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Changes Concerning VAT AS of 1. January 2020 - "Quick Fixes"

02 January 2020

On 2 October 2018, the Economic and Financial Affairs Council (ECOFIN) agreed on immediate measures to harmonize the European VAT system („quick fixes“), most of which were adopted by the European Council on 4 December 2018. The „Act on the Further Tax Promotion of Electricity Mobility and on the Amendment of Further Regulations“, which was passed by the German Bundestag and Bundesrat, was recently published, so that the associated changes will take effect at the new year.

The most important changes concern:

  • Intra-Community supplies and „new“ documentary evidence
  • chain transactions
  • consignment warehouse

1. Intra-Community supplies
The tax exemption for intra-Community supplies will be subject to stricter preconditions in the future. Art. 138 (1) / 1a MwStSystRL (VAT Directive) and § 6a UStG (VAT Act) stipulate that the following criteria extend the material requirements for the tax exemption of an intra-Community supply:

  • the purchaser is registered for VAT purposes in an EU member state other than the one in which the shipment or transport begins,
  • the purchaser has informed the supplier of his VAT ID number/“used“ it in accordance with the German VAT Act,
  • Validation / correct recording of the VAT ID number in the MIAS system,
  • the supplier complies with its obligation to submit a proper recapitulative statement.

If the supplier does not record a (valid) VAT ID number of the purchaser, the intra-Community delivery shall be subject to mandatory taxation. The prerequisites for the tax exemption are not fulfilled, even if all other prerequisites are met; even if the customer, for example, applies to the authorities for the issue of a VAT ID number, but has not yet received it at the time of delivery. The supplier must charge VAT to the customer. However, this does not alter the fact that the purchaser has to declare a taxable intra-Community acquisition in his Member State.
Only the notification of a VAT ID fulfils the requirement for exemption set out in Art. 138 of the VAT Directive, since only this number is recorded in the „VIES database“ and therefore only this number can be checked for validity by the supplier. The communication of the tax number is not sufficient.
For this reason, the (constant) qualified query of the VAT ID number and the correct identification of deliveries in the recapitulative statement will become even more important for companies in the future in view of the otherwise impending tax liability. This requires structured internal processes and, as a rule, an IT-supported regular query of the purchaser‘s VAT ID number. BDO‘s VAT-IDN Check is a web-based tool with a database connection. In our VAT-IDN Check, essential document information from the accounting department of the client is transferred and processed automatically. The check is carried out via an interface to the Federal Central Tax Office or to the VIES query of the European Commission. Of course, the test results are stored and displayed in a user-friendly way.