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Relevant – who knows?

4th June 2018

Relevant – who knows?

A recent draft amendment to the Principal VAT Directive has been issued. If it is adopted it will significantly change the way that Intra-community transactions (or Intra-Union transactions as they will be called) will be dealt with.

Instead of zero-rating the despatch from the supplier’s country and leaving the purchaser to account for VAT on the acquisition of the goods, the supplier will charge VAT at the rate appropriate in the purchaser’s country. This is an extension to what is currently done under the Mini One Stop Shop.

 If adopted, the amended Directive will come into effect on 1 July 2022. It will initially apply to supplies of goods, but in due course it will be extended to services.

 There will be exceptions where a Certified Taxable Person can still zero-rate his supply and leave it to the purchaser to account for VAT, but it is hoped that this revised way of applying VAT will significantly reduce the amount of VAT lost to Missing Trader Intra-community fraud. It will also reduce the amount of transactions needed to be reported through the Intrastat return procedures.

How relevant this will be to the UK once it is out of the EU; who knows. 

For more information about our VAT services, click here or contact Phil Salmon, Partner and Head of VAT.