Those simplified ABC transactions are not so simple

As only one of these transactions can be an intracommunity transaction (“ICT”), without the simplification B must either register for VAT in member state A (to claim VAT back on the purchase and to report an intracommunity supply to C), or member state C (to report an acquisition from B and a local supply).

“Quick fix” rules are laid down to determine to which transaction the ICT must be attributed. If transportation of the goods is organised by A or B, their transaction qualifies as the ICT unless B provides a valid VAT ID issued by member state A, in which case the A-B supply is a local supply. When C arranges the transportation, the ICT takes place between B and C.

This simplification avoids the registration of B in member state C, i.e. the ICT takes place between A and B. B is not deemed to acquire the goods in member state C and the VAT due on the local supply in member state C is levied from C by way of the reverse charge.

Before the Luxury Automobile Trust decision, it was broadly accepted that the invoice between B and C should mention something about the use of the simplified ABC arrangement. However, the ECJ has now ruled that only the remark “reverse charge” or an EU equivalent suffices and nothing else.

When we look at the Dutch regulations, the above rules are not implemented properly. Neither the invoice regulations (what to mention on the invoice) nor the quick fixes (use of VAT ID by B) is correct. And we can safely assume that only few of the current 27 member states are implementing these rules correctly.

---

Photo: aapsky - stock.adobe.com