Transactions in goods: Quick fixes

Historically, an intra-community supply of goods was exempt from VAT if the supplier had evidence of the goods being transported to another EU Member State and if they were in possession of the customer’s valid and active VAT identification number.  The rules introduced in 2020 imposed an additional requirement such that the exemption for intra-community supplies will not apply if the supplier fails to declare the supply in the recapitulative statement or provides incorrect information. This change emphasises the importance of accurate reporting and compliance.

Chain transactions involve multiple successive supplies of the same goods, where the goods are dispatched or transported directly from the first supplier to the last customer. The rules clarify the place of supply and the assignment of the dispatch or transport to a specific supply within the chain. 

The place of supply of goods from one Member State to another in a chain transaction is:  

1. When the same goods are sold repeatedly and those goods are sent or moved from one Member State to another Member State directly from the first seller to the final buyer in the chain, the sending or moving shall only be assigned to the supply made to the intermediary operator; but

2. By way of exception from point (a), the dispatch or transport shall be ascribed only to the supply of goods by the intermediary operator where the intermediary operator has communicated to his supplier the VAT number issued to him by the Member State from which the goods are dispatched or transported. 

‘Intermediary operator’ means a supplier within the chain who dispatches or transports the goods either himself or through a third party acting on his behalf.

These rules simplify VAT compliance for businesses transferring goods to another Member State. If certain conditions are met, these transfers are not considered a supply of goods for consideration, thus alleviating the need for VAT registration in the destination Member State. 

In terms of these rules, call-off stock arrangements are considered to exist when the following conditions are fulfilled:

1. goods are moved by a supplier to another Member State with the intention of supplying those goods there, later after arrival, to another taxable person subject to certain conditions;

2. the supplier moving the goods does not have a place of business or a fixed establishment in the Member State where the goods are moved;

3. the customer for whom the goods are destined is registered for VAT purposes in the Member State where the goods are transported, and the supplier knows their identity and the VAT number of that Member State when the transport starts;

4. the supplier records the transfer of the goods in a special register and includes the identity of the customer and the VAT number that he received from the Member State where the goods are moved in the recapitulative statement.

Council Implementing Regulation (EU) 2018/1912 and guidelines from the European Commission offer further insights into the "Quick Fixes."