New VAT rules in the EU per 1 January 2010.

Posted on 05. Jun, 2009 by Philippe Robert in Exact Globe, Exact Online

In February 2008, the EU Ministers of Finance adopted a package of changes regarding the VAT system in Europe. One of the objectives of this package is to modernize and simplify existing rules regarding the cross-border delivery of services within the EU. Another objective is to reduce fraud. This new VAT package will be introduced in all EU countries on the 1st of January 2010.

This means that before the end of 2009, all 27 EU countries will have to include these changes in their local VAT legislation. I will not go in full detail of the new package in this post, but I will give you 3 major changes that might also impact your business (if it’s located in the EU, of course). It is a complicated manner, so I tried to write it down as clearly as possible.

If you are a VAT-registered business and you sell or move goods to other VAT-registered businesses within the European Union (EU), you must record and report data on your activities. There are two systems: Intrastat and the European Community (EC) Sales List. This EC Sales List, the listing of delivery of goods, will be replaced by the listing of delivery of goods and services. This listing will thus not only be for the delivery of goods, but now also for the services that you provide to customers that are liable to VAT (B2B) located in another EU country. The periodicity of the ESL (EC Sales List) will be quarterly or monthly depending of the size of the company.
In case of (cross-border) delivery of services, you will have to list these services on the EC Sales List if the location of your customer is in another European country than your own. In other words, the location where the service is actually executed is not relevant anymore. Only the country of your customer is relevant.
The VAT return can also be changed, but this will differ per country. For example in the Netherlands, goods and services have to be reported in the existing ‘box 3′ while in Belgium two new VAT boxes will be added to the VAT return. Whatever solution a country will choose, the objective is always to have a full coherence between the EC Sales List and the VAT return.

For some countries the modifications that have to be implemented in the EC Sales List and the VAT return are already known, while in other countries these modifications will not be totally clear before November or December of this year.

Even though not all the changes are known yet, Exact Software will not and cannot wait until the last minute to implement these changes in Exact Globe and Exact Online. With customers in almost every EU country we have to take timely measures. Therefore we are currently, for each individual EU country, in contact with the local VAT administration and accountancy firms to investigate the impact for the local VAT return and EC Sales List.

Around Europe, you have probably received invitations to follow a seminar regarding this subject, often organized by the VAT authority, accountants offices or business organizations. We advise you to follow one of these seminars. This because the new VAT package will not only have impact on the VAT return or the EC Sales List, but it will also have an impact on the way that you will register your financial data.

As soon as we have new information about the VAT package of 2010 and/or the impact on our software, we will keep you informed via this blog.

Photo credit: Phillip

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Tags: 2010, EC Sales List, EU, package, service, VAT

8 Responses to “New VAT rules in the EU per 1 January 2010.”

Exact User

25. Nov, 2009

Hi there….

I understand that B396 will be released with legislation compliants for the above in relation to EC Sales List

Can you advise when B396 will be commercially available for us to be able to make use of this new functionality?

Regard

Exact User
Marcel van de Sandt

25. Nov, 2009

Hello Exact User,

product update 396 is scheduled to be generally available early January 2010. See also this earlier blogpost.

Regards

Marcel
Exact User

25. Nov, 2009

If it is not going to be avaiilable until early Jan 2010 and I need to submit my ESL at the end of January as I exceed the threshold set by UK HMRC I cannot use Exact Globe to output this return? Why is this functionality not available to the customer base that is effected by these changes before Jan 2010? This blog was posted Jun 2009 yet Exact don’t hve a solution ready for Jan 2010???

I am sure there are customers who will want to use this functionality that will be on older batch releases and will be wary about updating to B396 without testing it first. For now I will implement my workaround until B396 is commercially available….. Disappointed!!
Marcel van de Sandt

25. Nov, 2009

Hello Exact User,

thanks for your comment. We currently put the final touches to the updates of the new tax rules. The general availability is indeed planned for early January 2010, but the controlled release is planned to start in about 2 weeks from now. Please let us know if you want to participate.

Rgds

Marcel
Exact User

26. Nov, 2009

Hi Marcel

Many thanks for the information, we have a saying in the UK…”once bitten, twice shy” so I think I would rather wait until B396 is commercally available.

Regards
Philippe Robert

26. Nov, 2009

Hi Exact User,

To be able to correctly register your transactions from 1/1/2010 regarding to the new VAT legislation, you will just need to create a new VAT code specific for the “Sales of Services to EU customers”.
On the new release, you will be able to specify one extra setting for this VAT code to indentify that the transactions on this VAT will have to take in the EU Sales list as Service.
You can contact your support organization of Exact to have more information about this change.

Regards.
Exact User

26. Nov, 2009

Hi Phieppe

Many thanks for the information. I have already created my addtional VAT codes in anticipation of the news rules. I am aware of the new 396 functionality its a pity it wont be available pre 2010…

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