Implementation of the "quick fixes"

16.05.2019 - As a transitional solution before the "final VAT system" is introduced, ECOFIN decided to introduce a series of "quick fixes" on 4 December 2018.

1. Regulation on chain transactions

The EU quick fix for chain transactions deals exclusively with the assignment of the tax-exempt delivery (“moveable supply” according to the German interpretation) for intra-Community chain transactions where the transport is initiated by an intermediary. This provision will be adopted in Section 3 (6a) UStG. If an entrepreneur in the middle of a supply chain organizes the transport, the regulation remains unchanged whereby, in principle, the supply to the intermediary is the moveable and thus potentially VAT-exempt. If the intermediary provides evidence that he is transporting the goods as a supplier, the delivery of the intermediary is the moveable supply. This is to be assumed if the intermediary provides his supplier with his VAT ID of the Member State in which the shipment began at the start of the transport. The legislator transfers this regulation to cases in which the goods arrive in a third country, whereby the tax number of the country of departure can also be used here. If the goods arrive in the EU from a third country, the delivery import takes place in his name or in the case of indirect representation on his account.

2. Correct EC sales list as a substantive requirement

According to Section 4, no. 1b UStG (new version), intra- Community supplies are only VAT-exempt if and as soon as a correct EC sales list has been submitted. The EC sales list therefore becomes a material condition for the VAT exemption.

3. Valid VAT identification number as a substantive requirement

The previous jurisdiction of the ECJ, according to which a VAT exempt intra-Community supply could also exist if it was beyond doubt that the goods had been transported from one Member State to another even if no valid VAT ID was available, is no longer applicable. The VAT ID as well as the correct EC sales list will now become the substantive requirements for the VAT exemption. The new regulation is included in Section 6a (1), sentence 1, no. 4 UStG (new version).

4. Consignment stock regulations

With Section 6b UStG (new version), a consignment stock regulation has been introduced into the German VAT Act for the first time, implementing the jurisdiction of recent years in this respect. If a supplier from one EU Member State delivers goods to the consignment stock of a customer in another EU Member State, under the general rules the transaction would be classified as an intra-Community transfer of own goods, followed by an own intra-Community acquisition of the supplier and a subsequent local delivery to the purchaser in the country of destination. In contrast, the new consignment stock regulation assumes a direct intra-Community delivery to the customer. In order to fall under the new regulation, the following prerequisites must be met:

  • The name and address of the purchaser are known to the supplier at the beginning of the transport.
  • The supplier is not located in the country of destination.
  • The purchaser has used his VAT ID of the country of destination towards the supplier by the beginning of the transport.
  • Delivery to the purchaser takes place within twelve months of the transport.

The consignment stock regulation contains extensive record-keeping obligations. Detailed rules will also apply in case the twelve-month period is exceeded or goods are destroyed.