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VAT News
(see indent 8). The latter enables the customer to claim
the VAT for the period in which it becomes chargeable.
In respect of cross-border transactions for which the
customer is liable to account for VAT under the reverse
charge mechanism, the invoice no longer needs to indicate
the VAT rate and the corresponding amount of VAT
due (see indents 9 and 10) because it may be difficult for
the non-resident supplier to determine the correct rate
of VAT applicable in his customer’s Member State.
Are there any other details required on a full VAT
invoice?
Yes, the other details that must be mentioned on a full
VAT invoice depend on the nature of the supply, such as:
– in respect of exempt12 supplies, the code “EX” must
be indicated on the invoice; and
– in respect of transactions that are subject to the
reverse charge mechanism, the code “RC” must be
indicated on the invoice.
The currently applicable references to the VAT Directive
or national legislation, or any other indications that the
supply is exempt or subject to the reverse charge mechanism
are removed.
What are the changes that affect electronic invoicing?
As regards electronic invoicing, the changes can be summarized
as follows.
Businesses will be able to send electronic invoices under
the same conditions as they would send paper invoices.
The condition that electronic invoices must be sent
under an advanced electronic signature or through “electronic
data interchange” (EDI) are removed. The other
optional conditions for sending electronic invoices are
also removed.
The recipient of an electronic invoice will no longer be
required to expressly accept it. The normal commercial
practice of tacit acceptance of invoices will also apply to
electronic invoices.
What are the changes that affect the storage of invoices?
As regards storage of invoices, the proposed changes can
be summarized as follows.
The option for Member States to require storage of
invoices in their original format is removed, which
enables businesses to store paper invoices in electronic
form.
The option for Member States to set the period of storage
is withdrawn. The proposed common storage period
for VAT invoices is set at six years.
Member States will continue to be able to request that
invoices are translated into their national language.
However, any Member State requesting such a translation
must state to which “particular invoices” the request
relates, which puts an end to the different approaches of
the Member States in this respect.
As regards the place of storage, Member States can only
impose the condition that the invoices must be made
available without undue delay. The requirement that
invoices must be made available electronically (online)
where they are stored outside of the Member State of the
supplier or customer is removed.
Businesses will no longer be required to notify the tax
authorities of the place where they store their invoices.
Member States currently have the option to require that,
in respect of B2C supplies, private individuals keep the
invoices received or that non-taxable legal persons store
the invoices. Those options will be withdrawn.
In which Member State do the invoicing rules apply?
The issue of invoices is subject to the rules applicable in
the Member State where the supplier is identified for
VAT. However, if the supply is subject to the reverse
charge mechanism, the rules applicable in the customer’s
Member State apply.
Storage of invoices received by the customer is subject to
the rules applicable in the Member State where the customer
is indentified and storage of the duplicates of the
invoices issued by the supplier is subject to the rules
applicable in the Member State where the supplier is
indentified.
What is the change to the rule on the chargeability of
VAT for intra-Community supplies?
Invoices issued before the 1 th day of the month following
the date of an intra-Community supply will no
longer give rise to chargeability of the tax. Instead, the
chargeability of the tax in respect of intra-Community
supplies will be determined only by the date of the supply.
Will the chargeability of VAT for intra-Community
acquisitions also change?
Yes. The chargeability of the tax on intra-Community
acquisitions will arise only when the supply is made, i.e.
no longer on the 1 th day of the month following the
supply or at the time of issue of the related invoice.
What is the change as regards holding a valid invoice to
claim deduction?
In general, in order to exercise their right to deduct input
tax, taxable persons are required to hold a valid VAT
invoice, even if the supply is subject to the reverse charge
mechanism. Nevertheless, Member States may continue
to base the right to deduct on other evidence.
What is the change in respect of accounting for VAT on
a cash basis?
Member States will have the option, without having to
apply for authorization to derogate from the VAT Dir-
12. Editor’s note: It should be noted that the Community term “exemption”
refers to both true exemptions (i.e. transactions in respect of which the supplier
is not entitled to deduct related input tax), and zero rates.
142 INTERNATIONAL VAT MONITOR MARCH/APRIL 2009 © IBFD