EU VAT 'quick fixes' – zero-rating supplies - PKF Francis Clark
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EU VAT ‘quick fixes’ – zero-rating supplies

Important changes from 1 January 2020 regarding the conditions of zero-rating supplies of goods to other EU member states.

The EU has introduced four ‘quick fixes’ which aim to provide a consistent approach across all EU member states. One of which is new EU legislation setting out the conditions for zero-rating when you supply goods to a business in another EU member state.

Current UK legislation includes the following conditions for zero-rating a supply:

  • Your customer’s EU VAT registration number has to appear on your VAT sales invoice, including the 2-letter country prefix code
  • The goods are sent or transported from the UK to a destination in another EU member state
  • The goods have left the UK within the time limits set and valid commercial evidence is kept to prove as such

The changes introduced into EU legislation are:

  • An accurate EC sales list needs to be submitted for zero-rating a cross border supply within the EU from 1 January 2020
    • If the transaction is not reported on an EC sales list, any zero rating of the supply becomes invalid. Any additional VAT due on the supply will be backdated to the original supply and may be liable to a penalty and interest
    • This is the most significant change to the regulations for UK businesses
  • Acceptable ‘valid commercial evidence’ to prove goods have left the UK, has to come from a prescribed list of agreed documentation
    • This represents a significant tightening of the rules as to what is acceptable evidence
    • Currently the responsibility to prove to HMRC that the conditions for removal of goods have been met lies with the business
    • Under the new rules HMRC can challenge the presumption, but it is for HMRC to prove that goods have not been transported from the member state of origin
  • The supplier has to obtain the customer’s VAT registration number
    • As this is already part of UK law there are no changes here for UK businesses

For further advice or assistance, please get in touch with your PKF Francis Clark VAT & indirect tax team –

FEATURING: Simon Anslow
Simon heads up our VAT, Customs & Indirect Tax Team. A broad experience of industry sectors and working with businesses from start-ups through to multi-nationals… read more
FEATURING: Liam Dushynsky
Liam is an Indirect Tax Partner specialising in VAT, Customs Duty and other indirect tax matters. Liam joined PKF Francis Clark in 2005 as part… read more
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