EU ‘quick fixes’ change VAT on cross-border transactions from 1 January 2020

07 November 2019

Regardless of Brexit, new harmonised rules across the EU will make many practical changes to the way businesses deal with cross-border transactions.

Who needs to know about the changes?

If your business moves goods between EU Member States, you need to understand the new VAT rules for cross-border transactions from 1 January 2020 and consider their impact on your supply chains and reporting systems.

Why are the changes happening?

The quick fixes are intended to make the EU VAT system more definitive by harmonising and simplifying some of the uncertain areas surrounding how VAT is treated on cross-border transactions within the EU. By making the legislation clearer and uniform across the EU, the EU is hoping to save businesses significant administrative expense in some areas. Whether this objective will be achieved in practice remains to be seen.

What are the changes?

Harmonised proof of transport of intra-EU supplies of goods

  • Currently, rules on the evidence required to prove a supply is an intra-EU supply (and thus benefits from being zero-rated) differ between EU Member States.
  • The quick fix harmonises and simplifies the regulations by introducing new rules that all Member States must comply with.
  • Suppliers must be able to produce two items of non-contradictory evidence, prepared by two different independent parties, to prove that a supply is destined for another EU Member State.
  • If the acquirer is responsible for the transport, the acquirer must also provide the vendor with a written statement that the goods have been transported by the acquirer or on the acquirer’s behalf by the 10th of the month following the date of supply.
  • Acceptable forms of evidence are set out within the regulations but include a signed CMR document (consignment note showing the standard set of transport and liability conditions), a bill of lading or an insurance policy for the transport of the goods.


In the UK, it is already a requirement to obtain satisfactory evidence that the goods have been removed from the UK. This harmonisation gives a clear definition of what is satisfactory, and harmonises this across the EU. A key point to note is that the two pieces of evidence must now be supplied by two separate parties that are independent of each other, the vendor and the customer. Where the acquirer collects the goods (eg under ex-works incoterms) a written statement must be provided to the vendor.

Zero-rating of intra-EU supplies of goods

From 2020, the following additional conditions must now be met in order for an intra-EU supply to be zero-rated:

  • The supplier must obtain the customer’s valid EU VAT registration number, and
  • The transaction must be included on the supplier’s EC Sales List.


In the UK, it is already a condition of zero-rating an intra-EU dispatch that you must obtain the customer’s EU VAT number and display this on the invoice, so nothing should change here regarding this. However, the new rules bring in the additional requirement that an intra-EU dispatch cannot be zero-rated if the supply is not included on the supplier’s EC Sales List for the relevant period.

Although still not strictly a condition under EU law as a result of the changes, it is best practice to display the customer’s EU VAT number on the invoice when supplying goods cross-border. This is the best practical evidence that the customer has indicated its VAT number to the supplier at the relevant time.

Call-off stock

  • In the context of cross-border VAT, call-off stock refers to the situation where the supplier knows the identity of the person acquiring the goods at the time the goods are transported to another Member State, but where transfer in title to the goods will change at a later date and after they’ve arrived in the Member State of destination.
  • The current rules on call-off stock arrangements differ between countries, resulting in uncertainty as to whether or not call-off stock gives rise to a deemed supply (a movement of own goods) and a subsequent domestic supply, which would require the supplier to register for VAT in the recipient country.
  • Under the new rules, EU businesses will no longer be required to register for VAT in the recipient country if operating under call-off stock arrangements. Instead, the recipient will be required to account for the VAT in the Member State of destination.
  • The key conditions are that the supplier must not have a fixed establishment in the Member State of destination and that the customer must be VAT-registered there at the time the transport of the goods begins.


The new rules will provide more certainty when supplying goods cross-border on a call-off basis. As long as the conditions are met, businesses operating in this way will no longer need to register for VAT in the Member State of destination.

Chain transactions

  • A chain transaction is one which involves successive supplies of goods, with only a single intra-EU movement of those goods. Current rules are unclear in determining which transaction in a chain transaction is the intra-EU supply that can be zero-rated for VAT purposes.
  • Where the goods are transported directly from the first supplier to the last customer in the chain, the transport (and, therefore, the zero-rated supply) shall be ascribed to the supply from the first supplier to the intermediary.
  • However, where the intermediary is registered for VAT in the Member State from which the goods are dispatched, has supplied its VAT number to the first supplier and is responsible for the transport, the intra-EU supply shall be ascribed to the supply by the intermediary to the final customer.


These rules should provide more certainty regarding the VAT treatment of chain transactions, which should be harmonised across the EU. However, we consider that the rules are still open to different interpretation in each EU Member State.

Furthermore, this change could create some issues for companies involved in these more complex supply chains that cross EU borders, particularly as a result of Brexit. In the event of the UK leaving the EU, it will no longer be possible for UK companies to participate in simplified triangulation. As a result, UK companies may wish to consider registering in countries where their major suppliers are based to avoid them having to register in all Member States of destination of their goods. However, it will not be enough to merely register for VAT as the UK company (assuming it is the intermediary in the supply chain) will also need to arrange the transport of the goods to avoid it having to register in the Member State of destination of the goods. This should be considered carefully in the run-up to Brexit.

What about Brexit?

Some of these changes may no longer affect UK based businesses if the UK does leave the EU, depending on the final terms of Brexit. However, the changes come into effect from 1 January 2020, so businesses need to take actions now to remain compliant. Of course, regardless of Brexit, many businesses will continue to have an interest in the movement of goods across the EU so will need to be aware of and comply with these changes.  

What if I don’t comply?

These changes will be introduced by all EU member states via a mandatory change to legislation. As a result, not complying with these changes leaves your business open to potential penalties and reputational damage with tax authorities. In particular, the substantive conditions for making a zero-rated intra-community supply of goods are changing, and action must be taken to ensure that processes are compliant with the relevant conditions.

How can BDO help?

If any of these changes impact your business, it’s important you start taking measures now to ensure you are compliant when the legislation comes into effect on 1 January 2020. BDO can review your processes and supply chains to identify any possible gaps in compliance and possible opportunities.

For help and advice on the new rules, please get in touch with your usual BDO VAT contact or Tom Kivlehan.

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