The recently enacted Law 4714 (Government Gazette A' 148/31-07-2020) introduces material legislative modifications and clarifications regarding VAT exemptions on intra-community transactions as well as the maintenance of stock in other EU member states.
Specifically, and under the precondition that the circular of the Ministry of Finance which will be issued will not set otherwise, the main points of the said Law cover the following areas:
Article 61 Law 4714/ 31.7.2020 adds a new article (i.e. 7A) in the VAT Code (L. 2859/ 2000), which incorporates a significant provision of article 1 of the EU Directive 2018/1910. This new provision simplifies for Greek companies the transfer and creation of stock to another EU member state, by discharging them (the companies) from the obligation to acquire a VAT/ Tax Registration Number in the said member state as well as from any other filing obligations. The same regime shall apply respectively to EU companies planning to keep stock in Greece.
A basic requirement for the implementation of the above simplified scheme is that the stock is sent to a specific acquirer upon relevant agreement. This acquirer should already possess a VAT Registration Number in the member state where the stock is transferred to and this stock should be sold within 12 months from its arrival.
Practically the acquirer will keep the goods, owned by a third party, as the ownership will not be transferred to him at the time of the transportation of goods. Nevertheless, upon finding a client (third party) and deciding to sell all or part of the stock, the acquirer will only then become owner of the stock.
Under the standard regime, if a company transferred its goods to another EU member state, in order to create stock for a specific client, then this transaction would be considered as: a) an intra-community supply of the company exempted from any VAT in the departure member state and b) an intra-community acquisition of the company in the arrival member state, entailing the obligation to acquire a VAT Registration Number in said EU member state with further VAT filing obligations. In case any goods from such stock were sold to the client, then a second delivery (local delivery) would be effected, being subject to VAT in that EU member state.
The simplification introduced with retroactive effect as from 1.1.2020, allows that when a company transfers its goods to another member state in order to create stock for a specific acquirer this does not constitute neither an intra-community supply at the transfer time nor an intra-community acquisition in the arrival EU member state. These transactions will take place only when the goods are eventually sold by the acquirer to a third party.
For safeguarding a sufficient level of monitoring by the tax authorities both sides i.e. the supplier and the acquirer should keep a special stock book for the goods kept in the EU member state of arrival.
Moreover the owner of the goods should include the VAT Registration Number of the specific acquirer in the summary table of intracommunity transactions (as this will be properly reformed) and when the final delivery is performed, it should also file the standard summary table of intracommunity deliveries. Relevant obligations burden also the acquirer in the EU member state where the stock is kept.
If, however, the goods are not delivered within 12 months from their arrival, then as from the next day a goods delivery is deemed under par. 3 article 7 VAT Code as well as an intra-community acquisition (case c article 12 VAT Code) from the supplier, who should acquire a VAT Registration Number in order to comply with the standard VAT rules without the said simplification for the stock kept in the other EU member state. The above obligation will not apply, if the goods are sent back to the member state from where they were dispatched.
For the proper implementation of the above provisions we consider essential that relevant Ministerial Decisions are issued regarding both the details of the maintenance of the special stock book as well as the reformation of the summary table of intracommunity transactions to be filed.
The new provisions set in par. 6a art. 13 of VAT Code and are applicable as from 1.1.2020 clarify the case of chain transactions between successive customers regarding goods that are being transferred from the member state of the initial supplier to the member state of the final customer. In such cases the VAT – exempt intra-community supply will be attributed only to the intermediary party, whereas the rest of the deliveries in the chain will be taxed as local deliveries either in the departure member state or in the arrival member state.
Exceptionally, if the intermediary party notifies the supplier about its VAT Registration Number in the departure member state, then the intra-community supply will be attributed only to the delivery by the intermediary towards its customer.
We consider that the above case is distinguished from the simplified procedure of triangular transactions between contracting parties seated in three different EU member states (i.e. par. 2 and 3 article 15 VAT Code).
The notification of the VAT/ Tax Registration Number of the customer and the submission of correct summary table of intracommunity deliveries are mandatory requirements for granting the exemption of intra-community deliveries
The modifications introduced in article 28 of VAT Code regarding the exemption of intra-community supply of goods to another member state, establish additional obligations as of 1.1.2020: a) the customer should notify the supplier about its VAT Registration Number in the EU member state of the arrival of the goods and b) the supplier should submit a correct Summary table of intracommunity deliveries. Consequently, the exemption will not apply if the supplier does not file the above summary table or if the said table does not include all necessary and correct data.
Place of taxation of intra-community acquisition of goods
The changes introduced in article 15 VAT Code affect the conditions to be met for the implementation of the simplified regime of triangular transactions with contracting parties, either bearing a VAT Registration Number or maintaining establishments in three different EU member states.
Specifically following the change of par. 2 of article 15 of VAT Code the intermediary acquirer may be taxed in Greece for intracommunity acquisition even without any establishment in Greece as long as he maintains a Greek VAT Registration Number and provided that he does not prove that the goods were not transferred in Greece but instead constitute an intra-community acquisition in another EU member state where they were transferred to.
Moreover for the application of the simplified procedures of triangular transactions, in the case of transactions where the goods arrive in Greece, the intermediary acquirer (being an EU company) must not have any establishment in Greece for VAT purposes, while the previous law provision set that he should not have a Greek VAT Registration Number.
Transactions between related parties
Through the modification in case d par. 2 article 19 VAT Code, as taxable value for VAT purposes is considered the fair value of the supply of goods or services for transactions between related parties (i.e. family members, management or ownership influence persons etc.) as these are defined in the Income Tax Code (L. 4172/ 2013).
The transactions falling under this new provision are the following:
- When the recipient does not have a full VAT deduction right, a lower price for the transaction than its fair value would be beneficial, as the recipient is burdened with a lower VAT cost.
- When the supplier does not have a full VAT deduction right and the transaction is exempted from VAT, it would be more beneficial for the supplier to set a lower price than its fair value so that his pro-rata percentage will not be reduced (reduction of deduction right).
- Contrarily, if the supplier does not have a full VAT deduction right and the transaction is subject to VAT, it would be beneficial for the supplier to increase the transaction value more than its fair value in order to influence favorably his pro-rata percentage (increased deduction right).
Additional goods and services subject to the reduced VAT rates
In Appendix ΙΙΙ VAT Code, where goods and services subject to reduced VAT rates are listed, the following new cases are now added:
- Music books of Tarif Code 4904 shall fall under the super-reduced VAT rate 6%.
- Sports tickets will be subject to the reduced VAT rate 13% for the period from 1.9.2020 until 30.6.2021.
You can download the Tax-i in pdf file here.