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Written by:
Sean-Paul Smit


Bill providing for implementation of adjustments to value-added tax regime

The Junior Finance Minister has put out for public consultation a Bill that is to provide for implementation of a particular EU directive aimed at closer harmonisation and simplification, with effect from the first of January 2020, of intra-Community trade.

The first aspect which the Bill in question addresses concerns that of the value-added tax regime governing merchandise that is kept in stock elsewhere in the EU. Any movement of stocks by an entrepreneur from one EU Member State to another represents a notional intra-Community transfer which the entrepreneur in question is under the obligation to render account of in the value-added tax return and periodic Intra Community Performances (IPC) declaration he has to file. The entrepreneur has to account for an intra-Community acquisition in the warehousing Member State, with the subsequent sale of the stocks representing a value-added taxed supply in the supplying Member State. The new regime caters for the situation in which the identity of the buyer is already known to the entrepreneur before the merchandise in question leaves the warehouse, and involves the abolition of the supplier’s registration and reporting duties in the warehousing Member State.

Second, the Bill provides for an A-B-C supply chain transaction system to enable the identification of which of the constituent transactions should be regarded as the one having intra-Community transaction status. A-B-C supply chain transactions are sequential supply transactions between entrepreneurs each of which involves the same merchandise being moved from one EU Member State to another. It does not matter what number of links the chain is made up of, nor is it relevant in how many EU Member States each of the entrepreneurs who together make up the chain are established or value-added tax registered.

Third, the Bill deals with the evidence of intra-Community transport of merchandise to (an) other Member State(s), as one of the conditions for applying the zero tariff to supply transactions involving merchandise being moved from one EU Member State to another. It has been decided to introduce the “dual rebuttable presumption” criterion in order to remove legal uncertainty, the upshot of this being that merchandise will be deemed to have been moved out of the territory of the supplying EU Member State conditional upon the entrepreneur concerned having the requisite documentation to hand.

The fourth and final aspect which the Bill addresses concerns the status of the value-added tax identification number. Case law from the European Court of Justice has confirmed that the value-added tax identification number as such is no requisite for applying the zero tariff. However, the use of the appropriate value-added tax identification number is indispensable for tracking the flow of products and services and monitoring the associated value-added tax payments. Under the proposed legislation the submission of an accurate periodic IPC declaration would be added as a condition for applying the zero tariff. An entrepreneur’s failure to satisfy the conditions could cause him to forfeit his zero tariff privilege unless he were able to justify his shortcomings.

All input regarding the Bill is gratefully received, at, until 03 June 2019.

Dutch version: Wetsvoorstel implementatie aanpassingen btw-regelgeving

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