VAT: Changes to the treatment of intra-EU chain transactions and zero-rated goods

HMRC has issued a guidance note to explain changes to the VAT treatment of intra-EU chain transactions and to the conditions for zero rating intra-EU supplies of goods.

The new rules are set out in part 4 of the Value Added Tax (Place of Supply of Goods) Order 2004 (SI 2004/3148) and take effect from 1 January 2020. They bring into force EU wide rules on the VAT treatment of chain transactions where the goods are transported across an EU border.

The new chain transaction rules set out how to determine which supply is to be treated as the intra-community supply. The principle holds good for a chain of any length, irrespective of the number of intermediary buyers. The new rules make express provision as to which supply is to be treated as the intra-community supply and, in most cases, achieve the same end result as the UK’s current policy.

In addition to these changes to the UK law there are some EU regulations that have direct effect. These set out the evidence that must be held to show the goods have been moved across an EU border.

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