ABC Transactions – simplified VAT-rules
Entrepreneurs buying and reselling products within the European Union with the transportation being performed by the initial supplier can under certain conditions apply for simplified VAT-rules (ABC transaction / simplified ABC supply). These rules can not only favor independent parties, but also group entities.
We will discuss the simplified ABC-supply in the VAT by using an example. Additional invoice requirements and other duties will be included.
Supply from A to B
The supply from A to B is an intra-Community acquisition of goods as the products move from one EU member state to another EU member state. The transaction takes place and is taxed at the place of arrival, being Belgium. Therefore, B receives an invoice from A with 0% VAT and is required to register in Belgium as VAT taxpayer to file a Belgium VAT return.
Supply from B to C
The supply from B to C is a domestic transaction in Belgium, as in the above stated supply, the goods are already delivered in Belgium. Therefore, B invoices C with Belgium VAT.
If certain conditions are met the supply from B to C can be considered Dutch. This means that B does not need to register for VAT purposes in Belgium. In case B is already registered for VAT purposes in Belgium these rules do not apply.
Practical effect of the simplified ABC-supply
- B does not include the invoice received from A in his VAT tax return.
- B sends C an invoice without VAT stating the following:
- VAT-identification number B
- VAT-identification number C
- The phrase: “intra-Community acquisition”
- B includes the invoice send to C in his VAT tax return as intra-Community acquisition and in his intra-Community transactions declaration. In the declaration B should include the VAT-identification number of C.
- C calculates the Belgium VAT itself and takes care of the payment.
Conditions for applying Simplified ABC-supply
The following conditions should be met:
- B have to be able to prove the products bought form A with the purpose to resell them to C (e.g. by means of a contract of offer)
- B agrees with A about the transportation.
- The products go directly from A to C in Belgium.
- It concerns a transaction between three entrepreneurs each with a VAT-identification number is different EU Member States.
- B is not registered for VAT purposes in Belgium
- B includes the supply to C in his intra-Community transactions declaration.
What can MFFA Tax Advice do for you:
- Assessing transactions and analyzing the VAT impact
- Providing a manual with respect to invoicing requirements
- Arrange VAT refunds for non-EU clients
- Filing the tax assessments
- Practical advice
For questions and remarks with respect to the application of the simplified ABC-supply, please contact MFFA Tax Advice. Additionally it is possible to let MFFA Tax Advice take care of your VAT assessment and intra-Community transactions declaration. In case you have other questions regarding tax related subjects, please do not hesitate to contact us