VAT exemption for intra- EU Community

According to AWDC, on 1 January 2020, the conditions to be able to enjoy a VAT exemption for intra-Community deliveries will be changed. This has an impact on the documents that will be accepted as proof of delivery/shipment of diamonds to another EU member state. Read below what exactly is changing and what to take into account if you transport or dispatch diamonds to another member state.

 

If diamonds are sold and shipped/delivered to a company in another EU member state, no VAT needs to be charged. As proof of the actual delivery/shipment of diamonds, documents such as contracts, order notes, shipment documents, proofs of payment and documents of destination have been accepted until now.

 

However, discussions about this arose with the VAT administration, as a result of which the rules of evidence for VAT-exempted intra-Community deliveries are now being standardized within Europe. What exactly is accepted as documents of proof is clarified and also made more stringent according to these new rules.

 

If the seller ships the diamonds or has a third party ship them on his behalf, he needs to possess the following documents:

1: At least two items of non-contradictory evidence issued by two independent parties, relating to the dispatch or transport of the diamonds, such as a signed CMR document or note, a bill of lading, an airfreight invoice or an invoice from the carrier of the diamonds; OR 2: One item as mentioned in the point above, in combination with another item of non-contradictory evidence which confirms the dispatch or transport.

 

Such as, i: An insurance policy with regard to the dispatch/transport, or bank documents proving payment for this dispatch/transport; ii: Official documents issued by a public authority, such as a notarized confirmation of arrival of the diamonds and iii: A receipt issued by the warehouse keeper in the member state of destination.

 

If the buyer is responsible for the shipment, in addition to the documents above, the seller also needs to dispose of a written declaration by the buyer in which the latter confirms that the diamonds were dispatched / shipped for his account and in which the country of destination is mentioned.

 

According to the new rules, there is a rebuttable presumption that if the seller is in possession of these documents as prescribed by law, he has indeed done an intra-Community delivery and can enjoy VAT exemption. The purpose of this legislation is to counter VAT fraud in relation to the exemption and to provide more certainty to both the fiscal administration and entrepreneurs.

 

It is recommended to look into your internal procedures and to change them where necessary to ensure that, as of 2020, you will still be able to provide sufficient proof to the fiscal authorities with regard to the delivery of diamonds within the EU, to avoid any penalties.

  • VAT exemption for intra- EU Community