In brief, the new circular letter bundles all the Belgian guidelines on VAT and intra-Community trade of goods. It replaces the existing guidelines on this topic. Significantly, in this circular letter the VAT authorities have included extensive comments on the new EU quick fixes. Below we focus only on the specific guidelines on these quick fixes:
- The VAT exemption for intra-Community supplies of goods requires a valid VAT identification number as well as a correct intra-Community sales listing.
- A common framework for the proof of cross border transport for claiming the exemption for intra-Community supplies of goods.
- A simplified and uniform treatment for call-off stock arrangements is installed.
- Uniform criteria for allocating the transport in chain transactions are put forward.
The Belgian guidelines mainly align with the EU explanatory notes. However, the Belgian guidelines include some additional specific topics, which we address below.
Valid VAT identification number and a correct intra-Community sales listing
Since the beginning of this year, the VAT exemption for intra-Community supplies requires a valid EU VAT number of the recipient/customer. The recipient has to communicate its EU VAT number to its supplier.
On an EU level, there has been discussion when and how this communication should be made. Belgium applies sufficient flexibility regarding the “communication” of this EU VAT number. For this purpose, it is sufficient that the invoice states an EU VAT number. However, the supplier must still check that the communicated VAT number is indeed the VAT number of the recipient and also that this VAT number is valid at the moment of the supply. It is not required that this monitoring is done for each single supply (.preferably by using an IT tool), but a periodical check is highly advisable.
Specific situations are also clarified by the Belgian VAT authorities:
- A retroactive cancellation of the recipient’s VAT number should not trigger any negative consequences when the supplier has acted in good faith.
- The initial invoice has been issued with VAT but the recipient communicates an EU VAT number afterwards (e.g. the acquirer has a valid EU VAT number, but did not communicate it; the VAT number was under request or the VAT number was not yet “VIES active”). In such a scenario, the Belgian VAT authorities accept or even oblige a correction of the initial invoice with VAT. The circular letter provides detailed guidelines on how to make this correction. For this purpose it should be verified whether the recipient’s VAT number was already valid at the time of supply:
- If yes, the initial supply with VAT can be corrected by issuing a credit note/corrective invoice. The correction has to be reported in the period that the correction takes place.
- If not, a correction is accepted under the following circumstances:
- Written proof of the fact that an application for a VAT number has been submitted at the time of the supply, is available;
- When the above cannot be complied with, proof of reporting of an intra-Community acquisition in the EU Member State of arrival has to be at hand;
- When the above (both) cannot be complied with, the recipient has to show, by all means of proof, that it acted as a VAT taxable person.
- VAT refund for intra-Community supplies that were invoiced with Belgian VAT. The Belgian VAT authorities stress that no VAT refund request will be accepted if the recipient has got a valid EU VAT number but failed to communicate it to its supplier. In such a scenario, the recipient should discuss a correction of the initial invoice with the supplier. Only in exceptional circumstances, where a correction of the initial invoice would be impossible (e.g. the bankruptcy of the supplier) the recipient could submit a written request to the Belgian VAT authorities with a view to recovering input VAT.
The second new substantive requirement is that the supplier has to submit a correct intra-Community sales listing for the intra-Community supply that it wishes to VAT exempt. Here the Belgian VAT authorities state that:
- It is inevitable that there is a time gap between the supply and reporting. The fact that the supply precedes the reporting, should not have an impact on the application of the VAT exemption.
- An incorrect or late-filed listing does not automatically revoke the application of the VAT exemption. When the supplier has acted in good faith, the Belgian VAT authorities will maintain a flexible position when interpreting the justification for the non-compliance. Please note that specific rules are provided for the correction of an incorrect intra-Community sales listing. When the correction can be made before the filing deadline, a corrected version of the listing– that annuls and replaces the initial listing – has to be submitted; in the other case, the correction has to be made in the next listing that has to be submitted (and detail that this correction relates to a previous period).
Proof of cross border transport
The VAT exemption for intra-Community supplies requires that the supplied goods are transported from one EU Member State to another EU Member State. The supplier should prove this transport to the other EU Member State. The EU quick fixes have introduced rebuttable presumptions for this proof.
As stated in our previous newsletter (click here), Belgium maintains a flexible approach in this respect. The Belgian VAT authorities have now confirmed this point of view in the circular letter. Some points to note in this respect are:
- The circular explains in detail the use of a destination document as proof of transport under the Belgian rules. This covers a Belgian presumption that is more flexible than the EU presumptions. This destination document can be used for all supplies (whether the supplier, the recipient or a third party is responsible for the transport). This makes the use of the Belgian destination document more flexible than the EU presumptions. Particular attention is required for the issue of this destination document if the place of the customer and the place of arrival of the goods are different (two signatures required).
- The (EU and national) presumptions can be applied for each single supply. So there is no “one choice made that applies to all” approach.
- For the EU presumption, independent persons mean that there is no link involving family or professional ties (such as employment, management or ownership). This is more flexible than the approach on the EU level where reference is made to the links for VAT grouping.
This quick fix should introduce an EU-wide simplification for call-off stocks. In practice, a lot of administrative formalities have to be met to benefit from the new rules and Member States already apply different interpretations.
One question is whether the call-off stock simplification is mandatory once all the conditions are fulfilled or if companies can “opt out”. The Belgian VAT authorities have now confirmed that the new rules are optional and not mandatory. No specific requirements have to be met in this respect. One can simply not apply the new rules. However, do bear in mind that since such call-off stock arrangements must involve at least two EU Member States, the VAT position of the EU Member State where the call-off stock (consignee) or the consignor is located should also be checked.
Other issues addressed in this respect:
- The simplification does not apply if the consignor is established/has a fixed establishment for VAT purposes. It has been discussed on an EU level whether a call-off stock “by itself” could be qualified as a fixed establishment. Certain EU Member States tend to answer this question in the positive. However, the Belgian guidelines do not follow this position.
- The simplification does not apply if the goods in the stock are lost or destroyed. On the EU level, there is an agreement that small losses should not have an impact. It is important to note that Belgium will apply a more flexible approach: if the consignor/consignee can sufficiently document the reason that goods were lost/destroyed, then Belgium will not waive the call-off stock simplification.
- Transitional regime: goods transported before 01.01.2020 and supplied under the previous Belgian simplification for call-off stocks, can continue to benefit from the old simplification after 01.01.2020.
The last of the four quick fixes relates to the allocation of the cross border transport in a chain transaction. In fact, this quick fix confirms the Belgian practice before 01.01.2020: if the intermediary is responsible for the transport, then the allocation of the transport was determined by the use of the intermediary’s VAT number.
To determine which party in a chain transaction is responsible for the transport, the Belgian VAT authorities mainly focus on the question of who is physically doing the transport or who is contracting a transport company.
Under the new rules, when applying the quick fix, the intermediary operator has to keep sufficient proof of the communication of its VAT number to its supplier in order to verify the correct application of the measure in the case of a tax audit. Again, Belgium applies a flexible approach when such proof cannot be provided. A presumption based on the invoice then kicks in.
Tiberghien’s VAT team continues to monitor all EU (and national) developments in the field of VAT law. If you would like to receive further information on any of the aspects discussed above (or any other aspects), then please do not hesitate to contact us.
Stijn Vastmans - Partner (firstname.lastname@example.org)
Gert Vranckx - Senior Associate (email@example.com)