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EU VAT rules

New VAT rules for trading with the EU from 1 January 2020

Nicola Gladwell

Posted by
Nicola Gladwell
23.12.2019

If your business engages in business to business transactions with Europe, you should be aware of the forthcoming changes to the EU’s VAT rules.

With the recent focus very much on preparing businesses for Brexit, some forthcoming changes have not had the publicity from HMRC that they might have ordinarily received and the ‘four quick fixes’ is one such change.

From 1 January 2020, the EU will be launching what is being referred to as the ‘four quick fixes” for VAT. This is designed to simplify some aspects of the current VAT regime, but may also cause some compliance headaches for UK businesses – with forward planning and process changes needed.

These changes are the first of a number of amendments expected over the next couple as years as part of the move to the Definitive VAT regime.

Here we look at what these initial changes are and how they impact UK businesses trading with the EU.

What areas of VAT do the four quick fixes cover?

The changes from 1 January 2020 will cover:

  • Call-off stock held in other EU states: The simplification for suppliers not having to register locally where they hold call off stock, providing qualifying criteria is met and is extended to all member states.
  • Chain transactions with consecutive supplies of goods among three or more businesses in different EU Member States: There may be changes for the intermediary in a chain transaction where they arrange the transport.
  • Evidence of shipment for zero-rating intra-EU sales of goods: Suppliers must ensure that the customer provides an EU VAT number in order to secure zero-rating and so that an EC Sales List can be completed.
  • Other requirements for zero-rating intra-EU sales of goods: The EU has set out a simplified list of documents applicable to all member states. Taxpayers require at least two acceptable forms of evidence which are not contradictory and which are issued by independent parties.

Does Brexit mean these changes won’t apply to UK businesses?

Assuming the UK does not leave the EU before 31 Jan 2020, and/or that when it leaves, under an agreed deal, it will keep EU VAT law until the end of a transitional period (which is likely to be the end of 2020 at the earliest), these changes will affect UK businesses trading with the EU.

Under the circumstances will HMRC go lightly on businesses who aren’t complying fully with these new requirements?

“Given their strict treatment on zero-rated overseas shipments, it is prudent for UK business supplying goods to customers in other EU territories to consider what needs to be done to comply. This might include reviewing and adapting processes to meet the new requirements,” said Nicola Gladwell.

Contact us

To discuss how these new rules will specifically impact your business, or to discuss our VAT services further please contact us.

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This information has been produced by Rouse Partners LLP for general interest. No responsibility for loss occasioned to any person acting or refraining from action as a result of this information is accepted by Rouse Partners LLP. In all cases appropriate advice should be sought before making a decision.

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