Proposed technical amendments to VAT Directive for reform of intra-EU B2B supplies of goods

June 11, 2018

On 25 May 2018, the European Commission (Commission) launched a further proposal concerning the taxation of intra-EU supplies, which is intended to enter into effect from 1 July 2022.

The proposed draft Directive will amend Council Directive 2006/112/EC on the common system of value added tax (VAT Directive) to make technical amendments enabling the move to a destination-based VAT system for intra-EU business-to-business (B2B) supplies of goods.

The VAT Directive will be amended to provide that the place of supply of intra-EU B2B supplies of goods will be the member state of destination. The concept of an intra-Community acquisition of goods as a transaction subject to VAT will be removed and a definition of an intra-Union supply of goods will be introduced (with consequential amendments made to several Articles of the VAT Directive).

The supplier will be liable to account for VAT at the rate applicable in the destination member state, unless the supplies are made to a certified taxable person. The VAT Directive will also be amended to provide for a one-stop shop to administer VAT on supplies made by persons not established in the destination member state.

The significance of the proposals to UK businesses will depend on any transitional arrangements agreed once the UK leaves the EU, assuming that occurs before 1 July 2022.

However, the ability for companies outside the EU that make supplies to EU member states to register under the one-stop shop (rather than in each member state to which supplies are made) will be important to UK and EU businesses.


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