Changes to the VAT Act published
On 4 October 2019, amendments to the VAT Act implementing the provisions of Council Directive (EU) 2018/1910 (part of the package introducing the so-called “Quick Fixes”), were published. These amendments enter into effect on 1 January 2020.
The changes introduced are summarised below:
Chain Transactions
LN 250 of 2019 amending the Third Schedule to the VAT Act: The new paragraph (d) to item 1 sets out the manner in which the place of supply is to be determined in the case of chain transactions, by establishing to which party in the chain transaction the transport is to be attributed. It provides that, where the same goods are supplied successively and those goods are dispatched or transported from one Member State to another Member State directly from the first supplier to the last customer in the chain, the dispatch or transport shall be ascribed only to the supply made to the intermediary operator (as defined), unless the intermediary operator has communicated to its supplier its VAT number in the Member State of dispatch.
Call-off stock arrangements
LN 251 of 2019 amending the Second Schedule to the VAT Act prescribes a new item 17A which introduces a simplification procedure for call-off stock arrangements, in terms of which the transfer by a taxable person of business assets (goods) from Malta to another Member State under call-off stock arrangements shall not be treated as a supply of those goods for VAT purposes. The provision sets out the criteria to be met for call-off stock arrangements to be deemed to exist. Under these arrangements, upon the transfer of the right to dispose of the goods, which happens when the goods are physically located in the Member State of destination of the goods, the supplier is treated as making an exempt with credit intra-community supply of those goods whilst the purchaser reports the intra-community acquisition.
LN 249 of 2019 amending the Value Added Tax (Recapitulative Statement of Intra-community transactions) Regulations introduces the requirement to report transfers of goods under the call-off stock simplification procedure.
LN 252 of 2019 amending the Eleventh Schedule to the VAT Act: another amendment relating to the new simplification procedure for call-off stock arrangements, introducing the requirement to maintain a call-off stock register.
Exemption for Intra-EC Supplies of Goods
LN 253 of 2019 amending the Fifth Schedule to the VAT Act: this new proviso to item 3(1)(b) stipulates that the exemption for intra-EC supplies of goods would not apply where the supplier has failed to submit a recapitulative statement or provides incorrect information in the recapitulative statement, unless the shortcoming can be justified to the satisfaction of the Commissioner.
The above amendments will enter into effect on 1 January 2020.