The unexpected glory of Intrastat compliance
Some news in relations to intracommunity operations: « quick fixes » are going live as of January 1st 2020 within the framework of the European VAT system consolidation.
Those Quick Fixes have the following objectives:
- Simplifying and harmonizing the call-off / consignment stocks: When a supplier put at the disposal of a client a stock in another Member State, this supplier is not supposed to become VAT identified in each Member State where it places such a stock as soon as goods are withdrawn and therefore sold to the client provided the stock rotation is less than 12 months; such dispositions was not harmonized in all Member State, until the Quick Fixes.
- Bring back legal certainty to the VAT treatment of chain transactions: Criteria will be uniformly applied to successive operations in order to determine which operation will be qualified as intracommunity delivery;
- And reinforce the VAT exemption conditions on intracommunity deliveries: As of January 2020, issuing an intracommunity delivery invoice respecting the basic form conditions (indicate the client VAT number from another Member State than the one of departure, hold a proof of dispatch) will not be sufficient anymore to guarantee the VAT exemption.
FOCUS on the intracommunity supplies – 2020 version
Indeed, with the « Quick Fixes », the VAT regulation reshapes and strengthen the VAT exemption conditions applicable to these operations by imposing the following principles:
- Systematic check of the client’s VAT number validity becomes mandatory;
- The list of documents justifying the dispatch of the goods becomes restrictive and exhaustive. Besides, the elements of proof will have to be concordant and delivered by two different parties, independent from one another on the one hand, and independent on the seller and the buyer on the other hand;
- The accurate reporting of the intracommunity delivery in the Intrastat return becomes a sine qua none condition to the VAT exemption securization. Indeed, in case of lack of filling or any mistakes made in the Intrastat return, you might risk the VAT exemption rejection.
So the winner is… the intrastat return!
Usually described as a purely statistical declaration, and perceived sometimes as a low value added and burdensome task, the intrastat return will now have significant tax and financial implications.
On top of the customs filling or non-filling penalties, you will have to consider the risk of a potential VAT risk. This may not motivate everyone to take intrastat return seriously, but at least one might be more keen to consider outsourcing them.
GOOD QUESTIONS TO ASK YOURSELF:
Are your intracommunity flows of goods all tracked on your intrastat reports? Are your commodity codes up-to-date? Are product sheet available and up-to-date (especially regarding the weight of the product) and exportable from your IT system?
By 31.12.2019, companies now have less than 3 months to improve their intrastat compliance and more generally adopt Quick good practices, in order to avoid any VAT exemption rejection.
As an illustration for those good practices you could :
- Communicate to EUROTAX the EU VAT numbers of your clients so that we can check on their validity for you under a periodicity to be chosen by/with you (weekly, monthly, quarterly or other). In return we will provide you with the results for immediate actions in case of invalid numbers, and the logs for sake of justification of your VAT exemption; YES, I want to obtain more information on the EUROTAX’s VIES-Check subscription formula
- Ask EUROTAX to assist you in determining your « proofs couple » mapping for each one of your typology of flows and counterparties so that they can be included in your internal control process; YES, I want to obtain more information on EUROTAX « proofs couple” mapping assistance
- Subcontract your intrastat returns to EUROTAX: Intrastat Audit – Regularization – Monthly compliance YES, I want to obtain more information on EUROTAX’s Intrastat compliance offer in order to securize my intracommunity deliveries VAT exemption
In any case, our best recommendation would still be the following: DO NOT be tempted by The Wait & See approach ! The required adjustments to Quick Fixes must be anticipated NOW, with methodology and care. We remain at your disposal for any further information, and wish you a pleasant and efficient preparation to those 2020 Quick Fixes !