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Friday, 17 May 2019

VAT and intra-EU trade: companies should prepare for the 4 ‘quick fixes’ from 1 January 2020

VAT rules on intra-EU trade are currently subject to a major review on an EU level. This reform is deemed necessary to counter intra-EU fraud (see link). Although the outcome of this major reform is highly uncertain, the EU Member States already agreed on certain “simplification” measures in order to counter some actual problems of VAT and intra-EU trade. These measures are bundled in four “quick fixes”, which will come into force from 1 January 2020.

These quick fixes might look innocent and logic but the introduction of these new measures could, in our view, require important changes of current VAT compliance for intra-EU business. Therefore, we have assessed these “quick fixes” and identified the most important consequences they will have in practice and how they might affect your business. A brief summary can be found here below, while the full article can be read here.

  1. The new EU wide simplification measure for call-off stock arrangements is subject to a large list of cumulative requirements. If one of these requirements ceases to be fulfilled, the supplier might face serious VAT levies and penalties in both the Member State to which the goods were dispatched as well as in the Member State from which the goods were dispatched. Since the rule is not an option but mandatory, the supplier can only avoid the application by deliberately not fulfilling all the criteria. On the other hand, businesses that currently do not apply existing simplification measures might even be forced into these new rules.

  2. In order for intra-Community supplies to be zero-rated as from 1 January 2020, two substantive conditions will be added to the existing ones: (i) a correct VAT number of the recipient and (ii) a correct reporting in the recapitulative statement. It goes without saying that this amendment to the EU VAT Directive entails a great risk in the hands of the supplier as he or she will be liable for the payment of the VAT if at least one of these new conditions is not met. Moreover, this amendment will also have an impact on other transactions such as the transfer of own goods to other EU Member States, supplies with installation, tolling services, distance sales and even call-off stock arrangements.

  3. The documentary proof that needs to be gathered in order to substantiate the zero-rate for intra-Community supplies will primarily depend on which party arranges for the transportation. If the supplier arranges for the transportation, the supplier should gather at least two non-contradictory pieces of proof of transportation that should be issued by two different third parties that are independent. For ex-works supplies, additionally a written declaration of transport by the purchaser will become mandatory. The idea hereof is to harmonize the rules on documentary evidence between the different EU Member States, but it remains to be seen whether this amendment will indeed harmonize the rules in practice as it is not clear from the outset whether Member States can still impose other requirements.

  4. For chain transactions, transport will be ascribed only to the supply made to the intermediary operator unless the intermediary operator has communicated to his/her supplier its VAT identification number from the Member State in which the goods are dispatched or transported. When they decide to do so, the acquirers should keep sufficient proof of this communication in order to verify the correct application of the measure in case of a tax audit. Moreover, they should also gather sufficient proof in order to substantiate the application of the zero-rate for their subsequent intra-Community supply and hence should definitely take into account the new substantive conditions.

As these adjustments will apply from 1 January 2020, it clearly follows from the above that businesses should definitely be getting ready for the upcoming ‘quick fixes’. This requires an in-depth assessment of current internal compliance procedures for VAT and intra-EU trade.

Our VAT and international trade law specialists have extensive experience in this area and are very well-placed to assist your business in preparing for these changes.


Stijn Vastmans - Partner (

Stein De Maeijer - Senior Associate (

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