Transitional arrangements for intra-EC supplies to VAT registered customers in acceding countries.

• Position: Value added tax

March 1, 2004

On March 1, 2004, Tax Executives Institute filed the following comments with the European Commission. The submission was prepared under the aegis of TEI's European Chapter with the assistance of the International Tax Committee.

On behalf of Tax Executives Institute, I am pleased to provide comments in respect of the practical implications of making intra-EC supplies of goods to VAT-registered customers in Acceding Countries on or after 1 May 2004. As the pre-eminent international association of business tax professionals, TEI has a significant interest in promoting tax policy, as well as in the fair and efficient administration of the tax laws, at all levels of government. TEI appreciates any assistance that the Directorate may provide in reducing the administrative burdens in the period immediately following Accession.

1. Background

   TEI was founded in 1944 to serve the professional needs of business tax professionals. Today, the organization has 53 chapters in North America and Europe. Our 5,400 members represent 2,800 of the largest companies in the United States, Canada, and Europe. In 1999, TEI chartered a chapter in Europe. The European Chapter encompasses employees of a wide cross-section of European and multinational companies. TEI members are accountants, lawyers, and other corporate and business employees responsible for the tax affairs of their employers in an executive, administrative, or managerial capacity. The Institute espouses organisational values and goals that include integrity, effectiveness and efficiency, and dedication to improving the tax system. TEI appreciates the opportunity to comment on the practical implications of making intra-EC supplies of goods to VAT-registered customers in Acceding Countries on or after 1 May 2004.

2. Trade with Acceding Countries

   On 1 May 2004, the European Union will admit an additional 10 countries to its existing 15. With the addition of Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia, approximately 75 million new consumers will be added to the EU--the largest expansion since the EU's inception in 1957.1 As of 1st May, existing VAT laws in those countries will be replaced by the rules of the EC Sixth VAT Directive.

   To qualify for zero-rating intra-EU supplies of goods, (1) the supplier must provide evidence that the goods have been transported out of the EU Member State; and (ii) a proper VAT invoice must be issued by the...