29 January 2016
Intra-Community transfers are a particular way of supplies in the EU, which are often overlooked in practice because there is no compensation.
Intra-Community transfers are caused by fiction. It concerns an internal company process whereby an EU-company transports a good from one EU-country (country of departure) to another EU-country (country of destination) to itself and the delivered goods do not only have a temporary but a permanent use. For this “internal" supply, no invoice has to be issued (for the company itself), thus the supply takes place without compensation.
The legislator treats these transfers as though a supply of goods for consideration has taken place. The government determines a minimum taxable basis as replacement for the lack of compensation. (purchase price/manufacturing costs plus additional costs of the transferred good).
Due to the fiction of delivery an Intra-Community supply is caused in that EU country where the good is located before the transaction. This Intra-Community supply is exempt from VAT only if the company declares acquisition tax in the country of destination correctly, so that an Intra-Community acquisition is caused.
The consequences for the company in the country of destination are that he or she has to register for tax purposes in the country of departure as well and thus declare the Intra-Community supply in the advance VAT return and the EC Sales List. In the country of destination an Intra-Community acquisition has to be declared.
The following report obligations have to be considered:
Since there is no actual invoice for the transaction, the fiscal authority requires that there has to be issued a “pro-forma invoice" from the company in the country of destination to the company in the departure country. The “pro-forma invoice" serves as a recording paper for the correct determination of the Intra-Community supply in the departure country in the advance VAT return and the EC Sales List as well as for taxation of the Intra-Community acquisition in the country of destination.
The “pro-forma invoice" should include:
indication of the transferred goods
indication of the tax bases
indication of the VAT number in the country of destination
indication of the tax-identification number in the country of departure
This article is only a short description of Intra-Community transfers. For individual cases a detailed examination is required.
Wolfgang Müller, Auren Frankfurt. Germany.