Four VAT modifications, devised by EU member states, took effect from 1st January 2020 which affect all businesses who operate cross-border supply chains. The changes are intended to harmonise VAT regulations whilst clarifying businesses obligations.

The EU VAT regime that’s in place at present is due to undergo significant reforms in the coming years to eliminate the billions of pounds worth of money lost to VAT fraud annually. Ahead of this, these four changes were implemented from 1st January 2020, and it’s hoped that these will smooth the transition to a modified regime:

Change 1 – Call-off-stock

The first change is intended to provide more certainty when supplying goods cross-border on a call-off basis, harmonising the process, meaning businesses will no longer need to register for VAT in the destination state, assuming the conditions are met.

Change 2 – Chain transactions

The second change concerns chain transaction processes across the EU involving the successive supply of goods. Essentially the EU are simplifying the VAT position for suppliers, intermediaries and customers located in three different EU states, when goods are moved from supplier to customer. It seeks to identify when the zero-related VAT cross-border step occurs.

Change 3 – Proof of cross-border transportation

Currently, proof of cross-border transportation varies across EU member states. Changes aim to remove the uncertainty by clarifying what evidence is required to show the movement of the goods.

Change 4 – Customer VAT number

The fourth fix addresses concerns regarding zero-rating cross-border transactions. The EU has implemented a fourth and final change which confirms that the customer’s VAT must be obtained by the seller in order to allow zero rating.

Cross border VAT regulations are notoriously complex. Coupled with our impending exit from the EU on 31st January 2021, it’s vital that you abide to the changing regulations governing imports and exports and are fully informed.

Here at Smith Cooper, our specialist indirect tax team have extensive experience advising businesses with all aspects of VAT. If you’d like more information regarding the four changes, or have any other VAT or specialist tax queries, please get in touch today.

We can help your business operate in the most efficient way, guiding you through the complexities whilst ensuring compliance and peace of mind.