European Community (EC) Supplemental Information

Reporting Documents

The EC VAT information appears on these reporting documents:

• EC VAT Report
• EC Sales List Report

These reports are necessary to enable VAT authorities to control the administration of VAT under a single market.

You have three statistical obligations that may need to be be completed by VAT registered businesses which are involved with intra-EC trade:

• Additional boxes 8 and 9 on the EC VAT Report (VAT return)
• The EC Sales List Report (ESL)

Processed Goods with Respect to the EC Supplementary Statistical Declaration Report

If the goods are sent to another member state for processing, the transaction must appear on the EC Sales List Report with a value of zero and an I for the indicator (see the Single Market Report, section 8, page 13).

You must create a sales order for goods with a price of zero that are sent to another EC country for processing, which have a process indicator of I, and whose SSD value is set to the value of the unprocessed item. This will ensure that the transaction appears correctly on the EC Sales List Report.

When the processed item returns, you must enter a purchase order so that the return transaction shows on the EC VAT Report. The price is the processing charge, while the special EC SSD value is the complete item value: Regular Cost + Processing Charge.

If goods you processed are sent to another member state, you should indicate the value of processing (and not the value itself), and set the indicator to I (see the Single Market Report, section 8, page 13).

You create a sales order with the price set to the processing charge, a process indicator of I, and the SSD value set to the value of the item plus the processing charge. For repairs, you must follow the same procedure as above, except that the process indicator will not be set and the tax code of the item will have to be set so that it incurs no tax.

For goods which are transferred free of charge, enter a zero-priced sales order or purchase order line item with the SSD value set in accordance with EC legislation on the value of goods for customs purposes (see Ernst & Young, Guide to Indirect Taxes in the Single Market, page 92).

VAT Return

On invoicing, VAT is charged if the customer is domestic, or is in another member state and is not registered and arranges transport of goods. Both cases are indicated by a blank tax code on the Purchase Orders form.

If these conditions are not met, you must manually enter a zero-rated tax code for sales orders. If the transaction is defined as distance selling, you must be sensitive to the threshold and fill in the tax codes, where appropriate.

Credit Notes

Triangulation

A sells to B, but ships to C

B buys from A and sells to C, but is not registered in C

C buys from B, but goods are shipped from A

If you are B, you must set the process indicator to T, and the second digit of NOTC to 8. You must also add a comment to the invoice, stating that C will account for the VAT.

System Assumptions and Disclaimers

• For the EC Sales List Report, two options are available to include or exclude freight/miscellaneous charges.
• The system does not support the excise administrative accompanying document (AAD) (see the Single Market Report, section 10, page 13).
• The system does not support, at this time, any form of electronic submission of the data, nor specific form printing.
• Optional SSD fields have been omitted.
• The system assumes that you are already converted to the new EC VAT procedures.
• The system assumes that the orders will be invoiced before the 15th day of the month following the month of shipping (see Ernst & Young, Guide to Indirect Taxes in the Single Market, page 67).
• A/R payment receipts or A/P payments do not generate any VAT or SSD records - taxes are due on invoice, not on payment/receipt.
• The system assumes that the tax point for VAT is the invoice date.
• The system assumes that VAT office will accept multi-media returns (i.e., you can submit separate forms which can be on differing media). The system meets the standards for plain paper returns; however, at this time, it does not handle electronic returns.
• The system treats installed and assembled goods as domestic supplies in the member state of installation or assembly.
• The system assumes that for SSD, the owner must account for the moving of the goods being processed, both going out and coming in. On return of the goods, they will be declared at cost plus the processing charge.
• The system assumes that repair and other services applied to goods are taxable in the member state in which they are performed. Only the price of the process (and not the value of the goods) must be reported on the VAT. The processor must fill in Box 8 and the ESL. The owner must fill in Box 9.

Mini-Glossary of VAT Terms

• Acquisition: Purchase, ICA: Replaces the term import where, goods are imported from one member state to another. (Happens from the member state of arrival.)
• Company: A specific site database of Service Management.
• Dispatches: Shipment of goods from a company.
• Distance Selling: The following three conditions must be true:
  • The purchaser is not VAT registered.
  • The purchaser is in a different EC country (must be EC).
  • The supplier does the shipping.
• ESL: EC Sales List, VAT 101, aggregate sales listing: Submitted to customs, details supplies for acquisition to VAT registered customers in other EC member states.
• E&Y: Ernst & Young, Guide to Indirect Taxes in the Single Market.
• Goods included with supply of services: Goods supplied as an integral part of a supply of services, whether separately invoiced or charged-for or not.
• Installed and Assembled Goods: Goods that require assembly or installation by the supplier (see the Single Market Report, section 9, page 11, box 1).
• NOTC: Nature of Transaction Code
• Process: A process applied to somebody else's goods which, because it alters the character of those goods, means new, different goods are produced (see the Single Market Report, section 9, page 10).
• Repair and other services applied to goods: Repairs and other work (such as minor alterations) that do not alter the essential character of the goods were applied to somebody else's goods and which fall short of processing (see the Single Market Report, section 9, page 10).
• Returned Goods & Free of Charge Replacements: Goods returned in accordance with contract or faulty within guarantee or warranty period. Free replacements for such goods (see the Single Market Report, section 9, page 10).
• SMR: Single Market Report.
• SSD: Intrastat, Intra EC Trade Statistics. Supplementary Declaration, statistics: All see the Supplementary Statistical Declarations, form number C1500 for arrivals and Form C1501 for dispatches. Defined as: Statistical return which needs to be completed to enable trade statistics to be collected on intra-community trade.
• Supplies for Acquisition: Intra-Community supply for acquisition, ICA, sale. Replaces the term export, where the goods are exported from one member state to another. (Happens from the member state of dispatch.)
• VAT registration: EC-CODE + VAT ID + BRANCH ID (Format: xx xxxxxxxx xxx)
• VAT return: VAT 100, VAT, return.