Starting with January 1, 2020, Directive 2018/1910 ("the Directive"), amending Directive 2006/112 and Council Implementing Regulation 2018/1912 from 4 December 2018 ("the Regulation"), amending Regulation 282/2011, entered into force. These represent a package of amendments adopted by the Council of the European Union in order to standardize the VAT rules applicable to intra-Community transactions in all EU Member States - "2020 Quick fixes".
In brief, this “Quick fixes” package implements amendments regarding VAT exemption of intra-Community supplies of goods, chain transactions and call-off stock arrangements.
We mention that the provisions of the Directive 2018/1910 must be implemented into the local legislation by the Member States (at this moment, in Romania there is a draft law in this regard, published by the Ministry of Finance).
However, Regulation 1912/2018 applies directly, being in force and producing effects from January 1, 2020. Currently, to justify VAT exemptions for intra-Community supplies of goods, the Order of the Ministry of Finance 103/2016 is applicable (for which there is also an amendment draft). It remains to be seen how the new provisions will be implemented and in what form they will be transposed in Order of the Ministry of Finance 103/2016.
VAT exemption of intra-Community supplies of goods
The amendments made by the Regulation refer to the conditions for granting the VAT exemption for intra-Community supplies of goods, more precisely to the supporting documents for proving the transport of goods from one Member State to another.
In this context, the person that undertakes the transport, supplier or client, should be in possession of:
i. At least two documents related to the transport of the goods, as follows:
ii. One of the documents mentioned above together with any single document from the following:
The transport of the goods is considered justified if the person who undertakes the transport (the supplier or the client) has in possession, at least two evidence items (according to the conditions above) that are non-contradictory, issued by two different parties that are independent of each other, as well as of the buyer and of the seller.
Due to the fact that in case the carrier or the freight forwarding house are affiliated with each other or with the supplier or with the buyer, the two documents (according to the requirements of the Regulation) will cannot be obtained as proof of the transport.
When the client undertakes the transport, in addition to the documents mentioned above, the client must provide the supplier with a written statement stating that the goods have been dispatched or transported by the acquirer or by a third party on behalf of the acquirer, and identifying the Member State of destination of the goods, as well as the quantity and nature of the goods, the date and place of the arrival of the goods.
The statement shall be furnished by the client to its supplier by the tenth day of the month following the supply.
Also, the Directive stipulates that Statement 390 regarding intra-Community transactions will be a mandatory condition for granting the VAT exemption for intra-Community supplies of goods. If the supplier does not submit the Statement 390 or the intra-Community delivery is incorrectly declared, the exemption cannot be applied.
Chain transactions involve successive supplies of goods (implying the existence of two or more consecutive suppliers) which are the subject of a single intra-Community transport between two Member States (including triangular operations).
The Directive regulates the situation in which the goods are delivered successively and are transported from one Member State to another Member State directly from the first supplier to the last customer in the chain, the transport being undertaken by the intermediary operator. Thus, the Directive provides that in this situation, the transport shall be ascribed only to the supply made to the intermediary operator, being the only transaction exempt from VAT.
By way of exception, if the intermediary operator is registered for VAT purposes in the Member State from which the goods are dispatched or transported and has communicated to his supplier the VAT identification number issued to him by that Member State, the transport shall be ascribed to the second supply of goods, made by the intermediary operator to its beneficiary. Thus, the first transaction between the supplier and the intermediary operator remains a local VAT transaction and the second transaction, between the intermediary operator and its beneficiary, will be an intra-Community supply of goods exempted from VAT.
The call-off stock arrangements
The amendment made by the Directive in relation to the call-off stock arrangements stipulates that, starting with the date of application, all Member States shall apply the simplification measures, more exactly the intra-Community supply of the goods shall be treated as occurring when the goods are called-off stock, and not at the moment of the intra-Community transport, in this way the supplier is no longer required to be registered for VAT purposes in the Member State of destination.
Romania is among the EU member states that already apply the simplification measures for call-off stock, according to Order no. 4.120/2015 regarding the approval of the Instructions for the application of the simplification measures regarding intra-Community transfers and assimilated intra-Community acquisitions.
VAT split payment system
In the Official Monitor no. 1031 from December 23, 2019 was published the Emergency Ordinance no. 78/18.12.2019 regarding the approval of some fiscal-budgetary measures, through which the Law 275/2017 regarding VAT split payment system, is repealed.
Thus, the VAT split payment system is eliminated, starting with February 1, 2020. The money from the VAT accounts opened for the VAT split payment will be returned to the taxpayers within 10 days from the moment the Ordinance enters into force, respectively from the date of publication.
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