As of January 1, 2020, the intra-Community VAT measures listed below will come into force. Spain will have to include these rules to its internal legislation before the aforementioned date. However, the current political situation will make it difficult to meet this deadline.
- Consignment Stock (“Call-off stock”)
“Call-off stock” refers to transactions in which a supplier from a Member State (“MS”) sends goods to another MS without transferring ownership. The goods are usually stored at the buyer’s premises (or at the facilities of a logistics operator) and the buyer acquires the goods when needed, to add them to its production or distribution processes. The sale (i.e. the transfer of the ownership) usually takes place when the buyer removes the goods from storage or warehouse. The key to this type of transaction is that (i) the supplier knows the buyer’s identity and VAT number from the moment the goods are sent to the destination MS and (ii) the transfer of the goods (that is, when they are made available) is not effectuated with the first shipment to the destination MS, but at a later stage once the customer collects the goods to cover its business needs. Currently, these transactions can lead to three operations: (i) an operation deemed an intra-Community delivery of goods exempt in the outgoing MS – known as a “EU transfer”-, (ii) an operation deemed an intra-Community acquisition of goods in the destination MS and (iii) a domestic delivery in the destination MS. Operation (ii) requires the supplier to register for VAT purposes in the destination MS and to declare the intra-Community acquisition of goods.
As of January 1, 2020, only two types of transactions will take place, as opposed to three: (i) an intra-Community delivery of goods exempt in the outgoing MS, in which the taxable party will be the supplier (ii) an intra-community acquisition of goods in the destination MS, in which the taxable party will be the buyer. Note that the “EU transfer” disappears and therefore so does the supplier’s obligation to register in the destination MS, provided that the supplier has no permanent establishment in the destination MS and knows the buyer’s VAT details. At a formal level, both the supplier and the buyer must keep a specific record of these operations. Furthermore, the supplier must include all transfers in its EC sales list. Finally, and as a general rule, for the application of this simplification, the buyer must acquire (i.e. become the owner) of the goods within a period that may not exceed 12 months from their arrival at the destination MS.
- Chain Transactions
In chain transactions where consecutive goods deliveries occur with a single intra-Community transport, only the delivery linked to that transport can benefit from the exemption on intra-Community delivery of goods. Due to the problems that arise among MSs when determining which transfer of goods benefits from the exemption, as of January 1, 2020, a rule will be established that determines which transfer will be linked to the transport and benefit from the exemption. Thus, when the goods are delivered consecutively and they are dispatched and/or transported from one MS to another, directly from the first supplier to the last customer in the chain, transport will be charged on the delivery made by the supplier to the intermediary operator (that is, the first delivery in the chain), provided that the aforementioned operator has provided VAT details issued by a MS other than the country of origin of the goods.
- VAT and EC sales list
The inclusion of the buyer’s VAT number on the VAT Information Exchange System (VIES) will be a material requirement (and not just a formal one) for the exemption application. Consequently, from 2020 it will be a material requirement for intra-Community delivery of goods to be exempt from VAT, that the buyer has a VAT number registered in the VIES system and that the supplier has included the information related to said operation in the EC sales list. In practice, the Spanish Tax Authorities already required VIES registration as a material condition.
- Simplification of the Transport Evidence
From 2020, all MSs will have to apply the same rules in relation to the means of testing on intra-Community transport to apply the intra-Community delivery of goods exemption. In this sense, two iuris tantum assumptions are established to demonstrate that the goods have been transported to another MS. The concurrence of at least two non-contradictory items of evidence issued by different and independent parties is required, such as, signed consignment notes (CMR), carrier invoice, insurance policy, receipt from the depositary in the destination MS, etc. In addition, when the transport has been carried out by the customer or by a third party on its behalf, the supplier must be in possession of a written declaration issued by the buyer certifying that said transportation has been effectuated.
AUTHOR:
Andreu Bové
Tax advisor, Madrid
above@bovemontero.com
+34 91 561 54 14
