With effect from 2 September 2023, the information to be included on the VAT invoice by an intermediary in a simplified ABC supply will change.
VAT reverse-charged
This is set out in a notice published in the Government Gazette on 1 September 2023 amendment of the Decision on Turnover Tax: Administrative, invoicing and other obligations. It was agreed that the intermediary should state on the invoice “intra-Community supply“. With effect from 2 September 2023, that approval will lapse and, in accordance with European case law, the invoice must state “VAT reverse-charged“.
Simplified ABC scheme
The expiry of the approval relates to the so-called simplified ABC scheme. This may be applied if:
- Goods are supplied by trader A to trader B, who then supplies the goods to trader C;
- the goods are transported directly from A to C;
- A, B and C are each established in a different Member State of the European Union.
According to case law, for VAT purposes there are two supplies: namely, the supply by trader A to trader B and the supply by trader B to trader C. Only one of these two supplies qualifies as an intra-Community supply. This is the supply to which the intra-Community transport must be linked. Often, this is the supply by A to B. The other supply qualifies as a domestic supply in the country where C is established.
To prevent trader B from having to register for VAT in C’s country of establishment prior to making a supply to trader C, the simplified ABC scheme allows B to reverse-charge the VAT to trader C. This scheme remains in force unchanged, but the wording on the invoice will change.