EU VAT system, Quick Fixes

New in 2020: Four quick fixes for the European VAT system

The quick fixes are intended as an interim solution, while the EU Commission continues to work on a "big hit": the final EU VAT system. The EU's common VAT system is laid down in the Council Directive on the common system of value added tax. This goes back to the 6th EC Directive, which came into force shortly after the creation of the European single market in 1993. Right from the start, these regulations were intended as a transitional solution.

A lot of time has passed since then. With the triumph of digitalisation and the globalisation of the economy, business models have emerged which were not adapted to the old regulations. In order to stem the associated loss of revenue from VAT collection, four quick fixes came into force on 1 January 2020:

1) Until now, many different regulations on consignment stocks applied in the EU. These have now been standardised: whereas previously retailers only had to register for VAT purposes on the basis of a warehouse located in another EU country or fulfil reporting obligations there, this is now no longer necessary. However, the regulation only applies to one warehouse at a time - and not again if the goods are subsequently taken to other warehouses in other EU countries.

2) For the first time there is now an EU-wide regulation for chain transactions. This does not change anything in Germany, because the regulation corresponds to the administrative concept that has been practiced in this country for a long time.

3) The tax exemption of intra-Community supplies is more strictly regulated: Intra-Community supplies are now only tax-exempt if the supplier indicates the VAT idenfication number issued to the customer in the country of destination. The supplier must check its validity.

4) In order for intra-Community deliveries to be exempt from VAT, the supplier must prove that the goods were actually delivered from one EU member state to another. This proof has been simplified: Now it suffices to have two non-contradictory transport documents from independent parties, such as consignment notes or carrier's invoices.

ON TOPIC

21.01.2021

Cross-border e-commerce: good opportunities in foreign markets

Solid growth opportunities, increasingly uniform regulations within the European Union and uncomplicated logistics: it is worthwhile for German online retailers to conquer European foreign markets. However, there are decisive factors for success; above all, the VAT regulations must be closely examined and a legally compliant solution found.

04.01.2021

VAT cut ended in Germany / eClear keeps shop systems up to date

From July to December 2020, the German government had reduced VAT to 16% and 5% respectively. On January 1, 2021, Germany reverted to the previously applicable rates of 19% and 7%. eClear keeps merchant's shop systems in the EU 27 up to date with its automation solutions for tax compliance.

Closing the VAT gap

This year, EU states will miss out on 164 billion euros in VAT revenue. The VAT regulations for merchants selling goods to other EU countries are notoriously complicated. Many companies unintentionally misapply VAT. The EU has been working for years to simplify VAT. eClear already offers companies legally compliant solutions.

NEWS

11.11.2020

Personnel reinforcement in November and renewed SAP® Certification for Value Added Tax solution

eClear AG is expanding its management team with Brigitte Holzer as CFO/COO and Andreas Weidner as Vice President Customs Compliance. In addition, the Value Added Tax (VAT) solution ClearVAT Services 1.2 again received SAP-certification as built on SAP Cloud Platform.

01.10.2020

Peer Steinbrück launches EU VAT Engine

"This is something European politicians have been trying to do for more than ten years without success," commented Peer Steinbrück on the stage of the online retailer congress "Plentymarkets" in Kassel before he symbolically put the result of several years of development work into operation together with host Jan Griesel and eClear founder Roman Maria Koidl.