Stricter proof requirements for intra-Community deliveries

Intra-Community deliveries are deliveries between two entrepreneurs in which goods are transported or dispatched from one EU member state to another. If certain conditions are met, the intra-Community delivery is tax-free in the country of departure.

In a recent case before the European Court of Justice (ECJ), it was questioned whether the tax office may deny the tax exemption if the suppliers have not proven that the goods were delivered to taxable recipients, but the authority has the information necessary to verify this fact.
 

Book evidence required

The tax exemption of suppliers for an intra-Community delivery requires that their recipients are taxable persons and that they are subject to purchase tax in the country of destination. Suppliers must prove, among other things, that the goods have actually been dispatched or transported to another Member State and that these goods have physically left the supplying Member State (proof of dispatch). Furthermore, the conditions for the tax-free intra-Community supply must be proven in the accounts.

According to the ECJ, no additional (material) conditions may be imposed by the Member States for the classification of the transaction as an intra-Community delivery. The principle of tax neutrality also requires that the exemption is granted even if the material conditions are met but the suppliers have not complied with certain formal requirements.

Conditions for tax exemption extended

In principle, the national authorities must therefore use all available information to check whether the material conditions for the exemption of the intra-Community supply are met. However, from January 1, 2020, the substantive requirements for this tax exemption have been extended on the basis of an EU directive: in addition to the requirements that already applied until then, the tax-free treatment of an intra-Community supply requires that the supplier has been notified of the valid VAT identification number (VAT ID) of the customer, which was issued by another Member State, and the suppliers have fulfilled their obligation to submit a recapitulative statement.

Therefore, if an Austrian supplier does not check the VAT number of the EU customer and it is not valid, this will lead to the refusal of the tax exemption of the intra-Community supply and the assessment of Austrian VAT.