Draft explanatory notes on Quick fixes published

The EU Commission published further details on the 2020 quick fixes

Last September the European Commission published draft explanatory notes on the 2020 Quick fixes. This document outlines the view of the Group on the future of VAT on certain controversial aspects of the 2020 changes.

The 2020 quick fixes refer to 4 key changes in the VAT Directive that will impact most businesses with an intra-Community activity. Marosa summarized these changes with an individual article for each quick fix:

Intra-Community call-off stock will be simplified at EU level

New rules to allocate the intra-Community transaction on chain transactions

New rules on evidence for intra-Community supplies

The client VAT number is now a material requirement on intra-Community supplies

What are the questions answered by the draft explanatory notes?

Ever since the publication of the Commission´s plans to simplify VAT rules on EU trade, several questions were raised about the application in practice of these new rules. The draft explanatory notes focus on call-off stock and chain transactions, as these two quick fixes generate more controversy. They also cover aspects of the

Call-off stock:

  • What happens in case of substitution of the customer?
  • What is the VAT treatment of return of goods that are on consignment?
  • Can the supplier be registered for VAT in the country of consignment?
  • Is the intended acquirer required to be established in the country of arrival or is a VAT registration enough for the simplification to apply?
  • What happens if the time limit of 12 months is exceeded while the goods are on consignment?
  • Can the simplification apply if the goods are exported or sent to another EU country by the recipient?
  • Is it mandatory to apply the simplification?
  • Practical examples on how to complete the updated ECSL returns.

Chain transactions

  • How to assign the transport to the right party?
  • Who can and cannot act as an intermediary?
  • What happens if several parties handle the transport?

The draft notes also cover questions on the application of the other two quick fixes. These focus on practical aspects such as application of the exemption in case the client is 'waiting' for an application for VAT number to be processed or the use of local tax numbers for this simplification.

The complete document can be downloaded from the following link.

Contact us if you have questions on the application of this simplifications. We may also help you with a comprehensive health check of the VAT treatment of your activities in the EU.

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