Transitional arrangements for intra-EC supplies to VAT registered customers in acceding countries: April 9, 2004.

• Position: Value added tax - European Union

On April 9, 2004, TEI President Raymond G. Rossi responded to a March 22, 2004, letter from Stephen Bill of the European Commission on the practical implications of making intra-EC supplies of goods to VAT-registered customers in Acceding Countries on or after 1 May 2004. The letter was prepared under the aegis of TEI's European Chapter with assistance from the International Tax Committee. TEI's March 1, 2004, letter to Mr. Bill was published in the March-April 2004 issue of The Tax Executive.

On behalf of Tax Executives Institute, I would like to thank you for your 22 March 2004, letter responding to TEI's concerns about the practical implications of making intra-EC supplies of goods to VAT-registered customers in Acceding Countries on or after 1 May 2004. TEI appreciates your confirmation that VAT numbers may be verified by directly contacting the tax authorities of an existing Member State. We are also pleased to learn that the VAT Information Exchange System (VIES) database will be available for the on-line verification of customer VAT-registration numbers in Acceding Countries. We also welcome your efforts to encourage the tax authorities of the Acceding Countries to provide information on their VAT rules, including the process for applying for a VAT registration in these countries.

Your letter focused primarily on the ability of suppliers to verify on-line VAT registration numbers of companies in the Member States, including the new countries that will join the EU in May. TEI remains concerned, however, about the delays in receiving notices of their VAT numbers that companies not currently registered may have and the problems this will cause.

VAT Registration

In many Acceding Countries, the creation of new EU VAT-registration numbers will simply involve adding a country prefix to an existing domestic VAT-registration number. This is not the case, however, in Slovakia where the tax authority will issue new VAT-registration numbers in April 2004 to all businesses that are required to be registered for VAT in that country (both established and non-established). Clearly, this last-minute issuance creates problems for businesses operating in Slovakia. In addition, taxpayers are uncertain whether other countries may follow suit.

Businesses are genuinely concerned that they will not receive their EU VAT registration numbers until after 1 May 2004, or so late in April that it will be impossible to update billing systems, thereby preventing...