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EU Member States Slow To Implement VAT Quick Fixes

Thursday, February 6, 2020

The European Commission has launched infringement proceedings against 14 member states for failing to implement the so-called value-added tax quick fixes.

The VAT quick fixes were included in Council Directive (EU) 2018/1910 of December 4, 2018. They are intended to simplify VAT compliance for businesses and strengthen and harmonize existing EU rules ahead of the introduction of more comprehensive reforms to EU VAT law scheduled for 2021.

The four short-term measures provide:

  • That the VAT identification number of the customer, allocated by a member state other than that in which dispatch or transport of the goods began, should constitute an additional substantive condition for the application of the exemption in respect of an intra-Community supply of goods.
  • For more uniform rules when determining the VAT treatment of chain transactions, including triangular transactions, clarifying in particular which party should benefit from zero-rated treatment;
  • New VAT rules for call-off stock arrangements, to reduce the compliance burden for taxpayers and tax administrations and provide for a more uniform application of the rules in the EU;
  • For the introduction of a common framework for the documentary evidence required to claim a VAT exemption for intra-EU supplies.

According to the Commission's list of infringement decisions dated January 24, 2020, the following member states have been issued with letters of formal notice for deficiencies in implementing the directive: Belgium, Cyprus, the Czech Republic, Denmark, Greece, Spain, France, Italy, Luxembourg, Poland, Portugal, Romania, Slovenia, and the United Kingdom.

The letter of formal notice is the first step in EU infringement proceedings against a member state. National governments are required to respond to this notice within two months or the matter will be escalated.