If a company based in the EU sells goods to a company based 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 than before.
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 does not take effect automatically. The supplier must do something about it.
Among other things, the supplier must create a recapitulative statement and send it electronically to the Federal Central Tax Office. In the declaration, the supplier must correctly and completely list all intra-Community deliveries within a calendar month. If he fails to do so, 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 like is regulated by § 18a.
A complete recapitulative statement requires the supplier to state the VAT identification number issued to the customer in the country of destination. The VAT Act is particularly strict 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 customer is valid. Companies can check the validity of the numbers individually using an Internet form at the Bundeszentralamt für Steuern. The EU also provides such an 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 as an add-on for SAP ERP 6.0, SAP CRM and SAP S/4HANA systems. You can request product information from our sales team.