Grant Thornton Hungary Newsletter
VAT – Intra-Community supply of goods
The purpose of our current newsletter is to present the changes in the relevant provisions of law concerning the documentation of cross-border trade within the EU.
One of the conditions of the VAT-exemption of intra-Community supplies of goods is that the goods sold must actually leave the member state of origin and be transported to another member state. In case of a tax authority audit, the supplier of the goods is required to evidence the satisfaction of this condition. In the past, there was no specific provision of law concerning the manner in which the above proof could be documented.
By way of modifying Implementing Regulation no. 282/2011 (hereinafter: the Regulation), the EU introduced the so-called “Quick Fixes” package, effective from 1 January 2020. As a result of the amendments introduced in the summer, three of the four points of the package have already been incorporated into the VAT Act; however, the Hungarian laws still do not prescribe any rules in the issue of the fourth element, namely the manner of documenting deliveries. Nevertheless, irrespective of the transposition of the rule into the national laws, this change will also be applicable from next year in Hungary. The reason for this is that the rules defined in the implementing regulations that are added to the VAT Directive are binding (also) without actual transposition into the national laws of the member states.
The Regulation lists certain types of documents in possession of which the transport of goods between member states are assumed to have taken place. We wish to emphasise that these are only assumptions that may be rebutted by the tax authority (with the latter also bearing the burden of proof in such a case).
In the basic case, the Regulation provides that the assumption may be made on the basis of two separate documents which may be issued by persons other than a party to the transaction (e.g. the forwarder, warehousing operator, etc.) and are in line with each other. Further, depending on who organised the transport, a requirement is also the existence of the customer’s declaration, or an indication from the supplier that transport is (directly or indirectly) organized by him.
In case the transport is made or organised by the SUPPLIER, the assumption can be made on the basis of 2 documents (which must be non-contradictory and prepared independently from one another). Possible cases:
- The supplier has any 2 of the following documents pertaining to the transport of goods:
- signed CMR document or
- CMR waybill, or
- invoice issued by the forwarder, or
- air bill, or
- bill of lading, or
- other document pertaining to the forwarding/shipping,
OR
- The supplier has 1 document pertaining to the transport of goods according to point a) and 1 other document. Such other documents may be any of the following:
- insurance policy pertaining to the forwarding of goods, or
- banking document certifying payment for the forwarding of the goods, or
- a public document issued by a public authority (e.g. a civil law notary), which certifies the arrival of the goods in the member state of destination, or
- a receipt issued by a warehouse in the member state of destination that certifies the warehousing of the goods.
In case the transport is made or organised by the CUSTOMER, the assumption can be made on the basis of 3 documents.
- The supplier must have 2 (non-contradictory and prepared independently from one another) documents according to the point above (applicable in case the transport is organized by the supplier).
AND
- the written declaration of the customer. This declaration must contain the following:
- the customer’s statement that the transport of goods is carried out by the customer or by a third party on behalf of the customer,
- the member state of the destination of the goods,
- the date when the declaration was issued,
- the name of the customer,
- the address of the customer,
- the quantity and nature of the goods,
- the date when the goods arrived,
- the date when the goods substituted by,
- the identification data of the person taking receipt of the goods,
- (in case of the sale of a vehicle, the identification number of the vehicle).
The above declaration must be made available by the customer to the supplier by the 10th day of the month following the month of supply.
In addition to the above, the supplier may, of course, also support the fact of the intra-Community transport of goods with other evidential documents; however, the acceptance of such documents is at the discretion of the tax authority.
In an earlier newsletter we have already informed our clients, but due to the importance of the topic, we would like to emphasis once again that in addition to the above changes, which affect the rules of documentation, the substantial conditions of tax exemption have also been extended. Under the VAT Act changes entering into force on 1 January 2020, it shall be additional conditions of VAT-exemption in case of the intra-Community supply of goods that:
- the customer has an EU VAT number, and
- the supplier correctly completes the summary report (form A60) with respect to the transaction.
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