The year 2020 will start with some changes to VAT, basically in relation to intra-Community transactions, by application of Council Directive 2018/1910.
On 1 January next, Council Directive (EU) 2018/1910 of 4 December 2018, which amended Council Directive 2006/112/EC (VAT Directive), will enter into force, introducing changes to harmonise and simplify the provisions for the application of the exemption in intra-Community transactions in general, as well as the regulation of chain transactions and the sale of goods on consignment.
In order to adapt the Community regulations, all states must have transposed them by 31 December 2019 at the latest, although in the case of Spain, the draft law and regulations that should regulate it are still being processed. In addition, the new legislation would also include the regulation of the Execution Regulations (EU) 2018/1909 and 2018/1912.
We will now take a few brief notes on the new regulation and its application from next year:
The correct recording of the NIF/IVA becomes an essential requirement to be able to enjoy the exemption in the intra-community supply of goods. The NIF/IVA, becomes a material requirement and not a formal one (as it is at present) to apply the exemption in the intra-community supply of goods.
The same will occur with the inclusion of transactions in the recapitulative declarations of intra-Community transactions.
Proof of intra-Community transport of goods
With the aim of increasing legal certainty, the new regulation harmonises documentary evidence in order to consider that an intra-Community dispatch or transport of the goods has taken place.
It should be recalled that the rule currently refers to proof of transport by any means, which has sometimes led to disputes in the application of the exemption for intra-Community supplies.
Sale of goods on consignment and chain transactions
It establishes common rules for taxation and simplification in the field of trade in goods between Member States in relation to
- So-called call off stock transactions, which consist of agreements between entrepreneurs or professionals for the cross-border sale of goods, where the supplier sends goods from one Member State to another, within the European Union, so that they are stored in the Member State of destination at the disposal of the customer who can acquire them at a later date as required. Under the new rules, these transactions will result in an exempt supply of goods in the Member State of origin and an intra-Community acquisition of goods in the Member State of arrival of the goods by the customer. This simplified treatment will apply provided that the goods are acquired by the customer within one year of arrival in the Member State of destination.
- Chain transactions in which goods are sent to another Member State directly from the first supplier to the final purchaser by means of a single intra-Community transport, despite successive sales between different entrepreneurs or professionals. As a general rule, dispatch is only linked to the supply of goods by the supplier to the intermediary, which is treated as an intra-Community supply of goods exempt from VAT.
Finally, certain territories of the Italian Republic are incorporated into the Union’s customs territory.
Although the rules in the pipeline have yet to be approved, they provide for their entry into force on 1 January 2020.