intra-community acquisitions of goods using the methodology

INTRA-COMMUNITY ACQUISITIONS OF

GOODS

USING THE METHODOLOGY

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DEFINITION

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Definition

General

An intra-Community acquisition is the acquisition of the right to dispose as owner of goods which are transported by or on behalf of the supplier or the person acquiring them from a Member State to the person acquiring them in another Member State

Compare with the definition of a supply of goods (mirror)

Art. 6 VAT ActArt. 6 VAT Act Item 18(1)(a) Second ScheduleItem 18(1)(a) Second Schedule

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Definition

• Deemed intra-Community acquisitions: will be examined further on

• ICA done by a non-taxable legal person: will be examined during the session relating to importation

• All the operations assimilated to a supply of goods (for consideration) are also assimilated to acquisitions of goods (for consideration)

Art. 6 VAT ActArt. 6 VAT Act Item 18(1)(b) Second ScheduleItem 18(1)(b) Second Schedule

Art. 6 VAT ActArt. 6 VAT Act Item 18(1)(c) Second Schedule Item 18(1)(c) Second Schedule

Art. 6 VAT ActArt. 6 VAT ActItem 18(2) Second ScheduleItem 18(2) Second Schedule

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QUESTIONS 1 AND 2

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Questions 1 and 2 : intra-Community acquisition subject to VAT

• Conditions in the Member State of origin

– Supply taking place outside Malta (in the other Member State where transport begins)

– Supply is made for consideration by a taxable person acting as such who is not eligible in the Member State of origin for an exemption under the special scheme for small undertakings

Art. 4(1)(b)(i) VAT ActArt. 4(1)(b)(i) VAT Act

Attention: special regime for new means of transport and excise goodsAttention: special regime for new means of transport and excise goods

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• Conditions in Malta

– Goods other than new means of transport or excise goods

– Acquisition made for consideration

– Acquisition made by a taxable person acting as such who is registered under article 10 or 12 or a non-taxable legal person

Art. 4(1)(b)(i) VAT ActArt. 4(1)(b)(i) VAT Act

Attention: special regime for new means of transport and excise goodsAttention: threshold for some taxable persons or non-taxable legal persons

Attention: special regime for new means of transport and excise goodsAttention: threshold for some taxable persons or non-taxable legal persons

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• New means of transport

– Intra-Community acquisition always subject to VAT in Malta

– Whatever is the quality of the person acquiring the good (includes private individual) : will be examined during the session relating to new means of transport

Art. 4(1)(b)(ii) VAT ActArt. 4(1)(b)(ii) VAT Act

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• Excise goods

– Intra-Community acquisition always subject to VAT in Malta

– If made by a taxable person or a non-taxable legal person : will be examined during the session relating to excise goods

Art. 4(1)(b)(iii), VAT ActArt. 4(1)(b)(iii), VAT Act

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Questions 1 and 2: intra-Community acquisition subject to VAT : characteristicsVERY IMPORTANT

• Every Member State is sovereign

• Every Member State determines if there is an intra-Community acquisition (subject to VAT) without taking into account whether there is or not an intra-Community supply exempt from VAT in the Member State of origin

Therefore, intra-Community acquisitions of goods subject to VAT in Malta are completely independent from whether

there have been intra-Community supplies of goods exempt from VAT in the Member State of origin : NO LINK AT ALL = TWO SEPARATE OPERATIONS

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QUESTION 3

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Question 3 : place of intra-Community acquisitions

• In Malta if goods are in Malta when transport ends (compare with place of supply: where transport begins)

• In Malta if the acquirer provides the supplier with a Maltese VAT number (under article 10: compare with 6th Directive) unless this person proves that the acquisition takes place in another Member State and has been subject to VAT in that other Member State (security net) : will be examined during the session relating to triangulation

Art. 7 VAT ActArt. 7 VAT Act Item 13 Third ScheduleItem 13 Third Schedule

Art. 7 VAT ActArt. 7 VAT ActItem 14(1) Third ScheduleItem 14(1) Third Schedule

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Question 3 : place of intra-Community acquisitions (example)

A B

Other EU MSOther EU MS

Supply Place: where transport begins

Intra-Community acquisitionPlace: where transport ends

MaltaMalta

Sale of goods

Transport

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Question 3 : place of intra-Community acquisitions(example)

A B : provides to A his Maltese VAT number

FranceFrance

Supply Place: where transport begins

Intra-Community acquisition in Italy where transport ends

Security net: intra-Community acquisition in Malta (MS of VAT identification)

ItalyItaly

Sale of goods

Transport

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QUESTION 4

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Question 4 : exemptions on intra-Community acquisitions

• ICA of goods whose supply or importation in Malta would be exempt from VAT

• ICA of goods where the tax would be fully refundable

– Example: the representation office of an Italian firm (not doing any taxable supply in Malta) is acquiring furniture from Italy for this office: the ICA is exempt from VAT insofar as the Italian firm would be entitled to a refund of this VAT

Art. 9(1)(b) VAT ActArt. 9(1)(b) VAT Act Item 2 Part Three Fifth Schedule Item 2 Part Three Fifth Schedule

Art. 9(1)(b) VAT ActArt. 9(1)(b) VAT Act Item 3 Part Three Fifth ScheduleItem 3 Part Three Fifth Schedule

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• ICA of goods intended to be placed or while they are placed under a customs duty suspension regime

• ICA of investment gold



Item 1 Part 6 Fourteenth ScheduleItem 1 Part 6 Fourteenth Schedule

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• ICA of goods supplied in the MS of origin under the special regime of the margin scheme on second-hand goods, works of art, collectors’ items and antiques


Spain Malta

A B

Supply of a second-hand goodunder the profit margin scheme

Definitively taxed in Spain

ICA exempt from VAT

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• ICA of goods in Malta made for the purposes of a subsequent supply (triangulation – specific conditions)

• Will be examined during the session relating to triangulation

Art. 9(1)(b) VAT ActArt. 9(1)(b) VAT Act Item 1 Part Three Fifth ScheduleItem 1 Part Three Fifth Schedule

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QUESTION 5

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Question 5 : person liable to pay VAT on intra-Community acquisitions

The payment of the tax on an intra-Community acquisition shall be the liability of the person who makes the acquisition

Compliance: reverse charge mechanism

• VAT reported as due in the VAT return

• VAT reported as deductible in the same VAT return (according to the right to deduct VAT + limitations and exclusions + compliant invoice)

Art. 20(1)(b) VAT ActArt. 20(1)(b) VAT Act

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OTHER QUESTIONS

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Other question : chargeable event and chargeability

The chargeable event takes place on the date which would be the date of the chargeable event had those goods been supplied in Malta where the acquisition is made

The tax becomes chargeable on:

• The 15th day of the month following the date of the acquisition (compare with exempt intra-Community supply)

• The date on which a tax invoice (for the whole price) is issued to the person making the acquisition for the supply of goods in question if this date is earlier than the date referred to in first bullet point

Art. 8 VAT ActArt. 8 VAT Act Item 5 Fourth ScheduleItem 5 Fourth Schedule

Art. 8 VAT ActArt. 8 VAT Act Item 6 Fourth ScheduleItem 6 Fourth Schedule

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Other question: chargeable event and chargeability (example)

Other EU MS Malta

AB

Intra-Community supply exempt from VAT Intra-Community acquisition subject to VAT and taxable

Delivery date: 29/07/2004 Date of the ICA: 29/07/2004

Date of invoice: 20/08/2004

Chargeable event: 29/07/2004 Chargeable event: 29/07/2004

Date tax “becomes chargeable”: 15/08/2004Date tax becomes chargeable: 15/08/2004

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Other question: chargeable event and chargeability (example)

Other EU MS Malta

AB

Intra-Community supply exempt from VAT Intra-Community acquisition subject to VAT and taxable

Delivery date: 29/07/2004 Date of the ICA: 29/07/2004

Date of invoice: 29/07/2004

Chargeable event: 29/07/2004 Chargeable event: 29/07/2004

Date tax “becomes chargeable”: 29/07/2004Date tax becomes chargeable: 29/07/2004

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Other question : rate of intra-Community acquisitions

The tax chargeable on an intra-Community acquisition of goods shall be the rate applicable to the supply of like goods in Malta

Art. 19(3) VAT ActArt. 19(3) VAT Act

Art. 19(1) and (2) VAT ActArt. 19(1) and (2) VAT Act

Eight ScheduleEight Schedule

DEEMED INTRA-COMMUNITY

ACQUISITIONS OF GOODS

TRANSFERNON TRANSFER

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DEFINITION AND CHARACTERISTICS

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Deemed intra-Community acquisition: definition

The use in Malta by a taxable person for the purpose of his economic activity of goods transported by him or on his behalf from another Member State within the territory of which those goods were produced, extracted, purchased, acquired or imported by him for the purpose of his economic activity, where the transport of those goods would, if made from Malta to another Member State, be treated as a transfer of goods to another Member State, shall be treated as an intra-Community acquisition for consideration

Item 18(1)(b) and 18(2) Second ScheduleItem 18(1)(b) and 18(2) Second ScheduleArt. 6 VAT ActArt. 6 VAT Act

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Deemed intra-Community acquisition: characteristics

• Move from another Member State to Malta (without transaction)

• By a taxable person

• Of goods forming part of his economic activity

=

• Intra-Community acquisition

• For consideration

All the rules related to intra-Community acquisitions are applicable mutatis mutandis including compliance (recapitulative statement in the Member State of departure)

All the rules related to intra-Community acquisitions are applicable mutatis mutandis including compliance (recapitulative statement in the Member State of departure)

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Deemed intra-Community acquisition: characteristics

VERY IMPORTANT

• Every Member State is sovereign

• Every Member State determines if there is a deemed intra-Community acquisition without taking into account whether or not there is a transfer in the Member State of origin

• Every Member State determines if there is a deemed intra-Community acquisition taking into account if there would be a transfer in case the goods were transported from his territory to another Member State

Therefore, transfer and deemed intra-Community acquisition are in principle independent from each other

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Deemed intra-Community acquisition: exampleOther EU MS Malta

A = taxable personA = taxable person Premises of APremises of A

Move (transport) of goods from the stock of A in the other MS to the stock of A in Malta (without underlying transaction

A has to register for VAT purposes in Malta


• (Deemed intra-Community) acquisition by a taxable person? YES• Deemed ICA in the scope of VAT (e.g. for consideration)? YES• Place of ICA? In Malta (where transport ends)• Is there an exemption? NO (assumption)• Person liable to pay VAT? A (must register for VAT purposes in Malta)

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NO DEEMED INTRA-COMMUNITY

ACQUISITION

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No deemed intra-Community acquisition

Goods shall not be deemed to be intra-Community acquired for consideration if they are transported from another MS to Malta for the purposes of one of the following transactions: (1)

• A supply with installation or assembly in Malta

• A supply of these goods, which constitutes a distance sale taxable in Malta

• A supply of these goods by or on behalf of the taxable person on board ships, aircraft that takes place in Malta

• A supply of these goods that is treated as an intra-Community supply exempt from VAT, as a supply exempt from VAT for export…

Art. 6 VAT Act and item 17(2)(a,b,c and d) Second ScheduleNo special compliance Art. 6 VAT Act and item 17(2)(a,b,c and d) Second ScheduleNo special compliance

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No deemed intra-Community acquisition

… : (2)

• the supply of services to the taxable person involving work on those goods physically carried out in Malta provided the said goods are returned to that person in the Member State of departure on the completion of the said work

• the temporary use of those goods in Malta for the purpose of the supply of services by the taxable person if that person is established in the other Member State

• the temporary use of those goods in Malta for a period not exceeding twenty-four months if the importation of those goods into Malta for temporary use would qualify for a full exemption from import duties

Art. 6 VAT Act and item 17(2)(e,f and g) Second ScheduleSpecial compliance (register of materials received for first bullet point : Item 1(j) Eleventh Schedule)

Art. 6 VAT Act and item 17(2)(e,f and g) Second ScheduleSpecial compliance (register of materials received for first bullet point : Item 1(j) Eleventh Schedule)

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The no deemed ICA becomes an ICA

If a move of goods to Malta satisfies the conditions to be a non transfer from Malta (and therefore a no deemed ICA in Malta ) and if afterwards these conditions are not longer met, this non transfer (no deemed ICA) becomes a transfer (and consequently an ICA) with all the consequences

Simplification measures are possible (regulations)

Art. 6 VAT ActArt. 6 VAT Act Items 17(3) and 18(2) Second ScheduleItems 17(3) and 18(2) Second Schedule

Art. 6 VAT ActArt. 6 VAT ActItem 17(4) Second ScheduleItem 17(4) Second Schedule

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No deemed intra-Community acquisition: example

Other EU MS Malta

A = taxable personA = taxable person Export by AExport by A

Move (transport) of goods from another MS to Malta in order to export these goods (in the framework of a transaction)

• (Deemed) ICA in Malta by a taxable person? NOBUT• Supply by a taxable person? YES• Supply in the scope of VAT? YES• Place of supply? In the other MS (where transport begins)• Is there an exemption? N/A (Yes in the other MS if goods are transported outside the EU)• Person liable to pay VAT? N/A

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No deemed intra-Community acquisition: exampleOther EU MS Malta

A = taxable personA = taxable person BB

IC supply by A to B

• (Deemed) ICA in Malta by a taxable person? NOBUT• ICA in Malta by a taxable person? YES (B)• ICA in the scope of VAT? YES• Place of ICA? In Malta (where transport ends)• Is there an exemption? NO (assumption)• Person liable to pay VAT? B

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Distance sale by A to B

• (Deemed) ICA in Malta by a taxable person? NOBUT• Supply by a taxable person? YES (A)• Supply in the scope of VAT? YES• Place of supply? In Malta (where transport ends)• Is there an exemption? NO (assumption)• Person liable to pay VAT? A (must register for VAT purposes in Malta)

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Supply with installation by A

• (Deemed) ICA in Malta by a taxable person? NOBUT• Supply by a taxable person? YES (A)• Supply in the scope of VAT? YES• Place of supply? In Malta (where goods are installed or assembled)• Is there an exemption? NO (assumption)• Person liable to pay VAT? Either B if he is registered under article 10 or A if B is not registered under article 10

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A = taxable personA = taxable person PassengerPassenger

Supply by A on board ships: place of departure in Malta

• (Deemed) ICA in Malta by a taxable person? NOBUT• Supply by a taxable person? YES (A)• Supply in the scope of VAT? YES• Place of supply? In Malta (point of departure of transport of passengers)• Is there an exemption? YES or NO• Person liable to pay VAT? A (if any)

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A = taxable personA = taxable person B : processingB : processing

Move of goods from the other MS to Malta in order to be processedAfter completion of the work, goods are going back to the other MS

• (Deemed) ICA in Malta by a taxable person? NO• Compliance: register of materials received (movements of goods)• For service from B to A: see session on services

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(No) deemed intra-Community acquisition: exampleOther EU MS Malta

A = taxable personA = taxable person B : processingB : processing

Move of goods from the other MS to Malta in order to be processedAfter completion of the work, goods are not going back to the other MS

• (Deemed) ICA in Malta by a taxable person? YES• ICA in the scope of VAT (e.g. for consideration)? YES• Place of ICA? In Malta (where transport ends)• Is there an exemption? NO• Person liable to pay VAT? A (must register for VAT purposes in Malta)



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A = taxable personA = taxable person A : serviceA : service

Move of goods by A from the other MS to Malta in order to be used in the framework of a service made in Malta

• (Deemed) ICA in Malta by a taxable person? NO (even if A has to register for VAT purposes in Malta for the service rendered)

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A = taxable personA = taxable person B : goods on trialB : goods on trial

Move of goods by A from the other MS to B in Malta on trialAfter trial (not satisfactory), goods are going back to the other MS

• (Deemed) ICA in Malta by a taxable person? NO

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No deemed ICA followed by a deemed ICA: example

Other EU MS Malta

A = taxable personA = taxable person B : goods on trialB : goods on trial

Move of goods by A from the other MS to B in Malta on trial. After trial, goods are acquired by B (assumption that B is registered under article 10 and that A is not established nor registered under article 10)

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No deemed ICA followed by a deemed ICA : example (continued) – No simplification

Operation 1 (no simplification in Malta : ICA)

• (Deemed) ICA in Malta by a taxable person? YES (from the moment goods are acquired by B). VAT registration of A in Malta

• ICA in the scope of VAT (e.g. for consideration)? YES• Place of ICA? In Malta (where transport ends)• Is there an exemption? NO (assumption)• Person liable to pay Maltese VAT? A (must register for VAT purposes in

Malta)

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No deemed ICA followed by a deemed ICA : example (continued) – No simplification

Operation 2 (no simplification in Malta : supply of goods to B)

• Supply of goods by a taxable person? YES • Supply in the scope of VAT? YES• Place of supply? In Malta (where goods are at the time they are put at the

disposal of B)• Is there an exemption? NO (assumption)• Person liable to pay VAT? B

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No deemed ICA (followed by a deemed ICA): example (continued) - Simplification

Operation 1 and 2 (simplification in the other MS : movement of goods and supply of goods to B)

• (Deemed) ICA in Malta by a taxable person? NO (from the moment goods are acquired by B)

AND

• ICA in Malta by a taxable person? YES (B)• ICA in the scope of VAT? YES • Place of ICA? In Malta (where transport of the goods to B on trial ended)• Is there an exemption? NO (assumption)• Person liable to pay VAT? B

intra-community acquisitions of goods using the methodology

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