment Stock met in all-day meetings that took place at DG Taxud’s
premises in Brussels. In advance of the meetings an agenda was prepared and circulated by the
Commission Services. The various participants prepared pre-reads, which were shared in advance.
Additionally, in November and December 2013 several conference calls took place in which the
reporting and the subsequent draft versions of the Report were discussed.
The physical meetings took place on 19 June, 8 and 22 October, 15 November and 11 December
2013. Conference calls were held on 22 and 29 November and 6 and 20 December 2013.
The below Individuals, Organisations and Member States have contributed to the meetings, calls
and Report of the sub-Group.
Individuals
13. Carlos Gómez Barrero
14. Andrea Parolini
15. Gottfried Schellmann
Organisations
16. Business Europe
17. Chartered Institute of Taxation (CIOT)
18. Tax Executives Institute (TEI)
19. EY
20. KPMG
Kristian Koktvedgaard
Tarlochan Lall
Allard van Nes
Gijsbert Bulk
Niall Campbell
Member States
21. Belgium
22. Finland
23. Italy
Francois Coutureau
Suvi Anttila
Patrizia De Iulis
The Organisations representing business communities briefly present themselves below.
BUSINESSEUROPE
BUSINESSEUROPE is the leading advocate for growth and competitiveness at an European level,
standing up for companies across the continent and campaigning on the issues that most influence
their performance. A recognised social partner, we speak for all-sized enterprises in 35 European
countries of which national business federations are direct members. Through our 41 member
federations, BUSINESSEUROPE represents 20 million companies.
57
The views presented on the assessment of the different models have been discussed in the
BUSINESSEUROPE VAT Policy Group and are supported by this group.
CIOT
The Chartered Institute of Taxation (CIOT) is the leading professional body in the United Kingdom
concerned solely with taxation. The CIOT is an educational charity, promoting education and study
of the administration and practice of taxation. One of our key aims is to work for a better, more
efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s
work covers all aspects of taxation, including direct and indirect taxes and duties.
The CIOT draws on our members’ experience in private practice, commerce and industry,
government and academia to improve tax administration and propose and explain how tax policy
objectives can most effectively be achieved. We also link to, and draw on, similar leading
professional tax bodies in other countries. The CIOT’s comments and recommendations on tax
issues are made in line with our charitable objectives: we are politically neutral in our work.
The CIOT’s 16,500 members have the practicing title of ‘Chartered Tax Adviser’ and the
designatory letters ‘CTA’, to represent the leading tax qualification.
TEI
Tax Executives Institute is the preeminent association of in-house business tax professionals
worldwide. Founded in 1944, TEI has grown to more than 7,000 members who represent 3,000 of
the leading businesses in the United States, Canada, Europe, and Asia. The EMEA chapter has a
specialised committee for Indirect Tax, mainly focusing on VAT. In this committee VAT
professionals of the leading European businesses take part actively.
Through TEI and its 55 chapters TEI’s members play a critical role in identifying advocacy
opportunities; as a member, you can lend your voice to the Institute’s efforts, and advance your
company’s and community’s interests. Among the subject areas in which TEI has become involved
in recent months are:
- FIN 48 (Uncertain Tax Principles) and IRS Announcement 2010-09
- International Financial Accounting Standards
- IRS Access to Tax Accrual Workpapers (Textron v. United States)
- Codification of Economic Substance Doctrine
- Tax Reform
- OECD Transfer Pricing Rules
- State Tax Apportionment Rules
- U.S. Cost Sharing Regulations
- Tax Penalties at the Federal and State Level
- 2015 Implementing regulation on EU VAT
58
EUROPEAN COMMISSION
DIRECTORATE-GENERAL
Value Added Tax
VAT Expert Group
th
taxud.c.1(2014)83538 – EN
VAT EXPERT GROUP
VEG NO 029
Option 1B - Sub-Groups report – Chain transactions
59
TABLE OF CONTENT
1.
MEMBERS OF THE SUB-GROUP................................................................................ 62
2.
Meetings of the Sub-Group .............................................................................................. 62
3.
TASK OF THE SUB-GROUP ......................................................................................... 62
4.
Working Assumption of the Sub-Group for the Term “Chain Transaction” ................... 63
4.1
Scenario 1 ................................................................................................................. 64
4.2
Scenario 2 ................................................................................................................. 65
5.
Approach of the Sub-Group – Five step methodology .................................................... 65
6.
WORK UNDERTAKEN AND RESULTS ..................................................................... 66
6.1
Step 1 – Field Work / Preparation ............................................................................ 66
6.2
Step 2 – Analysis of the Responses ......................................................................... 67
6.2.1
Scenario 1 ........................................................................................................... 67
a)
Question 3, Scenario 1: To which of the 3 transactions is the intra-EU supply to be
assigned? ....................................................................................................................... 67
b)
Question 4, Scenario 1: Is a registration required if the business is not established in
the Member States where the supply takes place? ........................................................ 67
c)
Question 10, Scenario 1: Does your Member State apply the simplification of the
triangular scheme of Article 141 of the VAT Directive in cases of a chain transaction
involving 4 or more parties? ......................................................................................... 68
6.2.2
Scenario 2 ........................................................................................................... 69
6.2.3
Validation of the excel sheet by the Member States .......................................... 69
6.3
Step 3 – Identifying Best Practises .......................................................................... 69
6.4
Step 4 – Evaluation / Discussion of Potential Solution(s) ....................................... 70
6.4.1
Discussion of Criteria for Evaluation................................................................. 70
6.4.2
Evaluation of SCENARIO 1 .............................................................................. 70
a)
Case 1: Member State attributes the intra-Community supply to the transaction
between A and B ........................................................................................................... 71
aa)
Base case, i.e. no simplification measures at all ............................................ 71
bb)
Simplification measure: application of Articles 141 and 197 of the VAT Directive
72
cc)
Simplification measure: application of Article 194 of the VAT Directive .... 74
dd)
Proposal for further simplification ................................................................. 75
b)
between B and C ........................................................................................................... 77
60
aa)
bb)
78
cc)
c)
between C and D ........................................................................................................... 79
aa)
bb)
80
cc)
dd)
Proposal for further simplification ................................................................. 80
d)
Case 4: Member State attributes the intra-Community supply to either the transaction
between B and C or between C and D .......................................................................... 81
aa)
Attributing the intra-Community supply based on legally defined, but rebuttable
presumption ............................................................................................................... 81
bb)
7.
Attributing the intra-Community supply based on factual evidence .............. 82
6.4.3
Evaluation of SCENARIO 2 .............................................................................. 83
6.4.4
Overall assessment ............................................................................................. 84
STEP 5 - RECOMMENDATIONS ................................................................................. 85
7.1
Recommendations for clarification and consistent approaches ............................... 85
7.2
Recommendations to make better use of the options granted to the Member States by the
VAT Directive ...................................................................................................................... 85
8.
7.3
Recommendations requiring an amendment of the VAT Directive ........................ 86
7.4
Reservations ............................................................................................................. 86
ANNEXES ....................................................................................................................... 88
8.1
ANNEX 1 ................................................................................................................. 88
8.2
ANNEX 2 ................................................................................................................. 88
8.3
ANNEX 3 ................................................................................................................. 88
8.4
ANNEX 4 ................................................................................................................. 88
8.5
ANNEX 5 ................................................................................................................. 90
8.6
ANNEX 6 ................................................................................................................. 91
8.7
ANNEX 7 ................................................................................................................. 92
61
1.
MEMBERS OF THE SUB-GROUP
The Sub-Group on Chain Transactions – hereinafter referred to as the “Sub-Group” - is a
group which consists of members from the Group on the Future of VAT (GFV) and the
VAT Expert Group (VEG). The Sub-Group is made up of four individual members,
members from six organisations and members from seven Member States.
The participating members of the Sub-group were
2.

Jan Koerner (Rapporteur), Federations of German Industries (BDI) & Association of
German Chambers of Industry and Commerce (DIHK),

Jakob A. Kamminga (Rapporteur), the Netherlands,

Ine Lejeune (Co-Rapporteur),

Rosemin March (Co-Rapporteur), the United Kingdom,

Margarete Rosner-Liskounig, Austria,

Stamen Stamenov, Bulgaria,

Stephan Teuber, Germany,

Krisztina Magony, Hungary,

Viviane Ries, Luxembourg,

Peter Boerhof, Confederation of Netherlands Industry and Employers (VNO-NCW)
& the Royal Dutch Organisation for small and medium sized enterprises (MKB –
Nederland),

Lena Odelberg, Confederation of Swedish Enterprise,

Pierpaolo Maspes, Confindustria,

Thierry Charon, European VAT Club,

Karl-Heinz Haydl, General Electric Company,

Odile Courjon,

Stefan Maunz/Oliver Zugmaier,

Elisabeth Ashworth.
MEETINGS OF THE SUB-GROUP
Five meetings of the Sub-Group were held at DG TAXUD’s premises on June 18,
September 12, October 15, November 19 and December 12 2013.
Four telephone conferences were held on July 31, September 9 and October 4 2013in
preparation for the meetings and on January 9 2014 for finalisation of this Report.
3.
TASK OF THE SUB-GROUP
As defined by DG TAXUD – i.e. the note to the Fiscal Attachés dated 15 April 2013
(taxud.c.1(2013)765928), the document GVF N° 034, taxud.c.1(2013)3333964 – EN and
the VEG N° 022, taxud.c.1(2013)3272924 – EN – ANNEX 1 – the sub-group has to
examine the precise problems [of chain transactions] faced by business and tax
administrations, look at practical examples and identify possible ways to address those
problems without jeopardising the fundamental principles of the current EU VAT system.
62
4.
WORKING ASSUMPTION OF THE SUB-GROUP FOR THE TERM “CHAIN
TRANSACTION”
The sub-group established common ground and the worked on the following assumption
regarding the term “chain transaction”, as there is no legal definition provided for in the
Council Directive 2006/112/EC on the common system of value added tax (“VAT
Directive”):

successive supplies of the same goods.
For the scope of the work of the Sub-Group, only two chain transaction scenarios were
considered:

Where the goods supplied are directly dispatched or transported from the Member
State of the first supplier to the Member State of the last acquirer of the successive
supplies (i.e. Scenario 1 hereinafter), or where

the goods supplied are neither dispatched nor transported (i.e. Scenario 2
hereinafter);
hereinafter referred to as “Chain Transaction” or “Chain Transactions”.
However, this working assumption may not correspond to the definition of the term “chain
transactions” used by some Member States.
63
4.1
Scenario 1
 Three transactions between four parties (A, B, C & D) established in four Member
States (1, 2, 3 & 4)

Direct shipment of goods from Member State 1 (A) to Member State 4 (D)

C organises the shipment of the goods
Visual aid
MS 1
MS 2
A
MS 4
B
MS 3
D
C
Contractual flow
Flow of the goods
X
Taxable person
64
4.2
Scenario 2
 Three transactions between four parties (A, B, C & D) established in three Member
States (1, 2 & 3)

C and D established in Member State 3

Goods remain in Member State 4, no shipment
Visual aid
MS 1
MS 2
A
MS 4
B
MS 3
C
Goods
D
Contractual flow
X
5.
Taxable person
APPROACH OF THE SUB-GROUP – FIVE STEP METHODOLOGY
The work of Sub-Group was comprised of a five step approach.
Step 1: Field work / preparation

Questionnaire developed and sent to Member States
Step 2: Analysis of the completed excel sheet with the responses from the Member States

Responses from Member States transferred into an excel sheet for easier analysis and
comparison.

What are the consequences / impacts per Member State?

Are there serious problems such as double-taxation or non-taxation?

Is it possible to group the practises of Member States?
65
Step 3: Identifying best practises

Is there one best practise or a combination of Member States’ practices that can be
combined to become (a) common best practise(s)?
Step 4: Evaluation and discussion of potential solution(s)

What are the impacts?

Is there another solution to solve the problems?
Step 5: Proposal

What are the next steps to make the solution(s) work?
6.
WORK UNDERTAKEN AND RESULTS
6.1
Step 1 – Field Work / Preparation
To analyse the status quo within the European Union regarding the treatment of Chain
Transactions, the Sub-Group developed a questionnaire to be sent to the Member States
containing two scenarios as described above under 4.1 and 4.2.
Regarding Scenario 1, the Member States were inter alia requested to provide answers to the
following questions:

To which of the 3 transactions is the intra-EU supply to be assigned? (Question 3)

Is a registration required if the business is not established in the Member States
where the supply takes place? (Question 4)

Does your Member State apply the simplification of the triangular scheme of Article
141 of the VAT Directive in cases of a chain transaction involving 4 or more
parties? (Question 10)
Regarding Scenario 2, the Member States were inter alia requested to provide answers to the
following question:

Assuming that your Member State is MS 4 – are there any simplification measures
for businesses not established in your Member State available (e.g. fiscal
warehousing, reverse charge etc.)? (Question 11)
The questionnaire was sent by DG TAXUD to the Members of the Group on the Future of
VAT, i.e. note No. (2013)2736570 of July 9, 2013 – ANNEX 2 –, with the request to
submit answers by September 2, 2013.
DG TAXUD received answers from 24 Member States. These answers are for information
purposes only and are not legally binding.
Members of the Sub-Group transferred the answers from the Member States (as they were)
into an excel sheet – ANNEX 3. This allowed the Sub-Group to analyse the answers to this
report more easily.
66
6.2
Step 2 – Analysis of the Responses
Analysis of the 24 responses provided by the Member States showed that there were several
groups of approaches regarding the VAT treatment of Chain Transactions.
6.2.1
Scenario 1
a) Question 3, Scenario 1: To which of the 3 transactions is the intra-EU supply to be
assigned?
All Member States were in agreement that there can only be 1 intra-Community supply
within a Chain Transaction scenario between the parties: A, B, C and D.
However, there were 4 approaches taken in attributing the intra-Community supply to a
certain transaction:
(1)
Between A and B,
(2)
Between B and C,
(3)
Between C and D,
(4)
Between B and C or C and D, depending on circumstances.
The latter approach can be further divided into Member States who attribute the intraCommunity supply to B-C or C-D based on a legally defined, but rebuttable presumption;
and Member States who attribute the intra-Community supply to B-C or C-D based on mere
factual evidence.
The Sub-Group agreed that the difference in the approaches can lead to serious problems
such as double-taxation or non-taxation and creates legal uncertainty and material costs for
traders doing business across the EU.
b) Question 4, Scenario 1: Is a registration required if the business is not established
in the Member States where the supply takes place?
Registrations are required in the Member States who have not made use of the option
provided for under Article 19424 of the VAT Directive. Where Member States apply Article
194 of the VAT Directive, less registrations obligations are imposed on the business.
Therefore, the answers of the Member States can be grouped as follows:
(1)
Member States not applying Article 194 of the VAT Directive;
(2)
Member States applying Article 194 of the VAT Directive provided that the
customer has a local VAT registration (though is not necessarily established);
(3)
Member States applying Article 194 of the VAT Directive provided that the
customer is established (i.e. not with non-established customers, irrespectively if
such customers have a local VAT registration).
For purposes of analysis, the attribution of the intra-Community supply to one of the three
transactions in Scenario 1,(i.e. under a) above, was combined with the application of Article
194 of the VAT Directive as an alternative, in order to establish whether the application of
Article 194 of the VAT Directive might be preferable or not.
24
Details of the text of Article 194 can be found in Annex 7
67
c) Question 10, Scenario 1: Does your Member State apply the simplification of the
triangular scheme of Article 14125 of the VAT Directive in cases of a chain transaction
involving 4 or more parties?
The answers of the Member States can be divided into two groups:
(1)
Member States allowing for the triangulation simplification with only 3 parties
involved in the chain transaction, and
(2)
Member States allowing for the triangulation simplification where there are more
than 3 parties involved in a chain transaction – although the triangulation itself
requires two transactions between three parties.
Regarding the second group, clarification is needed to determine whether Member States’
allow the application of the triangulation simplification measure irrespective of the number
of parties involved in the chain transaction. The answers provided by some Member States
suggested that they apply the triangulation only in cases of 4 parties (which might be due to
the fact that scenario 1 had only 4 parties involved).
Visual aid
Goods
Goods
Member State 1
Member State 4
A
O% i.C.supply
B
Triangulation
Art. 141, 197
C
D
OR
A
B
O% i.C.supply
C
D
Triangulation
Art. 141, 197
OR
A
B
C
O% i.C.supply
D
Triangulation Art. 141, 197 not applicable
A different attribution of the intra-Community supply to the transactions will also have an
impact on a potential application of triangulation. A common interpretation is lacking.
25
68
6.2.2
Scenario 2
With regard to Scenario 2 question 11: Are there any simplification measures for
businesses not established in your Member State available (e.g. fiscal warehousing,
reverse charge etc.)?
All Member States were in agreement that the place of supply in Scenario 2 is deemed in
each case to be in Member State 4. The Group did not identify any serious problems such as
double-taxation or non-taxation.
Generally, the answers of the Member States can be grouped as follows:
(1)
Member States having no simplification measures
(2)
Member States applying VAT warehousing schemes
(3)
Member States applying local reverse charge
(4)
Member State applying a registration threshold
The use of the VAT warehousing option provided for by Article 160 26 of the VAT Directive
by Member States can be grouped as follows:
6.2.3

VAT warehousing restricted to the list of Annex V to Article 160 (2) of the VAT
Directive

VAT warehousing for an expanded list of goods

VAT warehousing without restrictions with regard to the goods
Validation of the excel sheet by the Member States
The Member States were asked to validate the excel sheet, i.e. note to Members of the
Group on the Future of VAT as of October 28, 2013, taxud.c.1 (2013)3584444. Member
States validated the excel sheet.
6.3
Step 3 – Identifying Best Practises
Members of the Sub-Group discussed the following practises:
For Scenario 1

Regarding the attribution of the intra-Community supply – a legally defined,
rebuttable presumption

The application of Article 194 of the VAT Directive

The application of the simplification measure triangulation: Article 141 of the VAT
Directive
For Scenario 2
26
69

VAT warehousing rules in certain Member States

Bonded customs warehousing provisions “type E” (as defined in Article 525
Commission Regulation (EEC) 2454/93) in combination with the option provided
for in Article 156 (1) (c)27 of the VAT Directive.
The Sub-Group members from businesses suggested certain best practices. Given the limited
timeframe granted to the Sub-Group, the members could not carry out a detailed analysis of
those practices.
However, two members from the Member States cannot agree on the content of this section
because they do not see a value in listing some approaches under the headline “best
practices” without any further explanation. Regarding warehousing rules, the Sub-Group did
not discuss the different regimes in detail.
6.4
Step 4 – Evaluation / Discussion of Potential Solution(s)
6.4.1
Discussion of Criteria for Evaluation
The evaluation was made by the Sub-Group based on the following criteria:
Member States
Taxable Persons
Financial Impact
Financial Impact
Enforceability (incl. Avoidance of VAT Legal Certainty (incl. Avoidance of VAT
Fraud)
Fraud)
Cost of Collection / Administration
Cost of Compliance
The criteria were assessed in a qualitative way, applying the assumptions and implications
as described in ANNEX 4.
6.4.2
Evaluation of SCENARIO 1
There are currently no legal definitions set out in the VAT Directive that clearly specify
which transaction is deemed to be the intra-Community supply in a chain transaction. The
rules are merely derived from CJEU case law: C-245/04 EMAG Handel Eder OHG; C430/09 Euro Tyre Holding BV and C-587/10 Vogtländische Straßen-, Tief- und
Rohrleitungsbau GmbH Rodewisch (VSTR).
27
70
Recommendation 1:
Given the fact that the Member States have reported different approaches to the rules
derived from the CJEU judgments and taking into consideration that the differences in the
approaches can lead to double-taxation or non-taxation and create legal uncertainty and
material costs for traders operating across the EU,
members of the Sub-Group agreed that it is advisable to have a common
interpretation that will consistently allow attributing the intra-Community
supply to one supply within the chain of transactions.
However, the different approaches for attributing the intra-Community supply to one
specific supply within the chain transaction will be discussed hereinafter, with a view to the
advantages and disadvantages of the different approaches (Cases 1 to 4).
a) Case 1: Member State attributes the intra-Community supply to the transaction
between A and B
Case 1: Attribution of intra-Community supply between A and B
Member State 1
A
Member State 4
O%
i.C.supply
B
C
Goods
Established
VAT payer
aa)
D
Goods
NonEstablished
VAT payer
Base case, i.e. no simplification measures at all
Advantages:
71

The Tax Authorities of Member State 1 will only have to deal with one established
taxable person.

In general, Member State 4 will have a cash flow advantage, as VAT will be charged
in the transactions between B – C and C – D.
Neutral:

For Member States 2 and 3 as well as for taxable person D.
Disadvantages:

The tax authorities of Member State 4 will have to deal with two non-established
taxable persons.

Taxable persons B and C will have to obtain a foreign VAT registration. Overall, B,
C and D will have a cash-flow disadvantage, due to the charging of VAT.
bb) Simplification measure: application of Articles 141 and 197 of the VAT
Directive
It is assumed that the simplification measure of Articles 141 and 197 of the VAT Directive
(“triangulation”) is applied to the transaction between B and C as supply subsequent to an
intra-community supply.
Advantages / Improvement with regard to base case:

The Tax Authorities of Member State 4 will only have to deal with one nonestablished taxable person (i.e. C)

Only one taxable person (C) has to obtain a foreign VAT registration.

From a taxable persons’ perspective: the transactions A – B and B – C are cash-flow
neutral.
Remark:

Compared to the base case taxable person C has still to obtain a foreign VAT
registration in Member State 4.
Recommendation 2:
A number of Member States do not apply the simplification of Article 141 of the VAT
Directive, if there are more than 3 parties involved in a chain transaction.
Some Member States require that the acquirer of the supply subsequent to the intraCommunity supply is established in the Member State of arrival of the goods supplied. In a
situation such as case 1, such Member States would not apply the simplification scheme of
Article 141, 197 of the VAT Directive to the transaction between B and C based on the
grounds that C is not established in Member State 4.
72
Members of the Sub-Group consider it advisable to clarify the application of
Articles 141 and 197 of the VAT Directive, especially with regard to requirements
of Article 141 d) of the VAT Directive i.e. to clarify that Article 141 d):

does not require that the person to whom the subsequent supply is to be
made is established in the Member State of arrival of the goods, and

only requires the person to whom the subsequent supply is to be made is
identified for VAT purposes in the Member State of arrival of the goods,
regardless of those person’s establishment;
and to check that Articles 141 and 197 of the Directive might also be applied in a
chain transaction where 3 or more parties are involved, provided that

the simplification of Article 141 is applied to a supply of goods subsequent to
an intra-Community supply, and thus only once within a chain transaction.
This recommendation is applicable for the cases 1, 2, and 4.
Reservation:
The same two members from the Member States (as previously referred to in
6.3 above) only support the recommendation as far as there is a uniform
application of Articles 141 and 197 of the VAT Directive.
Visual aid
73
Recommendation 2
Member State 1
Member State 4
A
B
O% i.C.supply
Goods
Established
VAT payer
Triangulation
Art. 141, 197
= reverse charge
C
D
Domestic supply
X % VAT
Goods
NonEstablished
VAT payer
cc) Simplification measure: application of Article 194 of the VAT Directive
It is assumed that taxable person C is VAT registered in Member State 4. It is assumed that
the simplification measure of Article 194 of the VAT Directive – reverse charge mechanism
in case of supplies by non-established taxable person – is applied to the transaction between
C and D and in addition to the application of Articles 141, 197 of the VAT Directive to the
transaction between B and C (i.e. bb) above).
Visual aid
74
Member State 1
Member State 4
A
B
O% i.C.supply
Triangulation
Art. 141, 197
= reverse charge
Goods
Established
VAT payer
C
Reverse charge
Art. 194
D
Goods
NonEstablished
VAT payer
Further
Advantages / Improvement:

From the taxable persons’ perspective the financial impact is significantly improved.

From the perspective of the Tax Authorities of Member State 4, the “break in the
chain” (i.e. the change from reverse charge to onward-charging VAT) is shifted from
the non-established taxable person C to the established taxable person D, which
improves the enforceability.
In such a scenario, Business members of the Sub-group would like to encourage
Member States to make use of the option provided for in Article 194 of the VAT
Directive.
dd)
Proposal for further simplification
In a situation like case 1, where the intra-Community supply is attributed to the first
transaction in a chain transaction, members of the Sub-Group feel that it is advisable to carry
out (future) work into analysing a combined application of the simplifications of Articles
141, 197 and 194 of the VAT Directive.
One member from a the Member State (as previously referred to) does not agree that
further work should be carried out because the application of Article 194 is an option
for the Member States.
Recommendation 3:
75
Business Members consider that a solution should be envisaged whereby the
application of Articles 141 and 197 of the VAT Directive to the transaction
between B and C could be deemed by Member States to allow for C to appoint a
fiscal agent, as foreseen in Article 204 (1)28 of the VAT Directive.
However, the disadvantages of Recommendation 3 are:

The cost of a fiscal agent for taxable person C, which will reflect that the fiscal agent
will be liable for VAT for C in Member State 4;

The fiscal agent, if he acts for a number of non-established taxable persons, will
know the margins of the transactions in Member State 4.
Furthermore, Members of the sub-Group proposed two more far reaching approaches:
One proposal is to amend Articles 4129 and 138 (1)30 of the VAT Directive in order to allow
taxable persons B and C to declare the intra-Community acquisitions and supplies in their
Member States of establishment (i.e. Member States 2 and 3), with the taxation in Member
State 4 safeguarded by the provision of Articles 4031, 41 (1) and 4232 of the VAT Directive.
An alternative proposal is to apply Article 32 (2)33 of the VAT Directive by analogy to
Chain Transactions where the flow of goods is within the EU.
Three members from the Member States (including the two members previously
referred to) could not agree to such a proposal, as it would require significant changes
of the current VAT Directive. They see such proposals as not being within the remit of
the Sub-group's objective.
Members from businesses are in favour of exploring this proposal as possible solutions
for the future – probably outside the scope of the Sub-Group. Thus, those further
proposals are attached in ANNEX 5 of this report.
28
30
31
32
33
29
76
b) Case 2: Member State attributes the intra-Community supply to the transaction
between B and C
Case 2: Attribution of intra-Community supply between B and C
Member State 1
A
Member State 4
B
O%
i.C.supply
C
Goods
Established
VAT payer
aa)
D
Goods
NonEstablished
VAT payer
Advantages:

In general, Member State 1 will have a cash flow advantage, as VAT will be charged
in the transactions between A – B and B will have an excess of input VAT over
output VAT (refund situation).
Disadvantages:

Member State 1 has to deal with one non-established taxable person.

Member State 4 faces an issue with enforceability, as taxable person C is a foreign
taxable person and has to declare an i.C. acquisition and output VAT, the transaction
between C and D could be VAT fraud sensitive.

taxable person B has to obtain a foreign VAT registration (cost of compliance).

taxable person B will have an excess of input VAT over output VAT and is thus in a
refund situation (cash flow disadvantage).

taxable person C has to obtain a foreign VAT registration (cost of compliance).
77
Directive
It is assumed that the simplification measure of Articles 141 and 197 of the VAT Directive
(“triangulation”) is applied to the transaction between C and D as the supply subsequent to
an intra-community supply.
Advantages / Improvement with regard to base case:

taxable person C would not need to be VAT registered in Member State 4.

Thus, the Tax Authorities of Member State 4 will not face the enforceability issue
referred to under the point (1) base case above, the case will be less fraud sensitive
under the application of the simplification measure of Article 141 of the VAT
Directive to the transaction between C and D.
Remark:

taxable person B still has to obtain a foreign VAT registration in Member State 1.

The cash-flow disadvantage for B will remain the same – i.e. a refund situation due
to an excess of input-VAT over output VAT.
Recommendation 4:
To mitigate the cash-flow disadvantage of a taxable person making zero-rated
supplies, members of the Sub-Group recommend that Member States review
the possibility of using the option of Article 16434 of the VAT Directive to grant
those taxable persons a license to receive the supply prior to the zero-rated
supplies (exports and intra-Community supplies) with 0% VAT, such zerorating limited by a threshold, e.g. the value of last year’s exports or intraCommunity supplies or the value of the projected exports or intra-Community
supplies of the current calendar year.
Reservation:
The same three members from the Member States (as previously referred to) do not
agree to the recommendation because from their point of view it is not within the task
of the Sub-Group to recommend that Member States make use of options granted by
the VAT Directive. Furthermore, one of those three members from the Member States
does not agree that the recommendation can be seen as a possible way to address
specific problems resulting from chain transactions. Another one of those three
members from the Member State points out that according to the VAT Directive
Member States have more options to choose how to mitigate the cash-flow
disadvantage in such cases, so the Member States should be given the right to choose
the most suitable way.
34
78
c) Case 3: Member State attributes the intra-Community supply to the transaction
between C and D
Case 3: Attribution of intra-Community supply between C and D
Member State 4
Member State 1
A
B
C
O%
i.C.supply
Goods
Established
VAT payer
aa)
D
Goods
NonEstablished
VAT payer
Advantages:

Member State 1 will have a cash flow advantage, as VAT will be charged in the
transactions between A – B and B – C.

The Tax Authorities of Member State 1 will only have to deal with one established
taxable person.
Neutral:

For Member States 2 and 3 as well as for taxable person A.
Disadvantages:

The tax authorities of Member State 1 will have to deal with two non-established
taxable persons.

Taxable persons B and C will have to obtain a foreign VAT registration.

Overall, A, B and C will have a cash-flow disadvantage, due to the onward-charge of
VAT.
79

Taxable person C in particular, will suffer a cash flow disadvantage due to an excess
of input VAT over output VAT and will thus be placed in a refund situation.
Directive
The simplification measure of Article 141 of the VAT Directive is not applicable in case 3,
as there is no supply subsequent to an intra-Community supply, which is seen as a
disadvantage per se.
As Article 194 of the VAT Directive does not require that the person to whom the supply is
made has to be established in the Member State of taxation, some Member States would in
case 3 apply the reverse charge mechanism to the transaction between B and C.
The application of Article 194 in this case would avoid B having to register in Member State
1.
dd)
Proposal for further simplification
The application of a licence to purchase zero-rated for a subsequent intra-Community supply
(i.e. Recommendation 4 above) would not provide an advantage in case 3, as the cash flow
disadvantage would just be shifted from taxable person C to taxable person B.
However, the application of VAT warehousing rules might provide a significant
improvement in a situation such as case 3. This is because the supply from A to B and from
B to C in case 3 does not involve a movement of goods, the VAT warehousing regime might
be applied for those supplies.
The VAT warehousing rules of Belgium/Netherlands or Italy (Belgium or Italy being
Member State 1 in the example of case 3) would allow B and C only to obtain a “simplified
VAT registration” (Belgium, using the VAT-ID of the warehouse keeper) or “light VAT
registration” (Italy) with reduced obligations.
Recommendation 5:
The members of the Sub-Group would like to recommend Member States to
review the possibility of using the option provided for in Article 157 (1) (b) 35 of
the VAT directive i.e. to use the VAT warehousing rules.
Reservation:
35
Details of the text of Article 157 can be found in Annexe
80
Two members from the Member States (as previously referred to) do not agree to the
proposal for further simplification and to recommendation 5 because from their point
of view it is not within the task of the Sub-Group to recommend that Member States
make use of options granted by the VAT Directive. Another member from a Member
State (as previously referred to) is of the view that whilst acknowledging that the use of
VAT warehousing can be of advantage for non-established taxable persons being party
to a Chain Transaction, it is still the right of the MS to decide whether or not to make
use of this option or not.
d) Case 4: Member State attributes the intra-Community supply to either the
transaction between B and C or between C and D
As discussed under 6.2.1 a) above, the approaches relating to case 4 can be divided between
Member States who attribute the intra-Community supply to B-C or C-D based on a legally
defined, but rebuttable presumption; and Member States who attribute the intra-Community
supply to B-C or C-D based on mere factual evidence.
Case 4: Attribution of intra-Community supply between B and C or between C and D
Member State 1
A
Member State 4
B
O%
i.C.supply
C
D
Goods
Goods
OR
Member State 4
Member State 1
A
Goods
B
C
O%
i.C.supply
D
Goods
aa)
Attributing the intra-Community supply based on legally defined, but
rebuttable presumption
It is assumed that not only the presumption, but also the means of proof for the prescribed
conditions relating to the opposite of the presumption (i.e. the rebuttal of the legally defined
presumption) are legally defined.
Advantages:

Member States 1 and 4 would increase the enforceability, due to greater legal
certainty
81

taxable persons B, C and D would benefit from greater legal certainty.

Lower cost of compliance for taxable persons B and C, as determining the VAT
treatment of their sales can be calculated automatically, based on pre-defined
conditions (so-called “condition tables”) within an ERP system.
bb)
Attributing the intra-Community supply based on factual evidence
As ruled by the judgements of the CJEU in the cases C-430/09 “Euro Tyre Holding BV”
dated December 16, 2010 and C-587/10 “Vogtländische Straßen-, Tief- und
Rohrleitungsbau GmbH Rodewisch (VSTR)” dated September 27, 2012, determining which
of the transactions the intra-Community supply is to be attributed to, is “conducted in light
of an overall assessment of all the circumstances of the case in order to establish, which of
the … supplies fulfils all the conditions relating to an intra-Community supply.”
Disadvantages:

Lower level of enforceability for Member States 1 and 4, as the overall assessment
of all circumstances of the case does not provide legal certainty

Lower level of legal certainty and higher cost of compliance for taxable persons B, C
and D, particularly as the overall assessment of all circumstances of the case cannot
be determined via an automated VAT code (i.e. VAT treatment determination)
within an ERP-system.
Recommendation 6:
The members of the Sub-Group agreed that in case 4 it is advisable, to determine the
attribution of the intra-Community supply to either the supply TO or the supply BY the
taxable person arranging the transport/dispatch of the goods based on legally defined but
rebuttable presumptions. Furthermore, it is advisable to legally define the means of proof for
the prescribed conditions relating to the opposite of the presumption (i.e. how the
presumption can be rebutted) in order to avoid legal uncertainty.
Comparing the advantages of case 2 and case 3, the members of the Sub-Group advise the
following:
to define the presumption that the intra-Community supply is to be attributed
to the supply to the taxable person arranging the transport/dispatch of the
goods (i.e. case 2 where the intra-Community supply is attributed to the
transaction between B and C). The discussion of case 2 above has shown that
some of the disadvantages can be mitigated by applying the simplification
scheme of Articles 141 and 197 of the VAT Directive.
Regarding the definition of the means of proof for the conditions opposite of the
presumption (i.e. how the presumption can be rebutted) it is advisable that in
cases where the taxable person arranging the transport/dispatch of the goods
82
provides his supplier with a VAT-Identification Number of the Member State of
departure of the goods, then the legally defined presumption is deemed to be
rebutted and the intra-Community supply is to be attributed to the supply by
that taxable person (i.e. in case of C providing B with C’s VAT-ID of Member
State 1, the intra-community supply is to be attributed to the transaction C to
D).
Reservations:
The member from a Member State (previously referred to) prefers a clear legal
framework without options and without rebuttable presumptions which would
give businesses and tax authorities greater legal certainty. One member from
another Member State (as previously referred to) does not agree to that
recommendation because the task of the Sub-Group was to identify possible
ways to address the problems regarding chain transactions but not to
recommend one approach. Furthermore, the same member from a Member
State cannot agree that the provision of a VAT Identification Number would be
a sufficient proof to rebut the presumption.
Recommendation 7:
The members of the Sub-Group held that
as a second-best alternative to Recommendation 6 above it is advisable to
provide at least a definition of the evidence to be provided by the taxable
persons in order to conduct the overall assessment of all circumstances of the
case.
It is envisaged that such evidence could be the use of a VAT-Identification number of either
the Member State of departure of the goods or another Member State (other than the one of
departure of the goods) , taking into account no. (45) of the judgment of the CJEU in the
case C-430/09 “Euro Tyre Holding BV” dated December 16, 2010.
Reservations:
Two members from the Member States (as previously referred to) cannot agree
with this recommendation.
6.4.3
Evaluation of SCENARIO 2
83
Members of the Sub-Group discussed most of the warehousing regimes, which members
encountered as practises, i.e. 6.3 above.
Members of the Sub-Group felt that it would be worthwhile to have a more in-depth analysis
of such warehousing regimes.
Members from businesses are in favour of discussing warehousing regimes in more
depth as a potential solution for the future – probably outside the scope of the SubGroup. The identified warehousing regimes for future discussions are described in
ANNEX 6 of this report.
Reservations:
Two members from the Member States (as previously referred to) cannot agree upon
any recommendations relating to this. In their opinion such an analysis is not within
the remit of the Sub-group's objective.
6.4.4
Overall assessment
Regarding an overall assessment of the cases 1 to 4 as discussed above under 6.4.2, it
appears that the approaches of case 1 AND case 4 provide the most advantages, and also
offer the most options to mitigate their disadvantages.
Recommendation 8:
Business members have a preference for case 1 i.e. 6.4.2 a) above, i.e. attributing
the intra-Community supply to the first transaction within a chain transaction
(i.e. A to B) taking into account the simplification measures as discussed by the
Sub-Group in Recommendation 3 above.
Reservations:
Two members of the Member States (as previously referred to) cannot agree
upon any recommendations relating to this, as in their opinion this is not within
the remit of the Sub-group's objective. The task of the Sub-Group was to
identify possible ways to address the problems regarding chain transactions but
not to recommend one approach. Another member from a Member State (as
previously referred to) cannot agree to this recommendation as this applies to a
specific scenario but it was not further examined as to whether it leads to the
best solution if the conditions are changing ( e.g. 2 domestic taxable persons in
the Chain Transaction).
84
7.
STEP 5 - RECOMMENDATIONS
7.1
Recommendations for clarification and consistent approaches
The members of the Sub-Group:

Agreed that it is advisable to have a common interpretation that will consistently
allow attributing the intra-Community supply to one supply within the chain of
transactions (Recommendation 1);
The members of the Sub-Group

Consider it advisable to clarify the application of Articles 141 and 197 of the VAT
Directive, especially with regard to requirements of Article 141 d) of the VAT
Directive i.e. to clarify that Article 141 d)
o does not require that the person to whom the subsequent supply is to be made
is established in the Member State of arrival of the goods, and
o requires that the person to whom the subsequent supply is to be made is
identified for VAT purposes in the Member State of arrival of the goods,
regardless of that person’s establishment;

and to check that Articles 141 and 197 of the Directive might also be applied in a
chain transaction where there are 3 or more parties involved, provided that:
o the simplification of Article 141 is applied to a supply of goods subsequent to
an intra-Community supply, and thus only once within a chain transaction
(Recommendation 2);
7.2

members from businesses prefer that the intra-Community supply is attributed to the
first supply within the chain of transactions (Recommendation 8) as a solution for
the problems relating to the different approaches of Member States regarding the
attribution of the intra-Community supply to one supply within a chain of
transactions;

alternatively, it should be considered whether the intra-Community supply could be
attributed to the supply to the taxable person arranging the transport/dispatch of the
goods by means of a defined but rebuttable presumption, with that taxable person
providing its supplier with a VAT-identification number of the Member State of
departure of the goods as defined proof to rebut the presumption (Recommendation
6); or

as second best alternative, to provide at least a definition of the evidence to be
provided by the taxable person in order to conduct the “overall assessment of all
circumstances of the case” for attributing the intra-Community supply to one of the
supplies in the Chain Transaction (Recommendation 7).
Recommendations to make better use of the options granted to the Member States by
the VAT Directive
85
Considering the analysed scenarios, the members of the Sub-Group would encourage
Member States to review the possibility to use the options granted by the VAT Directive in
context with Chain Transactions, particularly:
7.3

Article 194 – domestic reverse charge for non-established taxable persons;

Article 204 (1) – which allows the non-established taxable persons liable for VAT,
pursuant to Articles 141 and 197 of the VAT Directive as the person, to whom the
goods are supplied under the conditions of Article 141; to appoint a tax
representative (Recommendation 3 – made by members from businesses only);

Article 164 – to grant taxable persons making zero-rated supplies (exports and intraCommunity supplies) a licence to receive supplies prior to those zero-rated supplies
with 0% VAT (Recommendation 4);

Article 157 (1) b.) – to use the VAT warehousing rules for Chain Transactions, in
which the taxable person withdrawing the goods from the warehouse performs the
intra-Community supply (Recommendation 5).
Recommendations requiring an amendment of the VAT Directive
Members of the Sub-Group from businesses recommend an amendment of Articles 41 and
138 (1) of the VAT Directive as simplification rule extending the current simplification of
Articles 141, 197 of the VAT Directive in Chain Transactions. An alternative proposal is to
apply Article 32 (2) of the VAT Directive by analogy to Chain Transactions where the flow
of goods is within the EU. As the respective recommendations would require more in-depth
analysis, which could not be carried out within the restrictive time-frame of the Sub-Group,
the outline of such recommendations can be found in Annex 5.
The same applies to proposals for warehousing rules, which the members of the Sub-Group
from businesses deem to be recommendable. As the respective recommendations would
require more in-depth analysis, which could not be made within the restrictive time-frame of
the Sub-Group, the outline of such recommendations can be found in Annex 6.
The members of the Sub-Group note that in order to attribute the intra-Community supply to
a pre-defined supply within the chain of transactions in order to get legal certainty, one
possibility is to change the VAT Directive.
7.4
Reservations
As described above in Section 6.4, some members from the Member States have
reservations concerning parts of Recommendation 2 and Recommendations 3 to 8. Three
members from the Member States feel that the report should focus on the main problem of
chain transactions the Sub-Group examined: the differences between the Member States’
approaches in attributing the transport of the goods to one supply in the chain which can
lead to double or non-taxation.
Two members out of those three members from the Member States have reservations about
Recommendations 6 and 8, based on their opinion that those recommendations are not
within the remit of the Sub-Group's objectives. Based on the same grounds, those three
members from the Member States opposed any recommendation requiring an amendment of
the VAT Directive, i.e. 7.3 above.
86
The same three members from the Member States have reservations concerning
Recommendations 3 to 5 because from their point of view it is not within the task of the
Sub-Group to recommend that Member States make use of options granted by the VAT
Directive.
87
8.
ANNEXES
8.1
ANNEX 1
Document GVF N° 034, taxud.c.1(2013)3333964 – EN
34 - Option 1B State of play.doc
Document VEG N° 022, taxud.c.1(2013)3272924 – EN
22 - B2B supplies of
goods - Taxation at destination - Option 1B - State of play.doc
8.2
ANNEX 2
Note No. (2013)2736570 of July 9, 2013
taxud.c.1(2013)273
6570 - Questionnaire[1].pdf
8.3
ANNEX 3
Excel sheet with the transfer of answers from Member States
Relpies_by_Member_
States and Grouping.xlsx
These answers are for information purposes only and are not legally binding!
8.4
ANNEX 4
Criterion
Member States
Financial
Impact
Main Issues and Assumptions
Impact
Full right of input-VAT deduction of all involved
business, hence only cash-flow impacts for
88
Member States
Local supplies with charging of VAT
(+) = advantage
Zero-rating
(-) = disadvantage
Between
(-) = disadvantage
Local reverse charge
and
(0) = neutral
Dealing with Non-established taxable person
Enforceability Legal uncertainty
(incl.
Avoidance of Clear definitions / legal certainty
VAT Fraud)
Reverse charge
(-) = disadvantage
(+) = advantage
(+) = advantage
Dealing with Non-established taxable person
(-) = disadvantage
Dealing with Resident taxable person
(+) = advantage
Cost
of Zero-rating
Collection
/
Administration (burden of proof with the taxable person)
Criterion
Taxable
Persons
(-) = disadvantage
(0) = neutral
(+) = advantage
Refund
(-) = disadvantage
Main Issues and Assumptions
Impact
Mainly bad debt risk,
Impact on cash flow less clear, as depending on
the payment terms between supplier and
customer
Overall
Financial
Impact
Local supplies with charging of VAT
(-) = disadvantage
On average
(0) = neutral
Zero-rating
(can be an advantage
for one party while at
the same time a
89
disadvantage for the
other party)
On average
(0) = neutral
Legal uncertainty
Legal
Certainty (incl.
Clear definitions / legal certainty
Avoidance of
VAT Fraud)
Reverse charge
Foreign VAT registration
Cost
of Zero-rating
Compliance
(due to additional filing requirements)
Reverse charge
8.5
(can be an advantage
for one party while at
the same time a
disadvantage for the
other party)
(-) = disadvantage
(+) = advantage
(+) = advantage
(-) = disadvantage
(-) = disadvantage
(+) = advantage
ANNEX 5
One proposal from members of the Sub-Group from businesses is to amend Articles 4136,
and 138 (1)37 of the VAT Directive in order to allow tax persons B and C to declare the
intra-Community acquisitions and supplies in their Member States of establishment (i.e.
Member States 2 and 3.
This proposal could be structured by means of two different approaches :
(i) Extension of the existing triangulation system.
(ii) Extension of the safety provision
An alternative proposal of Members of the Sub-Group from businesses is a mid-term and
more far reaching approach to analyse the consequences of applying Article 32 2nd
paragraph of the Directive 112/2006 by analogy as well for chain transactions whose flow of
goods is within the EU. This analysis should list the challenges of such an approach and
potential solutions how they could overcome striking the balance between business needs
and the needs of tax authorities to safeguard revenues.
The proposal is based on the opinion of the Advocate General Kokott as delivered on
November 10, 2005 in paragraph 50 of the opinion in the case C-245/04 “EMAG Handel
Eder OHG.
36
37
90
Some members of the Sub-Group are willingly to discuss these approaches in more detail.
8.6
ANNEX 6
VAT warehousing regimes
(1)
Customs warehouse “Type E” as set forth in Article 525-2 of Implementing
Regulations of the Customs Community Code
The “Type E” customs warehouse requires prior authorisation. It is more relating to a status
of the goods than a status of warehouses, though nevertheless all places to be included in the
warehouse status have to be indicated and included in the authorisation.
Type E Customs
Warehous.docx
The members of the Sub-Group apart from 2 members found it worth to have a more indepth analysis of that customs warehouse regime, particularly as the status of “Type E”
customs warehouse can be granted to warehouses located not just on one but in a multitude
of Member States. Thus, the “Type E” customs warehouse regime transferred into VAT can
provide advantages not just for Scenario 2, but also for Scenario 1, i.e. discussion of Case 3
above.
(2)
VAT warehousing rules for Italy
VAT warehouse
regulations in Italy.doc
The advantages of the Italian VAT warehousing rules are that non-established taxable
person might obtain a “light VAT registration” and are thus subject to a reduced number of
VAT obligations in Italy.
(3)
VAT warehousing rules for Belgium and the Netherlands
VAT warehouses
NL.docx
The advantages of the Belgium warehousing rules are that non-established taxable person
can use the VAT registration (and VAT-ID) of the VAT warehouse keeper. However, if the
VAT warehouse keeper is an independent VAT person (e.g. a logistic service provider)
91
there are some disadvantages: the cost of the VAT warehouse keeper will reflect the takeover of the VAT liabilities, and most important, the VAT warehouse keeper will know the
margins of the transactions within the VAT warehouse.
The Netherlands have two types of VAT warehouses (a place-related warehouse and a nonplace related warehouse) for designated goods.
The members of the Sub-Group apart from 2 members found it worth to have a more indepth analysis of the Italian, Belgian and Dutch VAT warehouse regimes, particularly as
those regimes can provide advantages not just for Scenario 2, but also for Scenario 1, i.e.
discussion of Case 3 above.
(4)
VAT warehousing rules Hungary
VATwarehouse_HU.d
ocx
Due to time constraints, the Sub-Group have not been able to discuss the Hungarian VAT
warehousing rules in more detail.
8.7 ANNEX 7
Details of the text of the various Articles:
Article 32
Where goods are dispatched or transported by the supplier, or by the customer, or by a third
person, the place of supply shall be deemed to be the place where the goods are located at
the time when dispatch or transport of the goods to the customer begins.
However, if dispatch or transport of the goods begins in a third territory or third country,
both the place of supply by the importer designated or recognised under Article 201 as liable
for payment of VAT and the place of any subsequent supply shall be deemed to be within
the Member State of importation of the goods.
Article 40
The place of an intra-Community acquisition of goods shall be deemed to be the place
where dispatch or transport of the goods to the person acquiring them ends.
Article 41
Without prejudice to Article 40, the place of an intra-Community acquisition of goods as
referred to in Article 2(1)(b)(i) shall be deemed to be within the territory of the Member
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State which issued the VAT identification number under which the person acquiring the
goods made the acquisition, unless the person acquiring the goods establishes that VAT has
been applied to that acquisition in accordance with Article 40.
If VAT is applied to the acquisition in accordance with the first paragraph and subsequently
applied, pursuant to Article 40, to the acquisition in the Member State in which dispatch or
transport of the goods ends, the taxable amount shall be reduced accordingly in the Member
State which issued the VAT identification number under which the person acquiring the
goods made the acquisition
Article 42
The first paragraph of Article 41 shall not apply and VAT shall be deemed to have been
applied to the intra-Community acquisition of goods in accordance with Article 40 where
the following conditions are met:
(a) the person acquiring the goods establishes that he has made the intra-Community
acquisition for the purposes of a subsequent supply, within the territory of the Member State
identified in accordance with Article 40, for which the person to whom the supply is made
has been designated in accordance with Article 197 as liable for payment of VAT;
(b) the person acquiring the goods has satisfied the obligations laid down in Article 265
relating to submission of the recapitulative statement.
Article 138
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, for another taxable person, or for a non-taxable legal person
acting as such in a Member State other than that in which dispatch or transport of the goods
began.
2. In addition to the supply of goods referred to in paragraph 1, Member States shall exempt
the following transactions:
(a) the supply of new means of transport, dispatched or transported to the customer at a
destination outside their respective territory but within the Community, by or on behalf of
the vendor or the customer, for taxable persons, or non-taxable legal persons, whose intraCommunity acquisitions of goods are not subject to VAT pursuant to Article 3(1), or for any
other non-taxable person;
(b) the supply of products subject to excise duty, dispatched or transported to a destination
outside their respective territory but within the Community, to the customer, by or on behalf
of the vendor or the customer, for taxable persons, or non-taxable legal persons, whose
intra-Community acquisitions of goods other than products subject to excise duty are not
subject to VAT pursuant to Article 3(1), where those products have been dispatched or
transported in accordance with Article 7(4) and (5) or Article 16 of Directive 92/12/EEC;
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(c) the supply of goods, consisting in a transfer to another Member State, which would have
been entitled to exemption under paragraph 1 and points (a) and (b) if it had been made on
behalf of another taxable person
Article 141
Each Member State shall take specific measures to ensure that VAT is not charged on the
intra-Community acquisition of goods within its territory, made in accordance with Article
40, where
the following conditions are met:
(a) the acquisition of goods is made by a taxable person who is not established in the
Member State concerned but is identified for VAT purposes in another Member State;
(b) the acquisition of goods is made for the purposes of the subsequent supply of those
goods, in the Member State concerned, by the taxable person referred to in point (a);
(c) the goods thus acquired by the taxable person referred to in point (a) are directly
dispatched or transported, from a Member State other than that in which he is identified for
VAT purposes, to the person for whom he is to carry out the subsequent supply;
(d) the person to whom the subsequent supply is to be made is another taxable person, or a
non-taxable legal person, who is identified for VAT purposes in the Member State
concerned;
(e) the person referred to in point (d) has been designated in accordance with Article 197 as
liable for payment of the VAT due on the supply carried out by the taxable person who is
not established in the Member State in which the tax is due.
94
Article 156
1. Member States may exempt the following transactions:
(a) the supply of goods which are intended to be presented to customs and, where
applicable, placed in temporary storage;
(b) the supply of goods which are intended to be placed in a free zone or in a free
warehouse;
(c) the supply of goods which are intended to be placed under customs warehousing
arrangements or inward processing arrangements;
(d) the supply of goods which are intended to be admitted into territorial waters in order to
be incorporated into drilling or production platforms, for purposes of the construction,
repair, maintenance, alteration or fitting-out of such platforms, or to link such drilling or
production platforms to the mainland;
(e) the supply of goods which are intended to be admitted into territorial waters for the
fuelling and provisioning of drilling or production platforms.
2. The places referred to in paragraph 1 shall be those defined as such by the Community
customs provisions in force.
Article 157
1. Member States may exempt the following transactions:
(a) the importation of goods which are intended to be placed under warehousing
arrangements other than customs warehousing;
(b) the supply of goods which are intended to be placed, within their territory, under
warehousing arrangements other than customs warehousing.
2. Member States may not provide for warehousing arrangements other than customs
warehousing for goods which are not subject to excise duty where those goods are intended
to be supplied at the retail stage
Article 164
1. Member States may, after consulting the VAT Committee, exempt the following
transactions carried out by, or intended for, a taxable person up to an amount equal to the
value of the exports carried out by that person during the preceding 12 months:
(a) intra-Community acquisitions of goods made by the taxable person, and imports for and
supplies of goods to the taxable person, with a view to their exportation from the
Community as they are or after processing;
(b) supplies of services linked with the export business of the taxable person.
2. Where Member States exercise the option of exemption under paragraph 1, they shall,
after consulting the VAT Committee, apply that exemption also to transactions relating to
supplies carried out by the taxable person, in accordance with the conditions specified in
95
Article 138, up to an amount equal to the value of the supplies carried out by that person, in
accordance with the same conditions, during the preceding 12 months
Article 170
All taxable persons who, within the meaning of Article 1 of Directive 79/1072/EEC , Article
1 of Directive 86/560/EEC and Article 171 of this Directive, are not established in the
Member State in which they purchase goods and services or import goods subject to VAT
shall be entitled to obtain a refund of that VAT in so far as the goods and services are used
for the purposes of the following:
(a) transactions referred to in Article 169;
(b) transactions for which the tax is solely payable by the customer in accordance with
Articles 194 to 197 or Article 199
Article 194
1. Where the taxable supply of goods or services is carried out by a taxable person who is
not established in the Member State in which the VAT is due, Member States may provide
that the person liable for payment of VAT is the person to whom the goods or services are
supplied.
2. Member States shall lay down the conditions for implementation of paragraph 1.
Article 197
VAT shall be payable by any person who is identified for VAT purposes in the Member
State in which the tax is due and to whom goods are supplied in the circumstances specified
in Articles 38 or 39, if the supplies are carried out by a taxable person not established within
that Member State.
Article 204
1. Where, pursuant to Articles 193 to 197 and Articles 199 and200, the person liable for
payment of VAT is a taxable person who is not established in the Member State in which
the VAT is due, Member States may allow that person to appoint a tax representative as the
person liable for payment of the VAT.
Furthermore, where the taxable transaction is carried out by a taxable person who is not
established in the Member State in which the VAT is due and no legal instrument exists,
with the country in which that taxable person is established or has his seat, relating to
mutual assistance similar in scope to that provided for in Directive 76/308/EEC and
Regulation (EC) No 1798/2003, Member States may take measures to provide that the
person liable for payment of VAT is to be a tax representative appointed by the nonestablished taxable person.
96
However, Member States may not apply the option referred to in the second subparagraph to
a non-established taxable person, within the meaning of point (1) of Article 358, who has
opted for the special scheme for electronically supplied services.
2. The option under the first subparagraph of paragraph 1 shall be subject to the conditions
and procedures laid down by each Member State.
***
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VAT Expert Group: sintesi dell`attività in corso 25

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