Intra-Community Supplies

1. Introduction

The terms ‘intra-Community supply’ and ‘intra-Community acquisition’ relate to goods supplied by a business in one EU Member State to a business in another which have been dispatched or transported from the territory of one Member State to another as a result of such supply. (The terms also apply to new means of transport supplied by a person in one Member State to a person, including a private individual, in another Member State and transferred to that Member State. This is dealt with in ‘Certain transfers are not supplies’).

2. Supplies of goods to other Member States

The supply of goods by a VAT-registered trader in one EU Member State to a VAT registered trader in another EU Member State, with some exceptions, is referred to as an intra-Community supply. A VAT-registered trader in the State may zero rate the supply of goods to a customer in another EU Member State if:-

the customer is registered for VAT in that other EU Member State,
the customer’s VAT registration number (including country prefix) is obtained and retained in the supplier’s records
this number, together with the supplier’s VAT registration number, is quoted on the sales invoice
the goods are dispatched or transported to that other Member State.

If these four conditions are not met the supplier is liable for VAT at the appropriate Irish rate. If the supplier is not able to satisfy Revenue that particular consignments of goods have been sold and delivered to a VAT registered person in another Member State, the supplier becomes liable for the payment of Irish VAT on the transaction. Where any of the above four conditions are not satisfied the supplier should charge Irish VAT. If the conditions for zero-rating are subsequently established the customer is entitled to recover the VAT paid from the supplier. The supplier can then make an adjustment in his/her VAT return for the period.

3. Evidence of despatch to another Member State and removal of the goods from the State

The precise commercial documentation required to confirm despatch and removal of the goods from the State depends on the particular circumstances involved.

In many cases a supplier arranges transportation of the goods and the normal commercial documentation related to the supply and transportation of the goods is available (e.g. order document, delivery docket, supplier’s invoice, transport document/bill of lading, evidence of transfer of foreign currency for payment, etc.). In such cases the supplier should retain this documentation.

Where transport of the goods is arranged by the customer, or the goods are taken away by the customer using his or her own transport, the supplier needs to be satisfied that the goods are dispatched or transported to another Member State. The normal documentary evidence should be retained in relation to the sale itself but, in addition, the supplier should obtain and retain documentary evidence from the customer that the goods were received in another Member State. The type of documentation acceptable includes transport documents, copies of warehouse receipts, delivery dockets, etc. It might also be prudent for the supplier to record details of the means of transport (e.g. vehicle registration nos.) used by the customer.

Special care should be taken by the supplier to ensure that the four conditions outlined in ‘Supplies of goods to other Member States’ are met for sales and deliveries of goods to other Member States. Some examples of where a doubt can arise are where:

customer is not previously known to the supplier
customer arranges to collect and transport the goods
customer’s transport arrives at supplier’s premises without advance notice or correspondence
payment is made in cash
type or quantity of goods being purchased are not consistent with commercial practice bearing in mind the purported destination of the goods.

Cases where one or more of these various factors combine together must be treated with particular caution. Where a doubt arises, the supplier should charge Irish VAT. If the conditions for zero-rating are subsequently established the customer is entitled to recover the VAT paid from the supplier.

4. Verification of customers’ VAT numbers

For zero-rating to apply there must be a supply of goods to a person registered for VAT in another Member State. The fiscal authorities in each Member State have put in place a computerised system that makes it possible for traders to verify the VAT numbers of their customers in other Member States. However, use of the verification system is not obligatory and traders who are familiar with their customers, and are aware of their bona fides from trading with them over a period of time, are not expected or required to use the verification system. Instead they are advised to contact their EU customers and ask them to confirm in writing their VAT registration numbers.

An Irish trader who has doubts about the validity of a VAT number quoted may use the verification system to establish whether or not a particular number is valid. The system is primarily intended to be used in such circumstances and is not intended for routine checks. Verification of queries is dealt with by the VIMA Office, Government Offices, Millennium Centre, Dundalk, Co. Louth, Phone No: (042) 9353700 or LoCall 1890 251010 or by email at vimahelp@revenue.ie

It is possible to verify the format only and for some Member States, the details, on any given VAT Number in the EU by referring to the EU Commission database

5. Requirement to take all reasonable steps

Any supplier who takes all reasonable steps to confirm that the conditions for zero-rating are met will not be penalised if it subsequently transpires that a problem has arisen in connection with particular consignments. However, the tax due will be demanded from the supplier in any case where he or she has failed to take all reasonable steps.

6. Fraudulent claims for zero-rating

There are severe penalties for making fraudulent claims for zero-rating:

Seizure and forfeiture of zero-rated goods which have not been dispatched or transported outside the State (subsections (9A) and (10) of section 27 of the VAT Act).
A person who acquires goods VAT free in another Member State as a result of making a declaration of an incorrect VAT registration number shall be liable to a penalty of €630 plus an amount equal to the amount of tax which would have be chargeable.
Arrest of a person suspected of a criminal offence who is not established in the State, or whom an authorised Revenue Officer or a Garda has reason to believe may leave the State (subsection (11) of section 27 of the VAT Act).
Civil and criminal penalties, ranging up to €126,970 and imprisonment for a period of up to five years (sections 26, 27 and 28 of the VAT Act, and section 1078 of the TCA 1997).

7. Sale of new vehicles to persons in other EU Member States

Sales of new means of transport, i.e. motor vehicles, boats, aircraft, etc., are always intra-Community supplies/acquisitions and any person acquiring a new means of transport must always pay VAT in the EU Member State of arrival.

For a dealer selling a new means of transport to a person registered for VAT in another EU Member State, the VAT treatment is the same as that which applies to goods generally.

In the case of the sale of a new vehicle, for example, to a private individual in another EU Member State, VAT is ultimately payable in the EU Member State of destination. If the private individual collects the vehicle in the State, VAT should be charged by the dealer. However, once the customer satisfies the dealer that VAT has been paid in his/her own EU Member State, the dealer should refund the VAT charged to the customer and adjust his/her VAT liability accordingly. The dealer should retain documentary proof. The normal level of proof required would be a copy of the receipt of VAT payment and proof of registration of the vehicle in the other EU Member State.

8. What is a new means of transport?

Definitions of ‘new means of transport’ for VAT purposes.
Means of Transport	Specification	Definition
Motor Vehicle	Over 48cc or over 7.2 kw power	6 months old or less, or travelled 6,000 km or less
Marine vessel	over 7.5 metres in length	3 months old or less, or sailed for 100 hours or less
Aircraft	over 1,550 kg take-off weight	3 months old or less, or flown for 40 hours or less

9. Triangular transactions

Triangulation in the Single Market involves two supplies of goods between three VAT-registered traders in three different EU Member States e.g. where a trader in one Member State orders goods from a trader in a second Member State, to be delivered to a trader in a third Member State. To reduce the administrative and compliance burdens both on traders and the relevant revenue authorities with regard to registration and accounting, a simplification measure known as triangulation is in operation in such cases. A technical notice on the VAT treatment of triangulation in the Single Market is available on request.

10. Certain transfers are not supplies

For VAT purposes, certain transfers to other Member States are not treated as intra-Community supplies/acquisitions. These include goods for installation or assembly by the supplier, (in this case the customer must self-account for VAT) transfers for the purposes of having contract work carried out and transfer with a view to their temporary use in another Member State.

11. Branch to branch transfers of goods

For VAT purposes, branch to branch (with some exceptions) and similar transfers of goods between business persons in different EU Member States are treated as being intra-Community supplies and acquisitions.

12. VIES returns

When an Irish VAT-registered trader makes zero-rated supplies of goods to a trader in another EU Member State, summary details of those supplies must be returned to Revenue on a quarterly or monthly basis. This return, known as the VIES return, is to enable the authorities in each EU Member State to ensure that intra-Community transactions are properly recorded and accounted for.

13. Intrastat returns

Traders engaged in intra-Community trade are also obliged to make a periodic INTRASTAT return, for statistical purposes, where the value of goods acquired by them from other Member States exceeds €191,000 per annum or the value of goods supplied by them to other EU Member States exceeds €635,000 per annum.

Further Information

Enquiries regarding any issue contained in this Information Leaflet should be addressed to the Revenue District responsible for the taxpayer’s affairs. (Contact details for all Revenue Districts.)

This leaflet is issued by

VAT Appeals and Communications Branch,
Indirect Taxes Division,
Dublin Castle.

October 2008

This information leaflet which sets out the current practice at the date of its issue is intended for guidance only and does not purport to be a definitive legal interpretation of the provisions of the Value-Added Tax Act 1972 (as amended).

Revenue Information Note