If a company in the EU sells goods to a company in another EU country, no VAT is generally payable. Indeed, the transaction is exempt from tax if it counts as an intra-Community supply. Certain conditions must be met for this to happen. Since 1/1/2020, the tax exemption for such deliveries has been more strictly regulated.
The legislator speaks of intra-Community deliveries if goods are shipped or transported to a business customer within the EU. The customer must be registered for VAT purposes in another country – i.e. he must have a VAT identification number (VATIN).
However, the sales tax exemption only takes effect sometimes, and the supplier must do something about it.
The supplier must create a recapitulative statement and send it electronically to the Federal Central Tax Office. In the declaration, the supplier must wholly and correctly list all intra-Community deliveries within a calendar month. If he fails, the concerned deliveries are no longer exempt from VAT. This is stated in § 4 para. 1b of the VAT Act (UStG). How exactly the recapitulative statement must look is regulated by § 18a.
A complete recapitulative statement requires the supplier to state the VAT identification number issued to the customer in the destination country. The VAT Act is stringent on this point: it makes the supplier responsible for ensuring that the VATIN of the customer is valid at the time of delivery (§ 6a (1) no. 4. If he states an invalid one, the tax exemption is cancelled.
Retailers are therefore strongly advised to check whether the VAT identification number provided by their customers is valid. Companies can check the validity of the numbers individually using an Internet form at the Bundeszentralamt für Steuern. The EU also provides a web-based query: the VAT Information Exchange System (“VIES”).
To automatically check VAT identification numbers, ClearVAT offers CheckVAT, a complete solution. — Available as a platform-independent web application and an add-on for SAP ERP 6.0, SAP CRM and SAP S/4HANA systems. You can request product information from our sales team.