EU – Council agrees short-term VAT fixes as from 1 of January 2020

euro-comPlease find attached a press release as published last week by the European Council. This concerns so called “Quick Fixes” aimed to be implemented as per 1 January 2020 (and as an interim step towards a definitive EU VAT system). Due to the numerous discussion around the definition, the “Certified Tax Person (CTP)” concept has been postponed and will likely be part of the definitive VAT regime.

On 2 October 2018, the Council agreed on four adjustments to the EU’s current VAT rules to fix specific issues.

Pending introduction of the new VAT system, four short-term ‘quick fixes’ will be made regarding the VAT aspects of trade between the member states. Discussions are ongoing on a definitive VAT system to replace the current ‘transitional’ VAT arrangements, which have been applied since 1993.

“This package of proposals is aimed at fixing some of the practical problems we are experiencing with the current VAT rules”, said Hartwig Löger, minister for finance of Austria, which currently holds the Council presidency. “At the same time, it is of high practical relevance for our businesses who will benefit from the harmonised rules.”

The Council agreed on the four ‘quick fixes’ initially presented by the Commission:

  • call-off stock. The proposals provide for a simplified and uniform treatment for call-off stock arrangements, where a vendor transfers stock to a warehouse at the disposal of a known acquirer in another member state;
  • the VAT identification number. To benefit from a VAT exemption for the intra-EU supply of goods, the identification number of the customer will become an additional condition;
  • chain transactions. To enhance legal certainty in determining the VAT treatment of chain transactions, the proposals establish uniform criteria;
  • proof of intra-EU supply. A common framework is proposed for the documentary evidence required to claim a VAT exemption for intra-EU supplies.Next steps
  • Agreement was reached at a meeting of the Economic and Financial Affairs Council. The Council is expected to adopt the directive once the European Parliament has given its opinion.
  • These adjustments will apply from 1 January 2020.

The Council needs unanimity to adopt the proposals, after consulting the European Parliament. (Legal basis: article 113 of the Treaty on the Functioning of the European Union and article 397 of regulation 282/2011.)

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