If you supply goods to a business in another Member State of the European Union and the goods are dispatched or transported there in connection with that supply, this constitutes an intra-Community supply. In that case, you may apply the 0% VAT rate to the supply. Your customer must pay VAT on the intra-Community acquisition.
Proof
The successful entrepreneur must be able to prove that the 0% rate has been correctly applied. In the Netherlands, this currently entails:
- verification of the VAT registration number provided by the customer (via the VIES(system);
- provide all relevant administrative documents to prove that the transport or dispatch actually took place.
New EU rules
In an effort to curb the widespread VAT fraud surrounding the application of the 0% rate and to provide greater certainty for both the tax authorities and businesses, the European Union is issuing new rules. These take the form of a regulation. As a result, the rules apply directly in all Member States. A bill submitted for consultation, incorporating the amendments (quick fixes) to Dutch legislation.
The new rules come into force on 1 January 2020. In addition to the current rules regarding proof that the 0% rate has been correctly applied, a rebuttable presumption is being introduced. A trader who is in possession of the appropriate supporting documents is deemed to have made an intra-Community supply (the suspicion). However, the tax authorities may try to prove that this is not the case (the refute).
Businesses that supply goods within the EU would be well advised to check (or have someone check) whether they can adapt their administrative processes in such a way as to minimise their VAT risks by applying the new rules.
VAT registration number
The Dutch tax authorities already require businesses to check their customers’ VAT registration numbers. From 1 January 2020, it will be a substantive requirement for the supplier to have the customer’s VAT registration number. Naturally, that number must be checked in VIES.
Most Dutch businesses will already have the process of requesting and verifying VAT registration numbers incorporated into their procedures in the context of intra-Community supplies. This aspect of the process will become even more important from 2020 onwards.
Transport
The rules governing proof of transport vary between Member States. From 2020, a rebuttable presumption that a supply is intra-Community applies in each Member State if proof of transport is provided:
- either because the seller states that the goods were transported by the seller or by a third party, or because the seller has a statement from the buyer confirming that the goods have been dispatched or transported; AND
- the seller possesses at least two non-contradictory supporting documents, issued by two independent parties.
The following options are available for supporting documents:
- two documents relating to the consignment or transport (CMR, bill of lading, carrier’s invoice);
- a document relating to the dispatch or transport of the goods, including a transport insurance policy, a bank document relating to the transport, a notarised acknowledgement of receipt or a receipt issued by a warehouse keeper in another Member State.
ABC
The rules governing chain transactions (ABC transactions) are being simplified. This involves an amendment to the VAT Directive. If the dispatch or transport is carried out by or on behalf of Party A or B, the transport is attributed to the first supply. That supply then qualifies as the intra-Community supply. The rules for simplified ABC transactions remain unchanged.