Important EU Quick Fixes!
Please note some important changes in the VAT laws in the European Union "EU" relating to shipments and sales of goods from one EU country to another. These changes are effective as of January 1, 2020, and are part of the so called "quick fixes" within the EU. The purpose of stricter requirements is to streamline how the different EU countries apply the VAT rules. It’s an attempt to decrease VAT fraud in the EU, which currently is a major loss of revenue due to the uncollected VAT.
As you may know, your company does not have to charge VAT when you sell and ship goods from the country you are VAT registered in, to company customers in another EU country. For example, no VAT has to be charged if a company registered for VAT in Germany sells and ships to a company customer in Italy. The required backup used to be a valid VAT number of the Italian customer, and "proof of delivery" (often called "CMR") from the freight forwarder (where they confirm they delivered the goods from Germany to Italy).
New stricter requirements for back-up:
1. The buyer still needs to have a valid VAT number in the country where they are located, but now this number has to actively be communicated to the seller before shipment. This can be done at the PO, by e-mail, or by other communication.
2. Two kinds of "proof of delivery" have to be submitted, instead of only one. It is no longer enough to submit the "CMR" only (provided by the freight forwarder). These two required documents may be:
- signed "CMR" (proof of delivery) from the freight forwarder
- bill of lading
- invoice for the freight from the freight forwarder
- bank statement showing payment of the freight to the freight forwarder
- notarized confirmation confirming the arrival of the goods to the country of designation
- receipt from the warehouse that they received the goods, confirming receipt of the goods.
Please make sure to implement these new requirements immediately, so you can provide the required back up for your 2020 VAT filings. Please feel free to contact us directly at email@example.com for additional information and questions.
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