As of 1 January 2020 the ‘quick fixes’ for VAT have entered into force. The quick fixes aim to harmonise and simplify trade between EU Member States. At the end of last year, a new Dutch Decree: ‘Explanation quick fixes VAT’ entered into force. The Decree indicates to what extent the Netherlands will apply the European Commission’s Explanatory Notes of December 2019 and in what respect the Netherlands will deviate from these explanatory notes.
The expression ‘call-off stock’ refers to a situation in which a taxable person (the supplier) dispatches or transports goods to a warehouse in another EU Member State for an intended acquirer whose identity and VAT number are known at the time of the transport or dispatch and who has the right to take goods out of this warehouse at their discretion, at which time the ownership of the goods is transferred. Under the current EU VAT rules, among other things, the taxable person that dispatched or transported the goods is deemed to make an intra-Community supply in the Member State the goods arrived at because it transfers its own goods to another EU Member State. So, the supplier is required to register for VAT purposes in the EU Member State where the goods arrived. The quick fix related to call-off stock simplifies matters because it basically ignores the transport of the goods. Instead, an intra-Community supply is not deemed to take place between the supplier and intended acquirer until the moment the intended acquirer takes the goods out of the warehouse. Therefore, the supplier is not required to register for VAT purposes in the EU Member State where the intended acquirer retrieves the good from the warehouse in that EU Member State.
One of the conditions for applying the call-off stock scheme is that the supplier may not be established or have a fixed establishment (FE) in the EU Member State where the goods arrive. According to the explanatory notes, a warehouse qualifies as a FE if the supplier is the owner or tenant of the warehouse and manages the warehouse directly with its resources in the EU Member State where the warehouse is located. However, under the Dutch Decree a different approach is taken with respect to determining whether a warehouse is a fixed establishment. The Netherlands applies the regular FE assessment framework when determining whether a warehouse is a fixed establishment of the supplier. So, in the Netherlands the call-off stock scheme is bounded by stricter conditions than those set out in the Commission’s Explanatory Notes.
According to the Decree, the quick fix regarding chain transactions does not affect the simplified triangulation scheme because each scheme relates to different aspects of the chain transaction. Therefore, it is possible that if the conditions of both schemes are met, the taxable person can apply the schemes simultaneously.
With regard to the simplified triangulation, two situations have been outlined in the Explanatory Notes (page 47). In the second situation, the simplified triangulation is considered to be applicable to the BCDE-supply (see diagram on page 47 of the Explanatory Notes) due to a broad interpretation. However, under the Dutch Decree a different approach is taken. The Netherlands is of the view that application of the simplified triangulation can only take place in a chain with three parties that meet the conditions of the simplified triangulation scheme. The third party in a chain in which the simplified triangulation is applied should be VAT registered and established in the EU Member State where the goods arrive.
The 0% VAT rate can be applied on an intra-Community supply of goods if the supplier is able to prove by documentation that the goods are transported to another EU Member State. Furthermore, the supplier must have a valid VAT number for the customer.
As of 1 January 2020, per the quick fix, it is presumed that goods have been transported from one EU Member State to another if the supplier has certain documentary proof. In the case of transport by, or on behalf of, the supplier, the proof should consist of two supporting documents drawn up independent of each other (for example, a signed CMR in combination with the transport insurance policy for the respective supply of goods). The supporting documents are considered drawn up independently of each other if the documents are issued by two different parties that are independent of each other and independent of the vendor and the acquirer.
The Explanatory Notes indicate that if there is a family or other close personal, managerial, ownership, membership, financial, or legal relationship between the parties they will not be considered independent. The Dutch Decree has not completely adopted this view. Instead, the Netherlands takes the view that independence must be assessed on the basis of facts and circumstances.
According to the Decree, the rebuttable presumption for providing proof of transport is a practical add-on to the existing Dutch rules. Based on the Dutch VAT law, the transport of goods to another EU Member State can be proven by documents, such as CMR documents signed for receipt by the customer, purchase orders, invoices, payment documents, package slips, insurance policy for the transport, and so on.
Joost Vermeulen
joost.vermeulen@bdo.nl
Marco Beerens
marco.beerens@bdo.nl