2020 - EU VAT four quick fixes
- 29 December 2019
The EU VAT regime, which collects €1.2 trillion in taxes per annum, is due to undergo huge reforms over the next few years. Member states are debating overhauling the current ‘temporary’ systems for a definitive ‘destination’ based regime – provisionally from July 2022. This reform is aimed at helping eliminate an estimated €50 billion in annual VAT fraud.
Ahead of this reform, EU member states have agreed four changes for 1st January 2020 to the business-to-business (B2B) VAT rules on EU cross-border transactions (‘intra-community supplies’). These will help businesses operating cross-border supply chains by clarifying their VAT obligations. They also seek to tighten up areas vulnerable to VAT fraud. These reforms are known as the ‘four quick fixes’, and cover the following areas:
Quick fix | Topic | What's changing |
1 | Harmonising and reducing the obligation to VAT register on stock holdings held with a customer in another EU member state. | |
2 | Clarifying the pan-EU VAT rules on supply chain transactions and VAT zero-rating to provide businesses with certainty on their obligations. | |
3 | Harmonising the proof of transport document rules for zero-rating intra- community supplies. | |
4 | Obliging suppliers to obtain a customers’ VAT number, and list it on the sales invoices, as a new substantive condition for zero-rated intra-community supplies. |
These changes will help reduce some compliance obligations for businesses operating cross-border supply chains. It will, however, place new administrative requirements on them to ensure they can continue to enjoy VAT simplifications, such as zero-rating on intra-community supplies.