VAT-Exempt Intra-Community Supplies

VAT-Exempt Intra-Community Supplies and VAT Identification Number Verification Procedure

When a German business supplies goods to another business within the EU, this generally constitutes a VAT-exempt intra-community supply. For the intra-community supply to be VAT-exempt in Germany, the following conditions must be met:

1. Supply of goods by a business to another business in an EU member state.
2. The goods are actually transported from Germany to another member state of the EU.
3. The purchaser is a business or a legal entity.
4. The purchaser has acquired the goods for its business.
5. The acquisition must be subject to VAT in the other member state.

Re 1 and 2) Movement of goods and documentation

In the case of an intra-community supply, the goods must be transported from Germany to another member state of the EU. It is irrelevant through which countries the goods pass on the way to their destination. Whether the seller delivers the goods personally, engages a third party for transport, the buyer collects the goods, or the buyer engages a third party to collect them has no bearing on this. However, it is important to document the movement of goods precisely, since there are no longer any border checkpoints within the EU and the supply can therefore no longer be evidenced by customs documents.

The law therefore requires a book record and documentary proof for intra-community supplies, which must be retained in the original for 10 years.

Book record

Evidence of the supply based on the accounts. The following information must be included in the accounts:

1. VAT identification number of the recipient of the goods
2. Name, address and trade or profession of the recipient
3. Type and quantity of the goods
4. Consideration
5. Date of delivery
6. Details of the transport or dispatch
7. Destination of the goods

Documentary proof

Evidence of the supply based on documents. The business is required to prove by means of documents that the goods were actually delivered to another member state. There are two options for this:

1. The business or buyer transports the goods themselves:

• Duplicate of the invoice and the delivery note
• Acknowledgement of receipt of the goods
• If the purchaser collects the goods personally, they must confirm in writing that the goods will be transported to another EU member state. A note on the invoice, an addition to the invoice or a mere power of attorney of the person collecting the goods is not sufficient for this purpose.
• If the purchaser does not collect the goods personally but sends a third party to do so, a copy of the written confirmation, a copy of the power of attorney and a copy of the collector's passport should be retained.

2. Where the goods are dispatched by the German business or transported to the other EU member state by a freight forwarder:

• Duplicate of the invoice
• Dispatch document containing the following details:
  • Name and address of the issuer and freight forwarder
  • Type and quantity of the goods
  • Place and date of crossing the border
  • Name and address of the recipient
  • The freight forwarder must confirm that the information is provided on the basis of verifiable business records.
  • Signature of the freight forwarder

Missing or incorrect details are difficult to correct or rectify subsequently, as they are not always accepted by the tax office.

Re 3) Status of the buyer

The buyer must be a business and must acquire the goods for its business. If they acquire the goods for private use or the acquirer is not a business, it does not constitute an intra-community supply and the transaction is subject to VAT in Germany. However, if the intra-community supply involves the sale of a new vehicle, it is irrelevant whether the buyer is a business or a private individual. In this case it is always an intra-community supply and the acquisition must be subjected to VAT by the buyer in their own country.

Re 4) VAT treatment in the recipient country

A VAT-exempt intra-community supply in Germany is only possible if the acquisition in the purchaser's member state is subject to VAT under the rules applicable there. This is generally indicated by the purchaser by providing their so-called VAT identification number.

The following information must be included on the invoice without exception:

• A note indicating that the intra-community supply is VAT-exempt in Germany pursuant to § 4 No. 1b in conjunction with § 6a UStG.
• The supplier's own VAT identification number.
• The VAT identification number of the purchaser of the goods.

The business must verify the accuracy of the VAT identification number. This can be done by telephone via the Federal Central Tax Office (Bundeszentralamt für Steuern) in Saarlouis or via the website www.bzst.de. The link "USt-ID-Nr. Bestätigung" leads directly to the simple confirmation tool. After entering one's own VAT identification number, the country and the recipient's VAT identification number, a confirmation is received as to whether the identification number is valid or not. A subsequent check of the data associated with the VAT identification number is then carried out.

Should the tax office subsequently determine that one of the details is missing or incorrect, the supply is subject to VAT in Germany, provided this was recognisable from the outset. If the German business could not have recognised this whilst exercising due diligence, this does not prejudice the VAT-exempt status of the intra-community supply.