Modifications and clarifications to the existing VAT legislation have been introduced as set out below.
Moving towards the taxation at destination principle and in line with Article 4 of Council Directive (EU) 2022/542 amending Directives 2006/112/EC and (EU) 2020/285 as regards VAT rates, Article 14(4), point (1)(a), is modified to extend the definition of intraCommunity distance sales of goods to cover second-hand goods, works of art, collectors’ items and antiques. Furthermore, Article 35 is deleted and as such, these supplies are taxed at the place of destination in line with Article 33 point (a). As a consequence, it allows for the application of the OSS simplification scheme to declare these distance sales, thereby further minimising the need to register in the several Member States.
In order to reduce opportunities for VAT avoidance, the new Article 39a provides that the supplies of works of art and antiques without dispatch or transport (or supplies where the dispatch or transport of the goods begins and ends in the same Member State) are taxed at the place where the customer is established, has their permanent address or usually resides.
The application of the deemed supplier rule is extended by the modifications to Article 14a. In particular, in respect of supplies of goods made within the EU, paragraph 2 is modified to extend the application of the deemed supplier rule. Under its expanded scope, the deemed supplier rule will now include all supplies of goods within the EU facilitated by an electronic interface, irrespective of where the underlying supplier is established and the status of the purchaser. In addition, a new paragraph 3 is inserted to provide for the application of the deemed supplier rule to certain transfers of own goods that are facilitated via an electronic interface.
The provisions in the VAT Directive pertaining to call-off stock arrangements are amended to introduce a cut-off date, 31 December 2024, beyond which, no new transfers of stock under those arrangements can be effected. Article 17a, which governs call-off stock arrangements is further amended by the insertion of a new paragraph to clarify that the Article will cease to apply with effect from 31 December 2025. These amendments are introduced to reflect the fact that the current call-off stock arrangements will no longer be required as the new OSS simplification scheme for transfers of own goods is comprehensive and encompasses crossborder movements of goods that are currently covered by call-off stock arrangements.
Article 59c stipulates that there is a EUR 10.000 calendar-based threshold, below which cross-border supplies of telecommunications, broadcasting and electronic (TBE) services and intra-Community distance sales of goods, supplied by an EU established supplier who is established in only one Member State, may remain subject to VAT in the Member State where that taxable person supplying those TBE services is established, or where those goods are located at the time their dispatch or transport begins. In addition to cross-border supplies of TBE services, it is now clarified that only intra-Community distance sales of goods that are supplied from the Member State where the taxable person is established are included in that threshold.
The modification in Article 66 helps to clarify the timing of the chargeable event in respect of supplies under the non-Union OSS and Union OSS simplification schemes.
The new paragraph 1a of Article 143 foresees that an implementing act shall be adopted to introduce special measures to prevent certain forms of tax evasion or avoidance by better securing the correct use and verification process of the IOSS VAT identification number of the supplier or of the intermediary acting on their behalf that is required for the application of the exemption provided for in point (ca) of Article 143(1).
In order to further minimise the need to register in a Member State where the taxation of a domestic B2B supply occurs, the modification in Article 194 renders mandatory for the Member States to accept the application of the reverse charge mechanism where a supplier, who is not established for VAT purposes in the Member State in which VAT is due, makes supplies of goods to a person who is identified for VAT in that Member State. This reform will ensure that, in such circumstances, the supplier who is not identified there, does not have to register in that Member State. Further, the modification excludes supplies of margin scheme goods from the mandatory application of the reverse charge mechanism. To ensure adequate follow-up of the goods, this type of supplies is now to be mentioned in the recapitulative statement as referred to in Article 262.
As the new OSS simplification scheme for transfers of own goods covers cross-border movements of goods that are currently covered by call-off stock arrangements, the modifications in Articles 243(3) and 262(2) remove the provisions in the VAT Directive pertaining to call-off stock arrangements with effect from 1 January 2026 as they are no longer required. As already mentioned, a window of 12 months is foreseen so that call-off stocks arrangements effected on or before 31 December 2024 can be finalised.
The modification in Article 359 extends the scope of the non-union OSS to supplies of services from non-EU business to all non-taxable persons, even if they do not have their permanent address, nor do they usually reside, in a Member State.
The modification in Article 365 clarifies the time by which amendments can be made to the relevant VAT returns in the non-Union OSS scheme. Amendments can now be made in the same return insofar as these amendments take place before the time that the return was required to be submitted.
For the purpose of the Union OSS scheme, the new paragraphs in Article 369a broaden the definition of Member State of consumption to include supplies of goods according to Articles 36 (supply of goods with installation or assembly), 37 (supply of goods on board ships, aircrafts or trains) and 39 (supply of gas, electricity, heating and cooling), and domestic supplies of goods.
In Article 369b, it is stipulated that, for the above-mentioned types of supplies, the Union OSS scheme can also be used insofar as these goods are supplied to non-taxable persons (or to taxable persons or non-taxable legal persons whose intra-Community acquisitions of goods are not subject to VAT pursuant to Article 3(1) of Directive 2006/112/CE). In addition, the scheme can also be applied for domestic supplies of margin scheme goods to any other taxable person supplied under the margin scheme by taxable dealers.
The modification in Article 369g(1) and the new paragraphs amend the content of the Union OSS return to enable the inclusion of the above-mentioned supplies.
The modification in Article 369g(2) and the new paragraph (2a) clarify the information to be provided in the Union OSS return in relation to the above-mentioned supplies and indicate that zero rated and otherwise exempted supplies of goods are covered by the Union OSS and, therefore, shall also be reported.
The modification in Article 369g(3) indicates that the Union OSS return shall include zero rated and otherwise exempted supplies of services covered by the special scheme.
The modification in Article 369g(4) clarifies that amendments to VAT returns in the Union OSS scheme after the time that the return had to be submitted, need to be done in a subsequent return.
The modification in Article 369j stipulates that deduction is not possible in the VAT return of the Union OSS scheme but that VAT is to be refunded in accordance with the appropriate refund system.
The new paragraph in Article 369m makes the use of the IOSS mandatory for electronic interfaces facilitating as deemed supplier certain distance sales of imported goods.
Article 369p is amended to provide that, before commencing to use the special scheme for Imports (IOSS), a taxable person or an intermediary appointed on their behalf must indicate to the Member State of identification the taxable person’s status as a deemed supplier in respect of distance sales of goods imported into the EU.
The modification in Article 369r and the new paragraphs provide that, if a taxable person fails to comply with the rules of the IOSS, they will be excluded from the scheme unless the said taxable person is obliged to use this scheme as deemed supplier. If such a deemed supplier persistently fails to comply with the rules relating to this special scheme, they will incur other sanctions rather than exclusion from the scheme.
The modification in paragraph 2 of Article 369t clarifies the time by which amendments can be made to the relevant VAT returns for the IOSS scheme. If amendments are to be made after the time that the return had to be submitted, these have to be done in a subsequent return.
The modification to Article 369w stipulates that, under the special scheme, VAT is not to be deducted but to be refunded in accordance with the appropriate refund system.
The new Articles 369xa to 369xk provide for the application of a new scheme specifically designed to simplify the VAT compliance obligations associated with certain transfers of own goods.
Article 369xa provides definitions that apply to the new scheme for transfers of own goods. Capital goods, or goods that do not allow for a full right of deduction in the Member State where the intra-Community acquisition takes place, are excluded from the special scheme.
Article 369xb defines the scope of the scheme. Any taxable person making transfers of own goods, as defined in Article 369xa, can register to use this special scheme, in which case all of their relevant transfers will be covered by the special scheme.
Article 369xc requires taxable persons making use of the scheme to inform their Member State of identification, by electronic means, in case of commencement, cessation or relevant changes to their taxable activities covered by this special scheme.
Article 369xd provides that a taxable person using this special scheme shall, for the purpose of transfers covered by that scheme, be registered in one Member State of identification only. For the purpose of identification in the special scheme for transfers of own goods, the Member State of identification shall use the individual VAT identification number already allocated to the taxable person in respect of their obligations under the internal system.
Article 369xe provides for the circumstances under which taxable persons making use of the scheme for transfers of own goods shall be excluded from that scheme, including, among other situations, where they persistently fail to comply with the rules of the scheme or cease their relevant activities.
Article 369xf stipulates that VAT returns shall be submitted every month by electronic means, even when no relevant activity has been carried out.
Article 369xg describes the information that the monthly VAT return shall contain and stipulates that amendments to these returns, after the time that the return had to be submitted, have to be done in a subsequent return.
Article 369xh sets out the requirements in relation to the currency to be used in the VAT return.
Article 369xi stipulates that, for transfers of own goods under the scheme, the intraCommunity acquisitions are exempt in the Member State to which the goods are dispatched or transported.
Article 369xj stipulates that deduction is not possible in the above-mentioned VAT return but that VAT is to be refunded in accordance with the appropriate refund system or deducted as inputs in the national VAT return of a Member State in circumstances where the taxable person is already identified for VAT purposes in a Member State in respect of activities not covered by the special scheme.
Article 369xk sets out the record keeping obligations for taxable persons making use of the special scheme for transfers of own goods
See also
- ViDA Analyzed – Part 1: E-invoicing will be the general rule for the issuance of invoices – Legal basis
- ViDA Analyzed – Part 2: 2 days deadline for the issuance of invoices on intra-Community supplies
- ViDA Analyzed – Part 3: Elimination of the possibility to issue summary invoices
- ViDA Analyzed – Part 4: Content of invoice – More data elements added to allow automation of process reporting (Art. 226)
- ViDA Analyzed – Part 5: Call-Off Simplification (Art. 17a) introduced via the Quick Fixes will cease to exist
- ViDA Analyzed – Part 6: Digital reporting system for intra-Community transactions: Articles 262 to 271
- ViDA Analyzed – Part 7: Digital reporting system for supplies of goods and services for consideration carried out within the territory of one Member State: Articles 271a to 273
- ViDA Analyzed – Part 8: Platforms: Articles 28a, 46a, 135 (3), 136b, 172a, 242a, 306
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