Quick fix on customer´s VAT number
VAT numbers and ECSL returns will become a material requirement to qualify intra-Community supplies as zero-rated.
10 September, 2019
This article is part of a series of articles published by Marosa regarding the four key changes to come about to international trade as of 1 January 2020. This article covers the renewed importance of the customer’s valid VAT number when making intra-Community supplies.
Let's look at how VAT numbers and ECSL returns will become a material requirement to qualify intra-Community supplies as zero-rated.
VAT number as a material requirement
In order to make a zero-rated intra-Community supply, current rules establish that businesses must prove that goods were moved from the dispatch EU country to another EU country of arrival. In addition, the supplier should prove that the sale was made to a business. The latter requirement is typically met when providing the customer's VAT number, however, the European Court of Justice issued multiple decisions allowing businesses to support their zero-rated IC-supplies with alternative evidence.
As of 1 January 2020, stating the customer's VAT number will become a material requirement for zero-rated intra-Community supplies. Also, the submission of ECSL returns reporting the relevant transaction will become a material requirement for a zero-rated intra-Community supply.
From our view, there are two main consequences of this change:
- Businesses must ensure that all client VAT numbers in their master data have been entered and validated in the VIES EU database.
- Businesses must ensure that all intra-Community supplies are correctly captured by the system and reported accordingly in the ECSL return. This is important, as ECSL returns were often regarded as informative and less important tax returns. However, after 2020, there is a big risk in failing to complete these returns correctly.
How can Marosa help you?
At Marosa we developed a free of charge bulk VIES number checker. This tool will allow you to automatically check all your VAT numbers in your master data with a few clicks.
Our VAT compliance team carries logical and completeness checks to ensure that you do not miss any transaction in your ECSL return.
The other 3 quick fixes
You can find more information about the remaining EU changes as from 2020 in our dedicated articles about each change:
- VAT treatment of chain transactions. New rules to allocate the transport
- Documents to be kept for intra-Community supplies after 2020
- Call-off stock simplification as from 2020
Not sure how the changes introduced by the Quick Fixes will impact your business? Contact Marosa with any questions or remarks.