Following the Council Implementing Regulation (EU) 2018/1912 of 4 December 2018, four ‘quick fixes’ were introduced regarding the VAT legislation applicable to intra-Community trade. These ‘quick fixes’ are mainly aimed at clarifying and simplifying this legislation and will apply from 1 January 2020.
Apart from a simplification with regard to so-called ‘call-off stocks’, the obligation for the buyer to have a VAT identification number in the Member State of destination and a clarification with regard to chain transactions, the above-mentioned Implementing Regulation also aims to harmonise the proof of intra-Community supplies as the fourth ‘quick fix’.
From 1 January 2020, there is a (rebuttable) presumption of transport to another EU Member State if the supplier, where the transport is carried out by him or on his behalf, in accordance with Article 45a of Implementing Regulation (EU) No 282/2011 as amended by Implementing Regulation (EU) 2018/1912 , can provide at least two non-contradictory supporting documents issued by two different parties independent of each other, the seller and the buyer.
Such non-contradictory evidence may take the form of a CMR document or CMR consignment note, a bill of lading, an invoice for the carriage of goods by air or an invoice from the carrier of the goods (or other documents relating to the shipment or carriage of the goods).
However, if one is in possession of only one such document, it may be supplemented by an insurance contract covering the dispatch or transport of the goods or bank documents proving payment for the dispatch or transport (1), official documents issued by a public authority (e.g. a notary) confirming the arrival of the goods in the Member State of destination (2) or a receipt issued by a warehouse keeper in the Member State of destination confirming the storage of the goods in that Member State (3).
If the transport is carried out by or on behalf of the buyer, the supplier also needs a written statement from the buyer that meets a number of formal requirements before he can benefit from the presumption.
An important note in this respect is that all other means of proof already permitted in this respect are still valid. The above should be regarded as evidence that at least demonstrates that the supply is an intra-Community supply.
It is important to know under which Incoterm one transports in the light of the above ‘quick fix’.
After all, there is only transport carried out by the buyer at EX WORKS and transport arranged by the seller on behalf of the buyer at FCA, FAS and FAB. If transport is carried out under these Incoterms, a written declaration by the buyer is therefore required before the zero rate can be enjoyed.
Method of transport
The method of transport is also important for the simplified methods of evidence. Depending on whether the transport takes place by road, rail, sea or air, a CMR consignment note, CIM consignment note, Bill of lading or Airway Bill will in principle be used.
The document used, where applicable, supplemented by an invoice from the carrier, will thus be able to provide proof of an intra-Community supply as from 1 January 2020 and, consequently, the zero rate of VAT.
In concrete terms, the following combinations will thus suffice as proof:
- For road transport a CMR consignment note signed by the consignee (buyer) and drawn up by whom it belongs (the CMR convention only imposes the obligation to have a CMR consignment note, but does not determine who has to draw it up, ultimately of course this is the road haulier), in combination with an invoice from the road haulier.
- For maritime transport, a Bill of Lading or B/L signed by the captain (or by someone on his behalf), in combination with the shipping company’s invoice.
- For rail freight a CIM consignment note issued by the rail carrier in combination with an invoice from the railway company for the freight rate.
- For air transport, an Airway Bill or an electronic Airway Bill signed off by the air carrier together with an invoice from the airline.
However, if one of the two documents is missing, then each of the previous documents can also be exchanged with:
- In the case of road transport documents or invoices showing payment for an all-in road transport surcharge, i.e. coverage on top of the CMR liability limit.
- In the case of rail, sea or air transport, documents or invoices showing that insurance has been taken out for a ‘declared value’ (all-in) or ‘special interest’ (just-in-time).
- Bank documents showing payment to the shipping company, railway company or airline company of the freight price.