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The VAT rules for cross-border transactions within the EU changed on 1 January 2020. If you want to apply the zero rate to intra-Community supplies, for instance, you are now required to specify the customer’s VAT identification number on your invoice. We will explain the consequences of the new rules to you below.
VAT rules before 2020
Before 2020, a taxable person was permitted to apply the zero rate to their intra-Community supplies to taxable persons in other EU countries on the condition that they could prove that the supplied goods had arrived at the premises of an EU-based taxable person and that the goods had actually left the supplier’s country. The taxable person in the other EU country also had to have the VAT identification number of the customer in the EU country in which the dispatch or transport ended.
VAT rules after 2020: customer VAT identification number on invoice
To be able to apply the zero rate to intra-Community supplies, taxable persons are now required to specify the customer’s VAT identification number on their invoices. As a result, you are expected to document the VAT identification numbers of all your customers so that you can file the correct VAT returns and declarations of intra-Community supplies (ICS). Always check the VAT identification numbers of your customers in the VIES VAT number validation database.
VAT return and declaration of intra-Community supplies
In addition to reporting intra-Community supplies in your VAT return, you are required to file a correct ICS declaration. This declaration will list all the goods and/or services you supplied to taxable persons in other EU Member States. The value of any stock you may have moved to other EU countries must also be reported in the ICS declaration. Please remember that the ICS declaration and the VAT return should correspond.
Conclusion
Taxable persons supplying goods to taxable persons in other EU Member States are now required to specify the customer’s VAT identification number on their invoices. It is very important that this requirement is fulfilled properly.
