By 1 January 2020, the EU Member States have the obligation to introduce the so-called “quick fixes” in their national VAT legislation. These “quick fixes” are 4 concrete measures that are aimed at establishing a uniform VAT treatment for certain cross-border EU supply of goods transactions. From a Belgian perspective, the draft law has recently been published. In this first newsflash, we will have a closer look at the exemption for intra-Community supplies that causes the customer’s VAT number to become a substantive condition. In our subsequent newsflashes, the three other quick fixes will be analysed, being the call-off stocks, the allocation of transport in chain supplies, and the proof of transportation within an intra-Community supply.
As of 1 January 2020, to benefit from the VAT exemption for the intra-Community supplies of goods, the identification number of your customers becomes an additional condition. Until now, the VAT number of the customer, although a formal requirement, was not a substantive condition. In other words, even in the absence of that VAT number, the VAT exemption could previously be invoked (provided that it could be proven by other means that the customer qualified as a taxable person). Taking into account that the rejection of the VAT exemption is quite costly, as Belgian VAT increased with fines and late payment interest will then be claimed, it is clear that the VAT ID number has to become a mandatory requirement for customer set-up in your ERP system. That set-up will, however, still require these customer VAT numbers to be submitted to a periodic verification. This in turn will necessarily cause a process shift: while we see that most companies currently check the validity of their customers’ VAT number at the time the (ESL) filings are being done, this check will now have to be done at the time the purchase order is being created or at the latest at the time the invoice is being issued.
To enable companies to cope with the above change, PwC has developed RoboVAT, a tool that quickly and automatically validates VAT ID numbers in bulk with the VIES website of the European Commission. This will help you to mitigate, on a recurring basis, the risks that originate from poor-quality master data. Following the upload of VAT ID numbers into the tool, a person responsible in this respect will receive an overview report and the full results of the check (valid, invalid, errors) from which he or she can take immediate action.
Interesting features such as a check of the customers’ or suppliers’ VAT ID number format before the validation in VIES, the provision of a unique time stamp as proof of validation, and the secure storage of the reports on our cloud computing platform make RoboVAT a unique tool in the market to safeguard the application of the VAT exemption for intra-Community supplies. For more details as regards our tool, we invite you to have a look at our website.