Proposal for a COUNCIL DIRECTIVE amending Directive 2006/112/EC as regards harmonising and simplifying certain rules in the value added tax system and introducing the definitive system for the taxation of trade between Member States
Date: 2017-10-04
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: European tax cooperation, VAT, goods and services, intra-EU trade, supplier, supply, tax collection, tax harmonisation, tax law, taxpayer

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   EUROPEAN COMMISSION  Brussels, 4.10.2017  COM(2017) 569 final 2017/0251 (CNS)   Proposal for a COUNCIL DIRECTIVE amending Directive 2006/112/EC as regards harmonising and simplifying certain rules in the value added tax system and introducing the definitive system for the taxation of trade between Member States {SWD(2017) 325 final} {SWD(2017) 326 final}  
 
EXPLANATORY MEMORANDUM 

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CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

Indirect taxes on consumption are at international level governed by the fundamental principle 
of taxation in the country of destination. In other words, taxes are charged in the country in 
which the goods and services are consumed. 

Value-added  tax  (VAT)  is  Europe’s  longest-standing  consumption  tax.  In  1967,  the 
commitment  was  made  to  establish a  definitive  VAT  system  operating  within  the European 
Community  in  the  same  way  as  it  would  within  a  single  country1.  The  need  to  abolish  the 
fiscal frontiers between Member States by the end of 1992 made it necessary to reconsider the 
way in which trade in goods was taxed in the European Community. The goal was that goods 
would  be  taxed  in  the  country  of  origin,  so  that  the  same  conditions  that  apply  to  domestic 
trade  would  also  apply  to  intra-Community  trade,  perfectly  reflecting  the  idea  of  a  genuine 
internal market. 

Since the political and technical conditions were not ripe for such a system, transitional VAT 
arrangements  were  adopted2.  Those  arrangements,  as  far  as  Business-to-Business  (B2B) 
transactions  on  goods  are  concerned,  split  the  cross-border  movement  of  goods  into  two 
different transactions: an exempt supply in the Member State of departure of the goods and an 
intra-Community  acquisition  taxed  in  the  Member  State  of  destination.  These  rules  were 
regarded as temporary and are not without drawbacks since allowing goods to be bought free 
of VAT increases the opportunity for fraud, while the inherent complexity of the system is not 
favourable  to  cross-border  trade.  However,  these  transitional  arrangements  are  still  in 
operation more than 20 years after their adoption. 

After a broad public debate, launched with a consultation on the Green Paper on the future of 
VAT3 (Green Paper)  on 6 December 2011, the Commission  adopted  the Communication  On 
the future of VAT — Towards a simpler, more robust and efficient VAT system tailored to the 
single  market4.  That  consultation  confirmed  that  many  businesses  consider  that  the 
complexity,  additional  compliance  costs  and  legal  uncertainty  of  the  VAT  system  often 
prevent them  from engaging in cross-border activities and reaping the benefits  of the  single 
market.  It  also  provided  an  opportunity  to  examine  whether  the  commitment  made  in  1967 
was still relevant. 

Discussions with Member States showed that the objective of taxation in the Member State of 
origin was still politically unachievable and this was confirmed by the Council in May 20125. 

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First  Council  Directive  67/227/EEC  of  11 April  1967  on  the  harmonisation  of  legislation  of  Member 
States  concerning  turnover  taxes;  Second  Council  Directive  67/228/EEC  of  11 April  1967  on  the 
harmonisation of legislation of Member States concerning turnover taxes — Structure and procedures 
for application of the common system of value added tax. 
Council  Directive  91/680/EEC  of  16 December  1991  supplementing  the  common  system  of  value 
added tax and amending Directive 77/388/EEC with a view to the abolition of fiscal frontiers (OJ L 376 
of 31.12.1991, p. 1). 
COM(2010) 695, Commission Staff Working Document, SEC(2010) 1455, 1.12.2010. 
COM(2011) 851, 6.12.2011. 
Council conclusions on the future of VAT - 3167th Economic and Financial affairs Council meeting, 
Brussels, 15 May 2012 (see in particular point B 4) 
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/130257.pdf 

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Also  the  European  Parliament6  and  the  European  Economic  and  Social  Committee7 
recognised the deadlock and favoured a new VAT system based on the principle of taxation at 
destination as a realistic solution. 

After  the  adoption  of  the  aforementioned  Communication,  the  Commission  entered  into  a 
broad-based and transparent dialogue with Member States and with stakeholders to examine 
in detail the different possible ways of implementing the destination principle. The main idea 
in  this  regard  was  that  doing  business  across  the  European  Union  (hereinafter,  "Union"  or 
"EU")  should  be  as  simple  and  as  secure  as  engaging  in  purely  domestic  activities.  That 
dialogue took place in particular via the Group on the Future of VAT (GFV)8 and the VAT 
Expert Group (VEG)9. 

Following  this  work,  the  Commission  adopted  on  7 April  2016  the  Action  Plan  on  VAT  – 
Towards  a  single  EU  VAT  area  –  Time  to  decide10  (VAT  Action  Plan).  The  Commission 
announced,  inter  alia,  its  intention  to  adopt  a  definitive  VAT  system  for  intra-Union  cross-
border trade based on the principle of taxation in the Member State of destination of the goods 
in  order  to  create  a  robust  single  European  VAT  area.  A  legislative  proposal  for  such  a 
simpler  and  fraud-proof  definitive  VAT  system  for  intra-Union  trade  was  included  in  the 
Commission Work Programme for 201711. 

In  its  conclusions  of  25 May  201612,  the  Council  took  note  of  the  points  made  by  the 
Commission  in  its  VAT  Action  Plan  as  regards  the  way  forward  towards  a  definitive  VAT 
system  and  of  its  intention  to  present,  as  a  first  step,  a  legislative  proposal  in  2017  for  the 
definitive VAT system for cross-border B2B trade. It also reiterated its view that the principle 
of  “taxation  in  the  Member  State  of  origin  of  the  supply  of  goods  or  services”  should  be 
replaced  by  the  principle  of  “taxation  in  the  Member  State  of  destination”.  The  European 
Parliament also welcomed the Commission’s intention to propose a definitive VAT system by 
2017 that is simple, fair, robust, efficient and less susceptible to fraud13. 

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European  Parliament  resolution  of  13 October  2011  on  the  future  of  VAT  (P7_TA(2011)0436) 
http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P7-TA-2011-
0436 
European Economic and Social Committee Opinion of 14 July 2011 on the ‘Green Paper on the future 
of  VAT  -  Towards  a  simpler,  more  robust  and  efficient  VAT  system’  http://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=celex:52011AE1168 
The  Group  on  the  Future  of  VAT  provides  a  forum  for  discussion  with  VAT  delegates  from  the 
Member States' tax administrations on the Commission pre-legislative initiatives and for exchanges of 
opinions on the preparation of future VAT legislation. 
The VAT Expert Group is composed of 40 members: individuals with the requisite expertise in the area 
of VAT and organisations representing in particular businesses, tax practitioners and academics. 
COM(2016) 148 final. 
Commission Work Programme 2017: Delivering a Europe that protects, empowers and defends, 
COM(2016) 710 final  
http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1487237841093&uri=CELEX:52016DC0710 
See: http://www.consilium.europa.eu/en/press/press-releases/2016/05/25-conclusions-vat-action-plan/ 
European  Parliament  resolution  of  24  November  2016  on  Towards  a  definitive  VAT  system  and 
fighting VAT fraud (2016/2033(INI)) 
http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2016-
0453 

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In  its  conclusions  of  8 November  201614  the  Council  stated  that,  while  the  Commission  is 
working  on  the  definitive  VAT  system  for  intra-Union  trade,  improvements  to  the  current 
VAT  system  should  be  made  in  the  meantime.  In  this  context,  the  Council  requested 
amendments in four areas: 

  VAT  identification  number:  the  Council  invited  the  Commission  to  present  a 
legislative  proposal  aimed  at  making  the  valid  VAT  identification  number  of  the 
taxable person or non-taxable legal person acquiring the goods, allocated by a Member 
State other than that in which dispatch or transport of the goods began, an additional 
substantive  condition  for  the  application  of  the  exemption  in  respect  of  an  intra-
Community supply of goods. 

  Chain  transactions:  the  Commission  was  invited  by  the  Council  to  propose  uniform 
criteria and appropriate legislative improvements which would lead to increased legal 
certainty  and  harmonised  application  of  VAT  rules  when  determining  the  VAT 
treatment of chain transactions, including triangular transactions. 

  Call-off  stock:  the  Council  invited  the  Commission  to  propose  modifications  to  the 
current VAT rules in order to allow simplification and uniform treatment for call-off 
stock  arrangements  in  cross-border  trade.  To  this  effect,  'call-off  stock'  refers  to  the 
situation  where  a  vendor  transfers  goods  to  a  warehouse  at  the  disposal  of  a  known 
acquirer in another Member State and  that acquirer becomes  the owner  of the goods 
upon calling them off the warehouse. 

  Proof  of  intra-Community  supply:  the  Council  invited  the  Commission  to  explore 
possibilities  for  a  common  framework  of  recommended  criteria  for  the  documentary 
evidence required to claim an exemption for intra-Community supplies. 

In order to meet the request of the Council, amendments to the VAT Directive15 are proposed 
for  the  three  first  areas.  The  fourth  area  requires  a  modification  of  the  VAT  Implementing 
Regulation16 and is therefore subject to a separate proposal. 

In addition the present proposal introduces the cornerstones of the definitive system for intra-
Union B2B trade. A forthcoming proposal in 2018 will then further provide detailed technical 
provisions for the actual implementation of these cornerstones. The first legislative step of the 
definitive VAT system announced in the VAT Action Plan17 therefore includes two sub-steps: 

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transactions 

Council  conclusions  of  8  November  2016  on  Improvements  to  the  current  EU  VAT  rules  for  cross-
border 
(No.  14257/16  FISC  190  ECOFIN  1023  of  9 November  2016) 
http://data.consilium.europa.eu/doc/document/ST-14257-2016-INIT/en/pdf 
Council  Directive  2006/112/EC  of  28 November  2006  on  the  common  system  of  value  added  tax 
(OJ L 347, 11.12.2006, p. 1). 
Council  Implementing  Regulation  (EU)  No 282/2011  of  15 March  2011  laying  down  implementing 
measures  for  Directive  2006/112/EC  on  the  common  system  of  value  added  tax  (recast)  (OJ L 77, 
23.3.2011, p. 1). 
The  VAT  Action  Plan  provided  for  two  legislative  steps  in  relation  with  the  introduction  of  the 
definitive  VAT  system.  See  the  last  two  paragraphs  of  point 4  of  the  VAT  Action  Plan  for  further 
details on the content of these legislative steps.  

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one  contained  in  the  present  proposal  and  made  of  the  aforementioned  cornerstones  and 
another one that will take place in 201818. 

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Consistency with existing policy provisions in the policy area 

The introduction of a definitive system for intra-Union supplies of goods is one of the main 
parts  of  the  VAT  Action  Plan.  This  proposal  is  a  step  towards  replacing  the  transitional 
arrangements,  applicable  since  1 January  1993,  by  a  definitive  VAT  system  for  intra-Union 
B2B trade under which domestic and cross-border transactions of goods will be treated in the 
same  way19.  Further,  that  definitive VAT  system  will  create  a  robust  single  European  VAT 
area  which  can  support  a  deeper  and  fairer  single  market  that  helps  to  boost  jobs,  growth, 
investment and competitiveness. 

• 

Consistency with other Union policies 

The creation of a simple, modern and fraud-proof VAT system is one of the fiscal priorities 
set out by the Commission for 201720. 

Combating  missing  trader  VAT  fraud  is  also  one  of  the  European  Union’s  priority  crime 
areas, under the 2014-2017 EU Policy Cycle of Europol21. 

Reducing  administrative  burden,  particularly  for  SMEs,  is  also  an  important  objective 
highlighted in the EU’s growth strategy22. 

The proposed initiative and its objectives are consistent with the EU SME policy as set out by 
the Small Business Act (SBA)23, in particular principle VII on helping SMEs to benefit more 
from the opportunities offered by the Single Market. 

It is consistent with the Single market strategy (SMS)24 and the objectives of the Regulatory 
Fitness and Performance programme (REFIT). 

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A detailed description of the successive steps and sub-steps of the introduction of the definitive VAT 
system  may  be  found  in  the  Communication  from  the  Commission  to  the  European  Parliament,  the 
Council and the European Economic and Social Committee – On the follow-up to the Action Plan on 
VAT - Towards a single EU VAT area - Time to act (COM(2017) […].  
Although currently not in the forefront of the work on the definitive VAT system, there might be a need 
to  assess  in  the  future  certain  customs  procedures  (e.g.  CP  42)  so  as  to  ensure  this  principle  is 
coherently applied in combination with import/export schemes. 
Annual  Growth  Survey  2017;  see:  https://ec.europa.eu/info/publications/2017-european-semester-
annual-growth-survey_en 
EMPACT priorities 
Europe 2020 – A strategy for smart, sustainable and inclusive growth; see: 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:2020:FIN:EN:PDF 
Communication  from  the  Commission  to  the  Council,  the  European  Parliament,  the  European 
Economic and Social Committee and the Committee of the Regions - “Think Small First” – A “Small 
Business Act” for Europe (COM(2008) 394 final). 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  regions  –  "Upgrading  the  Single  Market: 
more opportunities for people and business" (COM(2015) 550 final). 

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2. 

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LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The  Directive  amends  the  VAT  Directive  on  the  basis  of  Article 113  of  the  Treaty  on  the 
Functioning  of  the  European  Union.  This  Article  provides  for  the  Council,  acting 
unanimously  in  accordance  with  a  special  legislative  procedure  and  after  consulting  the 
European  Parliament  and  the  Economic  and  Social  Committee,  to  adopt  provisions  for  the 
harmonisation of Member States' rules in the area of indirect taxation. 

• 

Subsidiarity (for non-exclusive competence)  

According to the principle of subsidiarity, as set out in Article 5(3) of the Treaty on European 
Union,  action  at  Union  level  may  only  be  taken  if  the  envisaged  aims  cannot  be  achieved 
sufficiently by the Member States alone and can therefore, by reason of the scale or effects of 
the proposed actions, be better achieved by the EU. 

VAT  rules  for  cross-border  Union  trade  can,  by  their  nature,  not  be  decided  by  individual 
Member States since, inevitably, more than one Member State is involved. Moreover, VAT is 
a tax harmonised at Union level and therefore any initiative to introduce the definitive VAT 
system for cross-border supplies of goods requires a proposal  by the Commission  to amend 
the VAT Directive. 

As  regards  the  provisions  to  harmonise  and  simplify  rules  within  the  current  VAT  system 
contained  in  this  proposal,  they  have  unanimously  been  requested  by  the  Member  States 
which  demonstrates  that  action  at  Union  level  is  likely  to  be  more  effective  as  action  at 
national level has proven not to be sufficiently successful. 

• 

Proportionality 

The proposal, as far as the introduction of the definitive system for intra-Union B2B trade is 
concerned, is consistent with the principle of proportionality i.e. it does not go beyond what is 
necessary  to  meet  the  objectives  of the  Treaties,  in  particular  the  smooth  functioning  of  the 
single  market.  As  with  the  subsidiarity  test,  it  is  not  possible  for  Member  States  to  address 
problems such as fraud or complexity without a proposal to amend the VAT Directive. 

As regards the proposed improvements to the current system, they are targeted and limited to 
a  restricted  number  of  VAT  rules  which  have  proven  difficult  to  apply  in  a  systematic  and 
uniform way and which have created problems for taxable persons. 

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Choice of the instrument 

A Directive is proposed in view of amending the VAT Directive. 

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3. 

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RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

A  retrospective  evaluation  of  elements  of  the  Union  VAT  system  was  conducted  by  an 
external  consultant  in  2011  and  its  findings  have  been  used  as  a  starting  point  to  the 
examination of the current VAT system25. 

• 

Stakeholder consultations 

On  6  May  2011,  the  European  Commission  organised  a  conference  in  Milan  as  part  of  the 
consultation  process  on  the  Green  Paper.  It  brought  together  policy  makers,  experts, 
businesses and other stakeholders and the general public from all over Europe, and beyond26. 
The  open  public  consultation  on  the  Green  Paper,  resulting  in  around  1700  contributions, 
provided the Commission with a clear understanding of the problems and possible solutions. 

Following  publication  of  the  Green  Paper,  the  Commission  set  up  two  working  groups  for 
discussions at technical level: the GFV and the VEG. A total of 12 meetings of the GFV and 
14 meetings of the VEG took place to discuss different issues related to the definitive VAT 
system for intra-Union B2B trade as well as the improvements to the current system. Mixed 
sub-groups  consisting  of  both  GFV  and  VEG  members  were  constituted  to  discuss  jointly 
certain  specific  topics.  Also  a  Fiscalis27  seminar  was  organised  in  Vienna  in  2015  which 
brought  together  members  of  both  the  GFV  and  the  VEG.  Another  mixed  sub-group  was 
established in the framework of the EU VAT forum28, a discussion platform where businesses 
and VAT authorities meet to discuss how the implementation of the VAT legislation can be 
improved in practical terms.  

Finally,  a  public  consultation  on  the  definitive  system  for  intra-Union  trade  was  organised 
from 20 December 2016 to 20 March 2017 resulting in 121 contributions29.The objective was 
to  get  the  views  of  all  stakeholders  on  the  operation  of  the  current  transitional  VAT 
arrangements,  the  possible  short  term  improvements  to  these  transitional  arrangements,  as 
requested  by  the  Council,  and  the  introduction  of  the  definitive  VAT  system  based  on  the 
principle of taxation at destination. 

• 

Collection and use of expertise 

Regarding  the  options  for  a  definitive  VAT  system,  the  following  studies  have  provided 
detailed analysis of the problems at stake and the possible ways forward: 

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Institute  for  Fiscal  Studies  (project  leader),  2011,  A  retrospective  evaluation  of  elements  of  the  EU 
VAT system: 
http://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/common/publications/stu
dies/report_evaluation_vat.pdf 
More information on: https://ec.europa.eu/taxation_customs/business/vat/action-plan-
vat/communication-future-vat/green-paper_en 
Regulation (EU) No 1286/2013 of the European Parliament and of the Council of 11 December 2013 
establishing an action programme to improve the operation of taxation systems in the European Union 
for the period 2014-2020 (Fiscalis 2020). 
Commission  Decision  of  3 July  2012  setting  up  the  EU  VAT  forum,  2012/C198/05,  (OJ C 198/4  of 
6.7.2012). 
Summary of the results of the open public consultation: 
https://ec.europa.eu/taxation_customs/consultations-get-involved/tax-consultations_en 

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-   Study on applying the current principle for the place of supply of B2B services to B2B 

supplies of goods30; 

-   Economic study on charging VAT on intra-EU supplies of goods and services31; 
-   Implementing the ‘destination principle’ to intra-EU B2B supplies of goods32; 
-   Study and Reports on the VAT Gap in the EU-28 Member States33. 

• 

Impact assessment 

Reference is made to the separate impact assessment which has been carried out in relation to 
this  proposal.  The  preferred  option,  chosen  in  that  impact  assessment,  would  reduce  cross 
border VAT fraud by EUR 41 billion and compliance costs for businesses by EUR 1 billion. 

The impact assessment for the proposal was considered by the Regulatory Scrutiny Board on 
14 July 2017. The Board gave a positive opinion to the proposal with some recommendations, 
in particular on the link of the proposal to other elements of the VAT Action Plan, the need 
for  a  staged  approach  and  the  concept  of  certified  taxable  person,  that  have  been  taken  on 
board. The opinion of the Board and the recommendations are mentioned in Annex 1 to the 
Staff Working Document for the impact assessment accompanying this proposal. 

4. 

BUDGETARY IMPLICATIONS 

The proposal will have no negative implications for the Union budget. 

5. 

• 

OTHER ELEMENTS 

Detailed explanation of the specific provisions of the proposal 

Certified taxable person: Article 13a (new) 

This provision introduces the concept of the certified taxable person.  

As a rule, taxable persons are identified for VAT purposes via a VAT identification number. 
No  distinction  is  currently  made  at  the  level  of  the  attribution  of  such  a  number  between 
reliable and less reliable taxable persons. The VAT rules, as far as identification is concerned, 
apply in the same way to both categories. 

The concept of certified taxable person allows for an attestation that a particular business can 
globally  be  considered  to  be  a  reliable  taxpayer.  The  concept  is  important  because  certain 
simplification rules, which could be fraud-sensitive, will apply only where a certified taxable 
person is involved in the relevant transaction.  

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PwC, 2012; see: 
http://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/common/publications/stu
dies/place_supply_b2b.zip 
CPB (project leader), 2013; see: https://circabc.europa.eu/sd/a/60e05641-2653-4ac3-aca2-
3060896aa6e3/33-ANN%20-%20Final%20report%20-
%20Study%20on%20charging%20VAT%20on%20intra-
EU%20supplies%20of%20goods%20and%20services%5B1%5D.pdf 
EY, 2015; see: 
https://ec.europa.eu/taxation_customs/sites/taxation/files/docs/body/ey_study_destination_principle.pdf 
CASE, 2016; see: https://ec.europa.eu/taxation_customs/sites/taxation/files/2016-09_vat-gap-
report_final.pdf 

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Further, the certified taxable person concept will be one of the essential elements of the first 
step  of  the  definitive  VAT  system  for  intra-Union  B2B  trade.  That  definitive  system  will 
replace,  by  one  taxable  supply  of  goods  located  for  VAT  purposes  in  the  Member  State  of 
destination (the so-called intra-Union supply of goods), the current transitional arrangements 
which entail an exempt supply of goods in the Member State of departure and a taxed intra-
Community  acquisition  in  the  Member  State  of  destination,  for  which  the  acquirer  is  the 
person  liable  to  VAT.  The  certified  taxable  person  concept  will  allow  for  a  gradual 
implementation of the definitive VAT system because, in the first step of that system, reverse 
charge  (i.e.  liability  to  VAT  of  the  acquirer  and  not  of  the  supplier,  which  gives  rise  in 
practice  to  a  similar  situation  to  what  exists  today  under  the  transitional  arrangements)  will 
apply where the acquirer, in case of intra-Union supplies, is a certified taxable person34  The 
justification is that no fraud should occur as a result of VAT not being charged on intra-Union 
supplies made for a certified taxable person, as the certified taxable person by definition is a 
reliable taxpayer. 

The  provision  sets  out  the  overall  criteria  on  the  basis  of  which  the  Member  States  will  be 
able  to  certify  taxable  persons.  Following  the  adoption  of  this  proposal,  a  Council 
Implementing Regulation will have to be adopted, based on Article 397 of the VAT Directive, 
so as to arrange the practicalities of the certified taxable person status and to ensure that the 
procedure  for  granting  and  withdrawing  the  certified  taxable  person  status  is  sufficiently 
harmonised  and  standardised  throughout  the  Union  so  that  a  uniform  application  can  be 
guaranteed.  Also  an  amendment  to  the  Administrative  Cooperation  Regulation35  is  to  be 
proposed  in  order  to  enable  the  certified  taxable  person  status  of  taxable  persons  being 
integrated  in  the  VIES  (VAT  information  and  exchange  system)  thus  allowing  both  tax 
administrations  and  businesses  to  verify  online  the  certified  taxable  person  status  of  a 
particular business. 

Since the certified taxable person status entails VAT reporting and payment obligations, non-
taxable  persons  will  not  be  eligible.  For  the  same  reason,  the  proposal  excludes  flat-rate 
farmers,  exempt  SMEs,  other  taxable  persons  exempt  without  the  right  to  deduct  and 
occasional taxable persons from the possibility of obtaining the certified taxable person status. 
However, any SME not applying the exemption scheme will be able to apply for the certified 
taxable  person  status  under  the  same  conditions  as  any  other  taxable  person.  It  is  therefore 
consistent with the EU SME policy as set by the Small Business Act (SBA)36. 

Similarity exists between the criteria to be used for granting the certified taxable person status 
and  those  applied  regarding  the  Authorised  Economic  Operator  (AEO)  as  defined  in  the 
Union  Customs  Code  (Article 39).  Similar  criteria,  based  on  the  AEO  status,  can  also  be 
found in the recent VAT proposal on e-commerce37. 

34 

35 

36 
37 

As announced in the VAT Action Plan, in a future second legislative step of the definitive VAT system, 
taxation would cover all cross border supplies of goods and services (and therefore the supplier, and not 
the  customer,  would  be  liable  for  the  VAT  on  all  goods  and  services  purchased  from  other  Member 
States)  so  that  all  supplies  of  goods  and  services  within  the  single  market,  either  domestic  or  cross-
border, will be treated the same way. 
Council Regulation (EU) No 904/2010 of 7 October 2010 on administrative cooperation and combating 
fraud in the field of value added tax (recast) (OJ L 268, 12.10.2010, p. 1). 
See footnote 23. 
Proposal  for  a  Council  Directive  amending  Directive  2006/112/EC  and  Directive  2009/132/EC  as 
regards  certain  value  added  tax  obligations  for  supplies  of  services  and  distance  sales  of  goods 
(COM(2016) 757 final of 1.12.2016; see the proposed Article 369m(1)(c) of Directive 2006/112/EC). 

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Call-off stock: Articles 17a (new), 243(3) and 262 (amended) 

Call-off  stock  is  a  scheme  whereby  a  supplier  transfers  goods  to  a  known  acquirer  without 
transferring the ownership of the goods yet. The acquirer has the right to take the goods from 
a stock of the supplier at his own discretion at which point a supply of goods takes place. In 
domestic relationships, the use of this model does not create specific problems but issues arise 
when supplier and acquirer are situated in different Member States. 

Under the current VAT rules, a business transferring own goods to another Member State in 
order to constitute a stock for a customer is deemed to have made a VAT exempt supply of 
goods  in  the  Member  State  of  departure.  The  arrival  of  the  goods  gives  rise  to  an  intra-
Community  acquisition  made  by  the  business  that  transferred  the  goods  which  is  subject  to 
VAT in that other Member State. The business that has transferred the goods is obliged, as a 
rule, to be identified for VAT purposes in the Member State of arrival in order to be able to 
declare the intra-Community acquisition in its VAT return. When the goods are taken out of 
the stock and delivered to the acquirer a second supply occurs, the place of supply of which is 
the Member State in which the stock is situated. 

In order to address the difficulties that this can cause in practice, certain Member States apply 
simplification  measures  regarding  these  transactions  while  others  do  not.  These  differences 
run against the uniform application of the VAT rules within the single market. 

The proposed solution consists in considering the call-off stock arrangements as giving rise to 
a single supply in the Member State of departure and to an intra-Community acquisition in the 
Member  State  where  the  stock  is  situated  insofar  as  the  transaction  is  taking  place  between 
two  certified  taxable  persons  This  will  avoid  that  the  supplier  has  to  be  identified  in  every 
Member State where he has placed goods under the call-off stock arrangements. However, to 
ensure an adequate follow-up of the goods by the tax administrations, the supplier as well as 
the  acquirer  will  be  required  to  keep  a  register  of  call-off  stock  goods  to  which  these  rules 
apply. Further, in the recapitulative statement of the supplier the identity of the acquirers to 
whom  goods  dispatched  under  call  off  stock  arrangements  will  be  supplied  at  a  later  stage 
must be mentioned.  

identification  number  and 

VAT 
transactions: Article 138(1) (amended) 

the  exemption 

for  certain 

intra-Community 

The  VAT  exemption  for  intra-Community  supplies  of  goods  laid  down  in  Article 138(1)  of 
the VAT Directive is at the centre of the current transitional arrangements. At the same time, 
this exemption is also at the root of the so-called carousel fraud. The VAT definitive system 
for intra-Union trade is intended to solve that problem but, in the meantime, interim solutions 
have been requested by the Member States. In particular they have requested including in the 
VAT  Directive  the  requirement  for  a  valid  VAT  identification  number  of  the  acquirer  in  a 
Member State other than that in which transport of the goods begins as a substantive condition 
in  order  for  the  supplier  to  be  allowed  to  apply  the  exemption.  This  goes  further  than  the 
current  situation  under  which,  according  to  the  interpretation  of  the  Court  of  Justice  of  the 
European Union38, the VAT identification number of the acquirer is simply a formal condition 
of the right to  exempt  an intra-Community supply.  That currently leads to  situations where, 

38 

Judgments  of  6 September  2012,  Mecsek-Gabona,  C-273/11,  ECLI:EU:C:2012:547;  of  27 September 
2012,  VSTR,  C-587/10,  ECLI:EU:C:2012:592;  of  20 October  2016,  Plöckl,  C-24/15, 
ECLI:EU:C:2016:791 and of 9 February 2017, Euro-Tyre, C-21/16, ECLI:EU:C:2017:106. 

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when the condition has not been complied with, Member States are only able to impose fines 
or administrative sanctions, but not to refuse the exemption itself. 

The  current  transitional  arrangements  are  further  based  on  the  obligation  for  the  supplier  to 
submit  a  recapitulative  statement  (the  so-called  VIES  listing  which  includes  the  VAT 
identification number of the acquirer). This is again a formal but not a substantive condition 
in relation to the exemption. This information is, via the VIES system, accessible for the tax 
authorities of the Member State of the acquirer which are thus informed of the  arrival in its 
territory  of  goods  that  are  normally  subject  to  a  taxed  intra-Community  acquisition.  The 
acquirer  has  to  declare  this  intra-Community  acquisition  in  his  VAT  return  and  the  tax 
authorities have the possibility to cross-check this declaration with data in the VIES system. 
The  VIES  listing  has  therefore  been  a  crucial  component  of  the  VAT  system  since  the 
abolition  of  the  fiscal  borders  and  the  corresponding  disappearance  of  the  customs 
documentation. 

Without correct information from the VIES system, the tax authorities of the Member States 
are not duly informed of the arrival of untaxed goods in their territory and have solely to rely 
on what their taxable persons declare. Nevertheless, if the listing is not filled in as regards a 
supply, this can give rise to penalties but not to the rejection of the exemption as such.  

The  new  proposed  Article 138(1)  therefore  includes  changes  as  regards  these  two  aspects. 
First, whereas currently reference is made to the acquirer as a taxable person or a non-taxable 
legal person acting as such, it is now stipulated, as a substantive condition for the application 
of the exemption, that the acquirer has to be identified for VAT purposes in a Member State 
other  than  that  in  which  dispatch  or  transport  of  the  goods  begins.  As  it  already  happens 
today, the supplier will have to verify the status of his customer via the VIES system before 
applying  the  exemption.  From  that  perspective,  there  is  no  practical  difference  for  the 
supplier,  but  the  consequences  might  be  different  as  the  non-identification  of  his  customer 
can, on that basis, lead to a rejection of the exemption. Secondly, also the correct filing of the 
VIES listing becomes a substantive condition which can lead, where that condition is not met, 
to the rejection by the tax administration of an applied exemption. 

Chain transactions: Article 138a (new) 

Chain  transactions,  which  are  considered  within  the  remit  of  this  proposal,  have  to  be 
understood as successive supplies of the same goods where the goods supplied are subject to a 
single intra-Community transport between two Member States. In this situation, according to 
the case-law of the Court of Justice39, the transport is to be attributed to one supply within the 
chain  so  as  to  determine  to  which  of  the  transactions  the  exemption  for  intra-Community 
supplies  should  be  applied  in  accordance  with  Article 138  of  the  VAT  Directive.  This 
provision  stipulates,  as  a  condition  for  the  exemption,  that  the  goods  are  'dispatched  or 
transported by or on behalf of the vendor or the person acquiring the goods' from one Member 
State to  another.  In  this  context,  Member  States  have  asked  for  legislative improvements  in 
order  to  increase  legal  certainty  for  operators  in  determining  the  supply  within  the  chain  of 
transactions  to  which  the  intra-Community  transport  must  be  ascribed  (which  will  be  the 
supply within the chain to which the exemption laid down in Article 138 will be applicable, 
provided all the other conditions for that exemption are met).  

39 

Judgment of 6 April 2006, Emag Handel, C-245/04, ECLI:EU:C:2006:232. 

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Where the transport has been made by or on behalf of one of the intermediate suppliers in the 
chain, rules  are  proposed  whereby  that transport  will  be  ascribed  (i) to  the  supply  made  for 
that intermediate supplier if he is, for VAT purposes, identified in a Member State other than 
the Member State of supply and has communicated the name of the Member State of arrival 
of the goods to his supplier; (ii) to the supply made by the intermediate supplier to the next 
operator in the chain, where any of the two conditions mentioned in (i) is not met. The rules, 
and the legal certainty they allow, apply only where the intermediate supplier and the taxable 
person who supplied the goods to him are both certified taxable persons No rule of this kind is 
needed where the transport is made on behalf of the first supplier in the chain (in which case 
the transport can only be ascribed to the first supply) or on behalf of the last taxable person in 
the chain (in which case the transport can only be ascribed to the supply made for that taxable 
person). 

It is not excluded that, in case of involvement of a non-certified taxable person, the transport 
could be ascribed to the same supply. However, in that case the legal rules in Article 138a will 
not apply and thus it remains, in the same way as under the current conditions, for the taxable 
person  concerned  to  demonstrate  that  the  transport  and  the  exemption  are  linked  to  that 
particular supply. 

Definitive system for intra-Union trade: Articles 402 (amended), 403 and 404 (deleted) 

The  cornerstones  of  the  definitive  system  for  intra-Union  trade  are  introduced  and  the  lines 
along which the new system will operate are set out. As regards the choice of this particular 
system, a reference is made to the impact assessment accompanying this proposal. 

As  already  explained  in  point  1  above,  a  forthcoming  proposal  in  2018  will  then  further 
provide  detailed  technical  provisions  for  the  actual  implementation  of  these  cornerstones. 
That forthcoming proposal will overhaul the whole VAT Directive and will replace or delete 
the current transitional articles. Further changes regarding the administrative cooperation rules 
and substantial IT developments will be needed in order to ensure the proper operation of the 
system. 

In  the  proposed  Article  402  of  the  Directive,  it  is  now  established  that  the  VAT  definitive 
system for intra-EU trade will be based on the principle of taxation in the Member State of 
destination of the supply of goods and services. In this context, a new concept in relation to 
goods  -  the  so-called  'intra-Union  supply'    –  will  be  introduced  in  the  above-mentioned 
detailed technical provisions. This new single taxable event is intended to replace the current 
system of an exempt supply in the Member State of departure and a taxed 'intra-Community 
acquisition' in the Member State of destination as a second and separate taxable event. Under 
this new concept, the 'place of supply' will be situated in the Member State of arrival of the 
goods. 

Further,  the  supplier  will  be  liable  for  the  payment  of  the  VAT  on  this  'intra-Union  supply' 
unless the acquirer is a certified taxable person, in which case the certified taxable person will 
account for the VAT in his VAT return. Where the person liable for VAT is not established in 
the Member State where the tax is due, he will be able to settle his declaration and payment 
obligations via a so-called One-Stop Shop system. Use of that system will also be possible for 
the deduction of input VAT. 

Although  at  this  stage  not  yet  explicitly  stipulated,  the  system  could  or  should  further  be 
based  on  the  abolition  of  the  recapitulative  statement  (the  so-called  VIES  listing),  the 

EN 

12 

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application  of  the  overall  invoicing  rules  of  the  Member  State  of  the  supplier,  and  the 
harmonisation of certain rules related to invoicing (such as the time of  issuing  of invoices), 
chargeable  event  and  chargeability  of  VAT  in  relation  to  'intra-Union  supplies'  of  goods.

EN 

13 

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2017/0251 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

amending Directive 2006/112/EC as regards harmonising and simplifying certain rules 
in the value added tax system and introducing the definitive system for the taxation of 
trade between Member States 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 113 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Parliament1, 
Having regard to the opinion of the European Economic and Social Committee2, 

Acting in accordance with a special legislative procedure, 

Whereas: 

(1) 

(2) 

1 
2 
3 

4 

5 

6 

In 1967, when the Council adopted the common system of value added tax (VAT) by 
means  of  Council  Directives  67/227/EEC3  and  67/228/EEC4,  the  commitment  was 
made to establish a definitive VAT system operating within the European Community 
in  the  same  way  as  it  would  within  a  single  Member  State.  Since  the  political  and 
technical conditions were not ripe for such a system, when the fiscal frontiers between 
Member  States  were  abolished  by  the  end  of  1992  transitional  VAT  arrangements 
were adopted. Council Directive 2006/112/EC5, which is currently in force, provides 
that these transitional rules have to be replaced by definitive arrangements. 
In  its  VAT  Action  Plan6,  the  Commission  announced  its  intention  to  put  forward  a 
proposal  setting  out  the  principles  for  a  definitive  VAT  system  for  cross-border 
business-to-business (B2B) trade between Member States that would be based on the 
taxation of cross-border supplies of goods in the Member State of destination.  

OJ C , , p. . 
OJ C , , p. . 
First  Council  Directive  67/227/EEC  of  11 April  1967  on  the  harmonisation  of  legislation  of  Member 
States concerning turnover taxes (OJ 71, 14.4.1967, p. 1301). 
Second Council Directive 67/228/EEC of 11 April 1967 on the harmonisation of legislation of Member 
States concerning turnover taxes — Structure and procedures for application of the common system of 
value added tax (OJ 71, 14.4.1967, p. 1303). 
Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ L 
347, 11.12.2006, p. 1). 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council  and  the  European 
Economic and Social Committee on an action plan on VAT - Towards a single EU VAT area - Time to 
decide (COM(2016)148 final of 7.4.2016). 

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14 

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(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

This would require replacing the current system consisting of an exempt supply in the 
Member State  of departure of the goods  and a taxed intra-Community acquisition  of 
goods in the Member State of destination by a system of a single supply taxed in and 
in accordance with the VAT rates of the Member State of destination. As a rule, the 
VAT will be charged by the supplier who will be able to  verify the applicable VAT 
rate of any Member State online by means of a web portal. However, where the person 
acquiring the goods is a certified taxable person (a reliable taxpayer recognised as such 
by  Member  States),  the  reverse  charge  mechanism  would  apply  and  the  certified 
taxable person should be liable to VAT on the intra-Union supply. The VAT definitive 
system  will  also  be  based  on  the  concept  of  a  single  registration  scheme  (One-Stop 
Shop (OSS)) for businesses allowing for the payment and deduction of the VAT due.  

These principles should be established in the Directive and should replace the current 
concept according to which the definitive arrangements shall be based on the taxation 
in the Member State of origin. 
The Council, in its conclusions of 8 November 20167, invited the Commission to make 
certain improvements to the Union VAT rules for cross-border transactions, regarding 
the  role  of  the  VAT  identification  number  in  the  context  of  the  exemption  for  intra-
Community supplies, call-off stock arrangements, chain transactions and the proof of 
transport for the purposes of the exemption for intra-Community transactions. 

Given this demand and the fact that it will take several years for the definitive VAT 
system for intra-Union trade to be implemented, these specific measures, intended  to 
harmonise and simplify certain arrangements for businesses, are appropriate.  

The  creation  of  the  certified  taxable  person  status  is  needed  for  the  efficient 
application of the improvements to the Union VAT rules for cross-border transactions 
as  well  as  for  the  gradual  transition  towards  the  definitive  system  for  intra-Union 
trade. 

In the current system no distinction is made between reliable and less reliable taxable 
persons as regards the VAT rules to be applied. The granting of the  certified taxable 
person status on the basis of certain objective criteria should enable the identification 
of  those  reliable  taxable  persons.  This  status  would  allow  them  to  benefit  from  the 
application of certain fraud-sensitive rules not applicable to other taxable persons. 

Access to the certified taxable person status should be based on criteria harmonised at 
Union level and therefore certification provided by one Member State should be valid 
in the whole Union. 

(10)  Certain taxable persons covered by particular arrangements excluding them from the 
general VAT rules, or who only occasionally carry out economic activities, should not 
be granted the certified taxable person status as far as those particular arrangements or 
occasional activities are concerned. Otherwise the smooth application of the proposed 
changes could be disrupted.  

(11)  Call-off stock refers to the situation where at the time of transport of goods to another 
Member  State,  the  supplier  already  knows  the  identity  of  the  person  acquiring  the 
goods to whom they will be supplied at a later stage and after arrival of the goods in 
the Member State of destination. This currently gives rise to a deemed supply (in the 

7 

Council  conclusions  of  8 November  2016  on  Improvements  to  the  current  EU  VAT  rules  for  cross-
border transactions (No. 14257/16 FISC 190 ECOFIN 1023 of 9 November 2016).  

EN 

15 

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Member State of departure of the goods) and a deemed intra-Community acquisition 
(in the Member State of arrival of the goods), followed by a 'domestic' supply in the 
Member State of arrival and requires the supplier to be identified for VAT purposes in 
that  Member  State.  To  avoid  this,  these  transactions,  where  they  take  place  between 
two certified taxable persons should be, under certain conditions, considered as giving 
rise to one exempt supply in the Member State of departure and one intra-Community 
acquisition in the Member State of arrival. 

(12)  As regards the VAT identification number in relation to the exemption for the supply 
of  goods  in  the  intra-Community  trade,  it  is  proposed  that  the  inclusion  of  the  VAT 
identification  number  of  the  person  acquiring  the  goods  in  the  VAT  Information 
Exchange  System  (VIES),  assigned  by  a  Member  State  other  than  that  in  which  the 
transport  of  the  goods  begins,  and  the  reference  to  that  number  in  the  recapitulative 
statement  submitted  by  the  supplier  should  become,  in  addition  to  the  condition  of 
transport of the goods outside the Member State of supply, substantive conditions for 
the  application  of  exemption  rather  than  formal  requirements.  The  VIES  listing  is 
essential  for  informing  the  Member  State  of  arrival  of  the  presence  of  goods  in  its 
territory and is therefore a key element in the fight against fraud in the Union. 

(13)  Chain transactions refer to successive supplies of goods which are subject to a single 
intra-Community transport. The intra-Community movement of the goods should only 
be ascribed to one of the supplies, and only that supply should benefit from the VAT 
exemption provided for the intra-Community supplies. The other supplies in the chain 
should be taxed and may require the VAT identification of the supplier in the Member 
State of supply. In order to avoid different approaches amongst Member States, which 
may  lead  to  double  or  non-taxation,  and  in  order  to  enhance  legal  certainty  for 
operators,  a  common  rule  should  be  established  that,  provided  certain  conditions  are 
met, the transport of the goods should be attributed to one supply within the chain of 
transactions. 

(14)  Since the objectives of this Directive – improved operation of the VAT arrangements 
in  the  context  of  cross  border  B2B  trade  and  definition  of  the  principles  of  the 
definitive VAT system- cannot be sufficiently achieved by the Member States and can 
therefore  be  better  achieved  at  Union  level,  the  Union  may  adopt  measures,  in 
accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on the 
European Union. In accordance with the principle of proportionality, as set out in that 
Article, this Directive does not go beyond what is necessary in order to achieve those 
objectives. 

(15) 

In  accordance  with  the  Joint  Political  Declaration  of  Member  States  and  the 
Commission  of 28 September 2011 on explanatory documents8, Member  States have 
undertaken  to  accompany,  in  justified  cases,  the  notification  of  their  transposition 
measures  with  one  or  more  documents  explaining  the  relationship  between  the 
components  of  a  directive  and  the  corresponding  parts  of  national  transposition 
instruments. With regard to this Directive, the legislator considers the transmission of 
such documents to be justified. 

(16)  Directive 2006/112/EC should therefore be amended accordingly, 

8 

OJ C 369, 17.12.2011, p. 14.   

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HAS ADOPTED THIS DIRECTIVE: 

Directive 2006/112/EC shall be amended as follows: 

(1) The following Article 13a is inserted: 

Article 1 

'Article 13a 

1. 
Any taxable person who has a place of business or a fixed establishment in the 
Community  or  in  absence  of  place  of  business  and  fixed  establishment  has  his 
permanent address or usual residence in the Community and who, in the course of his 
economic activity, carries out, or intends to carry out, any of the transactions referred 
to  in  Articles 17a,  20  and  21,  or  transactions  in  accordance  with  the  conditions 
specified  in  Article 138  may  apply  to  the  tax  authorities  for  the  status  of  certified 
taxable person. 

The tax authorities shall grant that status to an applicant where the criteria set out in 
paragraph 2 are met, unless the applicant is excluded from such certification by virtue 
of the terms of paragraph 3. 

Where  the  applicant  is  a  taxable  person  who  has  been  granted  the  status  of  an 
authorised economic operator for customs purposes, the criteria in paragraph 2 shall be 
deemed to have been met. 

All the following criteria shall be required to be met in order to grant the status 

2. 
of a certified taxable person:  

(a) 

(b) 

(c) 

the absence of any serious infringement or repeated infringements of taxation 
rules  and  customs  legislation,  as  well  as  of  any  record  of  serious  criminal 
offences relating to the economic activity of the applicant; 

the demonstration by the applicant of a high level of control of his operations 
and of the flow of goods,  either by means of a  system  managing commercial 
and,  where  appropriate,  transport  records,  which  allows  appropriate  tax 
controls, or by means of a reliable or certified internal audit trail; 

evidence  of  financial  solvency  of  the  applicant,  which  shall  be  deemed  to  be 
proven  either  where  the  applicant  has  good  financial  standing,  which  enables 
him to fulfil his commitments, with due regard to the characteristics of the type 
of  business  activity  concerned,  or  through  the  production  of  guarantees 
provided by insurance or other financial institutions or by other economically 
reliable third parties. 

The  following  taxable  persons  may  not  be  granted  the  status  of  a  certified 

3. 
taxable person: 

(a) 

(b) 

(c) 

taxable persons covered by the common flat-rate scheme for farmers; 

taxable persons covered by the exemption for small enterprises provided for in 
Articles 282 to 292; 

taxable persons carrying out supplies of goods or services in respect of which 
VAT is not deductible; 

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17 

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(d) 

taxable persons carrying out an occasional supply of a new means of transport 
within the meaning of Article 9(2) or carrying out an occasional activity within 
the meaning of Article 12. 

However, the taxable persons mentioned under points (a) to (d) may be granted the 
status  of  a  certified  taxable  person  for  the  other  economic  activities  that  they  carry 
out. 

4. 
A taxable person who applies for the status of a certified taxable person shall 
supply  all  the  information  required  by  the  tax  authorities  in  order  to  enable  them  to 
take a decision. 

For the purposes of granting this tax status, tax authorities shall mean:  

(a) 

(b) 

(c) 

5. 

6. 

7. 

those of the Member State where the applicant has established his business; 

those  of  the  Member  State  with  the  fixed  establishment  of  the  applicant  in 
which  his  main  accounts  within  the  Community  for  tax  purposes  are  held  or 
accessible,  where  the  applicant  has  established  his  business  outside  the 
Community but has one or more fixed establishments within the Community; 

those  of  the  Member  State  where  the  applicant  has  his  permanent  address  or 
where he usually resides, where he has neither a place of business nor a fixed 
establishment. 

Where  the  application  is  refused,  the  grounds  for  refusal  shall  be  notified  by 
the tax authorities to  the applicant together with the decision. Member States 
shall ensure that the applicant is granted a right of appeal against any decision 
to refuse an application. 

The taxable person who has been granted the status of certified taxable person 
shall  inform  the  tax  authorities  without  delay  of  any  factor  arising  after  the 
decision  was  taken,  which  may  affect  or  influence  the  continuation  of  that 
status.  The  tax  status  shall  be  withdrawn  by  the  tax  authorities  where  the 
criteria set out in paragraph 2 are no longer met. 

The  status  of  a  certified  taxable  person  in  one  Member  State  shall  be 
recognised by the tax authorities of all the Member States.' 

(2) The following Article 17a is inserted: 

'Article 17a 

The transfer by a certified taxable person of goods forming part of his business 
1. 
assets to another Member State under call-off stock arrangements shall not be treated 
as a supply of goods for consideration. 

For the purposes of this Article, call-off stock arrangements shall be deemed to 

2. 
exist where the following conditions are met: 

(a)  goods are dispatched or transported by a certified taxable person, or by a third 
party on behalf of that certified taxable person, to another Member State with a 
view that those goods shall be supplied there, at a later stage and after arrival, 
to another certified taxable person; 

(b) 

the  certified  taxable  person  dispatching  or  transporting  the  goods  is  not 
established  in  the  Member  State  to  which  the  goods  are  dispatched  or 
transported; 

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18 

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(c) 

(d) 

the  certified  taxable  person  to  whom  the  goods  are  supplied  is  identified  for 
VAT  purposes  in  the  Member  State  to  which  the  goods  are  transported  or 
dispatched and both his identity and the VAT identification number assigned to 
him by that Member State are known to the certified taxable person referred to 
in point (b) at the time when the dispatch or the transport begins; 

the certified taxable person dispatching or transporting the goods has recorded 
the dispatch or transport in the register provided for in Article 243(3) and has 
included the identity of the certified taxable person acquiring the goods and the 
VAT identification number assigned to him by the Member State to which the 
goods are dispatched or transported in the recapitulative statement as provided 
for in Article 262. 

Where  the  conditions  laid  down  in  paragraph 2  are  met,  at  the  time  of  the 
3. 
transfer of the right to dispose of the goods to the certified taxable person referred to 
in point (c) of that paragraph, the following rules shall apply: 

(a) 

(b) 

a supply of goods, exempt from VAT in accordance with Article 138(1) shall 
be  deemed  to  be  made  by  the  certified  taxable  person  that  dispatched  or 
transported the goods either by himself or by a third party on his behalf in the 
Member State from which the goods were dispatched or transported; 

an  intra-Community  acquisition  of  goods  shall  be  deemed  to  be  made  by  the 
certified taxable person to whom those goods are supplied in the Member State 
to which the goods were dispatched or transported.' 

(3) In Article 138, paragraph 1 is replaced by the following: 

'1.  Member States shall exempt the supply of goods dispatched or transported to a 
destination  outside  their  respective  territory  but  within  the  Community,  by  or  on 
behalf  of  the  vendor  or  the  person  acquiring  the  goods,  where  the  following 
conditions are met: 

(a) 

(b) 

the  goods  are  supplied  to  another  taxable  person,  or  to  a  non-taxable  legal 
person acting as such in a Member State other than that in which dispatch or 
transport of the goods begins; 

the taxable person or non-taxable legal person for whom the supply is made is 
identified  for  VAT  purposes  in  a  Member  State  other  than  that  in  which 
dispatch or transport of the goods begins; 

(c) 

reference  is  made  to  the  person  acquiring  the  goods  in  the  recapitulative 
statement submitted by the supplier under Article 262.' 

(4) The following Article 138a is inserted: 

'Article 138a 

1. 
For the purposes of applying the exemptions in Article 138 in the context of a 
chain  transaction  situation,  the  intra-Community  transport  shall  be  ascribed  to  the 
supply  made  by  the  provider  to  the  intermediary  operator,  where  the  following 
conditions are met: 

(a) 

(b) 

the  intermediary  operator  communicates  the  name  of  the  Member  State  of 
arrival of the goods to the provider; 

the  intermediary  operator  is  identified  for  VAT  purposes  in  a  Member  State 
other than that in which the dispatch or transport of the goods begins. 

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2. 
Where  any  of  the  conditions  laid  down  in  paragraph  1  is  not  met,  in  a  chain 
transaction  situation  the  intra-Community  transport  shall  be  ascribed  to  the  supply 
made by the intermediary operator to the customer. 

3. 

For the purposes of this Article, the following definitions shall apply: 

(a) 

(b) 

(c) 

(d) 

'chain transaction situation' shall mean a situation where successive supplies of 
the  same  goods  by  taxable  persons  give  rise  to  a  single  intra-Community 
transport  of  those  goods  and  where  both  the  intermediary  operator  and  the 
provider are certified taxable persons; 

'intermediary  operator'  shall  mean  a  supplier  in  the  chain  other  than  the  first 
supplier, who dispatches or transports the goods, himself or by a third party on 
his behalf; 

'provider' shall mean the taxable person in the chain who supplies the goods to 
the intermediary operator; 

'customer'  shall  mean  the  taxable  person  to  whom  the  intermediary  operator 
supplies the goods in the chain.' 

(5) In Article 243, the following paragraph 3 is added: 

'3.  Every  certified  taxable  person  who  transfers  goods  under  the  call-off  stock 
arrangements referred to in Article 17a shall keep a register of the following: 

(a) 

(b) 

the goods dispatched  or transported to  another Member State and the address 
where they are stored in this Member State; 

the  goods  supplied  at  a  later  stage  and  after  arrival  in  the  Member  State 
referred to in point (a). 

Every certified taxable person to whom goods are supplied under the call-off stock 
arrangements referred to in Article 17a shall keep a register of those goods.' 

(6) Article 262 is replaced by the following: 

'Article 262 

1.  Every  taxable  person  identified  for  VAT  purposes  shall  submit  a  recapitulative 
statement of the following: 

(a) 

(b) 

(c) 

the  acquirers  identified  for  VAT  purposes  to  whom  he  has  supplied  goods  in 
accordance with the conditions specified in Article 138(1) and (2)(c);  

the persons identified for VAT purposes to whom he has supplied goods which 
were  supplied  to  him  by  way  of  intra-Community  acquisitions  referred  to  in 
Article 42; 

the  taxable  persons,  and  the  non-taxable  legal  persons  identified  for  VAT 
purposes,  to  whom  he  has  supplied  services,  other  than  services  that  are 
exempted from VAT in the Member State where the transaction is taxable, and 
for which the recipient is liable to pay the tax pursuant to Article 196. 

2.  In  addition  to  the  information  referred  to  in  paragraph  1,  every  certified  taxable 
person  shall  identify  the  certified  taxable  persons  for  whom  goods  are  intended  and 
which  are  dispatched  or  transported  under  call-off  stock  arrangements  in  accordance 
with the conditions set out in Article 17a.'. 

(7) The heading of Chapter 1 of Title XV is replaced by the following: 

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'Definitive arrangements for the taxation of trade between Member States' 

(8) Article 402 is replaced by the following: 

'Article 402 

The  arrangements  provided  for  in  this  Directive  for  the  taxation  of  trade  between 
Member  States  are  transitional  and  shall  be  replaced  by  definitive  arrangements 
based on the principle of taxation in the Member State of destination of the supply of 
goods  or  services;  of  liability  for  VAT  of  the  supplier,  or  the  acquirer  if  he  is  a 
certified  taxable  person,  and  of  a  single  registration  scheme  for  the  declaration, 
payment and deduction of the tax.'. 

(9) Articles 403 and 404 are deleted. 

Article 2 

Member States shall adopt and publish, by 31 December 2018 at the latest, the laws, 
1. 
regulations and administrative provisions necessary to comply with this Directive. They shall 
forthwith communicate to the Commission the text of those provisions. 

They shall apply those provisions from 1 January 2019. 

When Member States adopt those provisions, they shall contain a reference to this Directive 
or be accompanied by such a reference on the occasion of their official publication. Member 
States shall determine how such reference is to be made. 

Member States shall communicate to the Commission the text of the main provisions 

2. 
of national law which they adopt in the field covered by this Directive. 

This Directive shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

Article 3 

This Directive is addressed to the Member States. 

Done at Brussels, 

Article 4 

For the Council 
The President 

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