Content

EUROPEAN COMMISSION

DIRECTORATE-GENERAL

TAXATION AND CUSTOMS UNION

Indirect Taxation and Tax administration

Value Added Tax

VAT Expert Group

7 th meeting – 6 February 2014 taxud.c.1(2014)27553 – EN

Brussels, 9 January 2014

VAT E

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Option 1B - Sub-Groups report - Consignment stock

Commission européenne, 1049 Bruxelles / Europese Commissie, 1049 Brussel – Belgium – Tel.: +32 2 299 11 11.

taxud.c.1(2014)27553 – VAT Expert Group

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C

ONTENT

1.

Introduction and mandate

2.

Acknowledgement and way of working

3.

Current state description – Problems and issues

4.

Relevant legal framework

5.

Current approaches: survey and summary

6.

Assessment of the current state

7.

Suggestion for a common simplification

8.

Conclusions and recommendations

9.

Next steps

Annex A

Annex B

Page

3

3

4

6

8

12

14

23

24

Overview of meetings and conference calls and of participants of the sub-Group and organisations that they represent

Survey of the current situation in Member States [ Excel file available in CIRCABC ]

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1.

I

NTRODUCTION AND MANDATE

The Commission has been carrying out a dialogue with Member States in the Group on the future VAT (“GFV”) and stakeholders in the VAT Experts Group (“VEG”) examining the different possible ways to implement the destination principle in intra-EU trade of goods between businesses. During the discussions several Member States and some members of VEG considered that there should also be an option which would consist in improving the current rules without modifying these fundamentally.

The Commission prepared a document setting out problems with the current system on the basis of the contributions received from stakeholders during the public consultation on the

Green Paper on the future of VAT. Members of GFV and the VEG identified three priority areas in which improvement of the current rules should be undertaken.

As regards the VAT treatment of consignment stock, which is one of the priority areas, the document mentions as problems in the first place that there are no clear and simple rules for consignment stock and, secondly, that only some Member States provide simplification measures that allow non-established businesses holding a stock of goods not to register for VAT. The third problem that is mentioned is that there are large divergences in consignment stock arrangements between Member States. This seems to be a result of the first two problems.

The Commission called members of GFV and VEG to take part in two sub-groups, one dealing with the VAT treatment of chain transactions and the other one with VAT treatment of consignment stock (“the sub-Group”). The sub-groups’ aim was to discuss the problems faced by businesses and tax administrations across the EU, look at practical examples and identify possible ways to address those problems. The sub-groups were required to report back with their recommendations to both GFV and VEG by the end of

2013. This is the report on Consignment Stock.

2.

A CKNOWLEDGEMENT AND WAY OF WORKING

Once acknowledged the merit of a more harmonised VAT treatment of consignment stock the sub-Group itself established agendas for each meeting and, more generally, how to identify the different systems in place in Member States, asses them and process alternatives for recommendations. The members of the sub-Group communicated with each other also by means of e-mails, bilateral calls and conference calls. In Annex A the meeting dates, conference calls, participants and the organisations that they represent are mentioned.

The sub-Group learned that the control and audit aspect for tax administrations is of the same importance as simple compliance, flexibility and certainty for business operators.

It was decided to make an assessment of the current state of affairs in all Member States first. This was done via a survey that should make clear how big the variances between the

Member States are and what exactly these variances are. The survey, enclosed as Annex

B, has no official status and does not intend to provide the reader with definite answers on the VAT treatment of transactions in the various Member States.

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For the purpose of the survey a list of questions on the VAT treatment of consignment stock and more in particular call-off stock was prepared. In view of time it was decided to prepopulate the survey with input from external consultants rather than let the Member

States start from zero.

The first draft answers to the questionnaire were provided by a network of independent indirect tax lawyers known as The European VAT Club for which hard work we are thankful for. For the Baltic countries EY Lithuania coordinated the input and we thank them for this as well. The input from the consultants was then submitted to the Member

States for validation. You will find the results of the survey in Annex A.

The various regimes applicable in the Member States were then grouped into four main types of approach. The representatives of industry were then asked to give an assessment of all four types of approach, using a fixed set of criteria. The above steps were set in order to see whether there is one type of approach that could potentially serve as a best practice.

In the course of the process the discussions concentrated on finding a solution for call-off stock. Call-off stock forms a species of consignment stock; the term ‘call-off stock’ is reserved for consignment stock situations where the Buyer is already known. Reference is made to Section 5.

Apart from these ‘grouping’ and assessment exercises, a more fundamental debate was held at the legal side. The question was asked whether it would be possible to find a potential common approach as an alternative to the existing (widely varying) approaches.

The sub-Group believes that this is possible, although not every member of the sub-Group believes that the result can be achieved within the existing legal framework of today’s

VAT Directive

1

.

Finally, the legal analyses, the survey, the types of approach, the assessments and the common simplification were discussed within the sub-Group. This has led to a set of conclusions and recommendations as well as suggested next steps.

3.

C

URRENT STATE DESCRIPTION

– P

ROBLEMS AND ISSUES

According to the Commission documents GVF 022 and VEG 013 a consignment stock is a special type of contract under which the Supplier sends goods to his Buyer without transferring the ownership of the goods to the Buyer. The goods are simply put at the disposal of the Buyer, usually in the Buyer’s premises who can take the ownership of the goods at the time he needs them. The supply of the goods takes place after the transport.

According to www.businessdictionary.com

a consignment stock is defined as “goods in possession of a party that is not the goods’ owner or titleholder”. Similar definitions can be found in several other sources.

A number of Member States, but not all, recognize a distinction between call-off stock and consignment stock. Below follows a description of both. We note that civil law systems and definitions in Member States differ, hence, the description below is a working

1 Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (Recast)

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VEG N o 028 definition for the purposes of the work of this sub-Group only. Additionally, we mention the problems and issues that Member States and businesses encounter with both types of stock.

The main issue that industry faces is that there is no harmonization of the VAT rules applicable to consignment stock. This means that it puts a high burden on industry to be compliant, leading to high costs and large risks for mistakes. The high costs are triggered by the need to obtain expert advice per country and setting the transactions up in administrative systems.

The varying obligations per country are particularly onerous for small and medium-sized enterprises (“SMEs”). For larger businesses the issues exist in the fact that they are doing business in many countries and with higher volumes.

Member States indicate that their purpose is also to assure the auditability of each transaction and, in order to achieve that, to have all necessary information about the goods which are stored on their territory. Due to this non-harmonization, transactions do not always receive the same VAT treatment in the different Member States and information is not always made available correctly. The latter adversely affects the completeness, reliability and comparability of the VIES data. Therefore, Member States have also for reasons of VAT control an interest that consignment stock and call-off stock transactions are treated in a similar way in the Member states.

Call-off stock

Several industries traditionally apply call-off stock scenarios. This is the model where a

Supplier transfers goods to a known Buyer without transferring the ownership of the goods. The Buyer has a right to take the goods from the stock at his own discretion.

Supplier invoices Buyer periodically for the goods taken out of the stock by the Buyer.

Quite often the invoice is drawn up by the Buyer himself instead (self-invoicing).

In domestic relationships, the use of this model does not lead to any specific VAT issues.

But once the Supplier and the Buyer are situated in different Member States, VAT issues arise. The main issue that industry faces is that there is very little uniformity in the application of VAT. Some Member States require the Supplier to register for VAT in the country of the Buyer and to account for a deemed intra-EU acquisition when the goods arrive into that Member State and then account for VAT on the subsequent domestic supply to the Buyer. Other Member States allow for simply applying the rules for an intra-

EU acquisition by the Buyer.

There are many variances and different requirements in Member States to treat the supply of goods in a call-off stock scenario as an intra-EU supply by the Supplier and an intra-EU acquisition by the Buyer. These variances are further explained and illustrated in Section

5, where the approaches of the Member States have been grouped, and in Annex B.

Consignment stock

A more general concept of stock that is often applied by industry is consignment stock, which concept comprises also call-off stock situations. Consignment stock stands for the model where the Supplier moves stock into a Member State where he is not established.

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The differentiating factor between call-off stock and other kind of consignment stock is that with the latter type of consignment stock, the identity of the Buyer is not known at the time when the goods are moved by the Supplier to another Member State. Only very few

Member States allow this transaction to be treated as a normal intra-EU supply carried out by Supplier and an intra-EU acquisition carried out by Buyer. Most Member States, including those that recognise call-off stock as giving rise to a normal intra-EU transaction, require the Supplier to be VAT registered in this situation and to account for an intra-EU acquisition when the goods arrive.

4.

R

ELEVANT LEGAL FRAMEWORK

Article 14(1) of the VAT Directive provides that a ‘supply of goods’ shall mean the transfer of the right to dispose of tangible property as owner. A supply of goods dispatched or transported from one Member State to another Member State by or on behalf of the vendor or the person acquiring the goods for another taxable person is an exempt intra-EU supply under Article 138 of the VAT Directive. The mirroring transaction in the Member State where the transport ends is an intra-EU acquisition of goods by the Buyer. Article 20 provides that the

“ intra-EU acquisition of goods” shall mean the acquisition of the right to dispose as owner of movable tangible property dispatched or transported to the person acquiring the goods, in a Member State other than that in which dispatch or transport of the goods began.

In order to ensure that the continuity of fiscal sovereignty is maintained the provisions on intra-EU transactions have been built so that at the moment that an exempt supply occurs in the Member State of Departure, a taxable acquisition takes place in the Member State of

Arrival. At any moment either of these Member States is independently able to tax the intra-EU transaction.

According to Article 63 the chargeable event shall occur when the goods are supplied.

Consequently, the intra-EU supply takes place when the right to dispose of the goods as owner is transferred.

According to Article 68 the chargeable event occurs when the intra-EU acquisition of goods is made. The intra-EU acquisition of goods shall be regarded as being made when the supply of similar goods is regarded as having been effected within the territory of the relevant Member State.

According to the Court of Justice of the European Union (“CJEU”) in Case C-118/11 (

Eon

Asset Management ) the concept of a supply of goods does not refer to the transfer of ownership in accordance with the procedures prescribed by the applicable national law, but covers any transfer of tangible property by one party which empowers the other party actually to dispose of it as if the recipient were the owner of the good. In that case the

Court went on to say that where a lessee is to possess all essential powers of ownership and, in particular, that substantially all rewards and risks incidental to legal ownership are transferred and that the present value of the amount of the lease payments is practically identical to the market value of the property, the transaction must be treated as an acquisition of goods.

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The concept of the transfer of the right to dispose of goods as owner is in practice to a certain extent open to interpretation. The owner can give the recipient rights of a different grade or different bundles of rights i.e. the ownership can be transferred gradually.

In order to be a normal intra-EU supply of goods two conditions must be met: the right to dispose of the goods as owner must be transferred and the transport to another Member

State must be ascribed to this supply (CJEU in Case C-430/09) i.e. the transport must be ascribed to the transfer of the right to dispose of the goods as owner. This applies naturally also to the intra-EU acquisition.

If the transfer of the right to dispose of the goods is not ascribed to the transport of the goods to another Member State, then the transfer is, according to the main rule, a deemed intra-EU transaction.

According to Article 17(1) of the VAT Directive the transfer by a taxable person of goods, forming part of his business assets, to another Member State shall be treated as a supply of goods for consideration. “Transfer to another Member State” is defined as the dispatch or transport of movable tangible property by or on behalf of the taxable person, for the purposes of his business, to a destination outside the territory of the Member State in which the property is located, but within the EU. The transfer of the goods is deemed to be an exempt intra-EU supply according to Article 138(2)(c), carried out by the taxable person in the Member State of Departure. The situations which are not considered to be transfers are listed in the second paragraph of Article 17.

The application by the taxable person of “own” goods in the Member State of Arrival is deemed to be an intra-EU-acquisition according to Article 21 of the VAT Directive. The application by a taxable person, for the purposes of his business, of goods dispatched or transported by or on behalf of that taxable person from another Member State, within which the goods were produced, extracted, processed, purchased or acquired within the meaning of Article 2(1)(b), or into which they were imported by that taxable person for the purposes of his business, shall be treated as an intra-EU acquisition of goods for consideration.

There would be a mirroring transaction subject to tax in the Member State of Arrival even without Article 21. According to Article 23 of the VAT Directive Member States shall take the measures necessary to ensure that a transaction which would have been classified as a supply of goods if it had been carried out within their territory by a taxable person acting as such is classified as an intra-EU acquisition of goods.

Articles 17 and 21 of the VAT Directive apply to situations where the supply of the goods, i.e. the transfer of the right to dispose of them as owner, only takes place after those goods are transferred from one Member State to another. This means that the transport of the goods is not based on a sales agreement of the goods. The transfer of the right to dispose of the goods as owner carried out later in time is in this situation a domestic supply carried out by the supplier.

The reason for stipulating in the Directive that transfers of own goods are treated as intra-

EU transactions is that the tax administrations in the Member States of arrival of the goods are notified and are able to monitor the subsequent supply of the goods or, in the case of capital goods, to control the exercising of the right of deduction and its possible

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VEG N o 028 subsequent adjustment. Without the provisions of Articles 17 and 21 (and 23) such transfers would escape effective monitoring for VAT purposes.

The problems and issues that were described in Section 3 follow from the question when an intra-EU supply and acquisition take place and by whom. Does the deemed intra-EU supply and acquisition of Article 17 and 21 already take place at the time that the goods are transported by the Supplier from one Member State to a call-off stock or consignment stock in another Member State? Or could a normal intra-EU supply and acquisition take place after that transport, either at the time that the goods are put into the stock or at the time that the Buyer takes the goods from the stock?

As explained above, the answer to this question depends on the fact whether the transport of the goods to another Member State is ascribed to the transfer of the right to dispose of the goods as owner or whether the transfer of that right takes place after the transport. The

Member States have different interpretations of this.

5.

C URRENT APPROACHES : SURVEY AND SUMMARY

The sub-Group decided to conduct a survey of the current practices in the EU Member

States. The questions were designed to firstly identify the VAT treatment of a very simple

“call-off stock” scenario and then to ask whether changes to the basic scenario would shift the VAT treatment in the case.

5.1 Basic scenario

This basic scenario can be illustrated the following way and covers question 1 to 6 in the questionnaire:

MS 1 MS 2

Supplier Warehouse Buyer

Following a discussion in the sub-Group we designed a questionnaire which the members of the sub-Group pre-populated in order to accelerate the validations from the Member

States.

To date the pre-filled answers were verified by 24 Member States; the coverage of the survey includes all Member States. Cyprus, Latvia, France and The Netherlands did not respond. It was assumed by the sub-Group that these Member States had accepted the prefilled answers.

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Below, you will find a diagram that illustrates the overall approach for the 28 Member

States, taking the answers to questions 1 through 6.The divergence in treatment is immediately noticeable. The Member States’ approaches seem to divide into four different categories. The summary below reflects the sub-Group’s analysis of the Member States’ practices.

Q1: Does the transfer of goods to warehouse in constitute a deemed EU acquisition of own goods in MS2 for the supplier?

YES (4 MS)

Belgium

Portugal

Spain*

Sweden

Model 2

YES (9 MS)

Q2: Is there a reverse charge in place on the actual local supply between Supplier and Buyer in

MS2?

NO (19 MS)

Q3: Does the transfer of goods to warehouse in

MS2 constitute an Intra EU Supply / Intra EU acquisition at the time when the goods arrive in the warehouse?

NO (5 MS)

Denmark

Germany

Greece

Luxembourg

Malta

Model 1

YES (8 MS)

Q5: Is there a time-limit within which the goods needs to be taklen out by Buyer?

Model 3

NO (11 MS)

Q4: Does the transfer of goods to warehouse in MS2 constitute an

Intra EU Supply / Intra EU acquisition at the time when the goods is taken out of the warehouse by the buyer?

YES (1 MS)

Lithuania

NO (7 MS)

Bulgaria

Cyprus

Czech Republic

Estonia

Finland

Latvia

UK

YES (11 MS)

Q5: Is there a time-limit within which the goods needs to be taklen out by

Buyer?

Model 4

NO (0 MS)

YES (4 MS)

Austria

France

Italy

Poland

No (7 MS)

Croatia

Hungary

Ireland

Romania

Slovakia

Slovenia

The

Netherlands

* On a case by case basis, if the contractual relationships show that the customer may dispose of the goods as an owner when they are dispatched to Spain, this would be treated as a direct intra-EU acquisition by the customer (changing Q1 and Q2 to "No" and Q3 to "Yes"). Consequently, Spain may belong to Model 3 on a case-by-case basis.

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The four Models can be named and described as follows:

Model 1: Deemed intra-EU acquisition (Supplier to warehouse) – [no reverse charge]

(warehouse – Buyer)

This is the basic Model with no special schemes in place. The transfer to the warehouse is simply treated as an acquisition of own goods. As a consequence, the Supplier would have to register for VAT in MS2 and account for VAT on the acquisition. The subsequent local sale from the warehouse to the Buyer is subject to normal VAT.

Model 1 is currently in use in 5 MS as indicated above.

Model 2: Deemed intra-EU acquisition (Supplier to warehouse) –[reverse charge]

(warehouse – Buyer)

In Model 2, the transfer from MS1 to MS2 is still treated as a deemed intra-EU transaction. However, the local sale is now subject to a reverse charge and in most

Member States a VAT registration by Supplier in MS2 is required.

Model 2 is currently in use in 4 MS as indicated above. In three of the four Member States applying it Model 2 seems to be a general reverse charge scheme for non-established suppliers rather than a consignment stock simplification.

Model 3: The transparent warehouse – Intra-EU acquisition by the Buyer at the time when the goods arrive at the warehouse

In Model 3, there is no deemed intra-EU transaction but a normal intra-EU supply by the

Supplier and an intra-EU acquisition by the Buyer at the time the goods are transferred to the warehouse.

Model 3 is currently in use in 8 MS as indicated above. Out of these 8 Member States, one

Member State has a time limit of one year in place.

Model 4: The transparent warehouse – Intra-EU acquisition by the Buyer at the time when the Buyer takes the goods out of the warehouse

In Model 4, there is again no deemed intra-EU transaction. In this Model the normal intra-

EU supply and acquisition are considered to take place at the moment that the Buyer takes the goods out of the warehouse.

Model 4 is currently in use in 11 MS as indicated above. Out of the 11 MS, 4 MS have a time limit in place ranging from 90 days to two years.

These four Models will be used in the rest of the analysis as they represent the two conceptually different approaches combined, with two distinct differences. Some simplification systems applied by Member States may not be fully covered by these four

Models, but this classification gives us the possibility to structure the analysis.

The first conclusion from the study is clearly that the current VAT treatment is fairly diverse, to the extent that the basic scenario alone essentially has four different VAT treatments and all of these four Models have a fair amount of uptake in the Member

States. From a business perspective this makes it difficult to translate commercial

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VEG N o 028 decisions of setting up a consignment stock operation with a major buyer or subcontractor to a streamlined VAT treatment. Member States also have concerns about the different provisions in force because these may well affect the completeness, reliability and comparability of the VIES system.

A full summary of the survey is in Annex B to this Report.

5.2 Variations of the basic scenario

The questionnaire included also questions with which the group wanted to find out whether the answers to questions 1 through 6 would change if slight changes to the basic scenario were made i.e. whether the simplification procedure could be maintained or not.

If not, the VAT treatment would revert to the Model 1 (or Model 2) situation. As a consequence a VAT registration would be needed.

The replies to question 9 revealed that the simplification is limited to a specific type of goods in only one MS. The type of goods is not a decisive factor in setting up a simplification procedure. Likewise, only two MS indicated in their answers to question 9 that, if the buyer was not established, but only VAT registered in MS2, the simplification would not be available.

The decisive factors are rather changes in the facts concerning the Supplier (VAT registration), the management of the warehouse (the Supplier assumes control instead of the Buyer) and the Buyer (either having more known Buyers or not knowing the Buyer at the time of transportation or not knowing the Buyers in advance). These variations are explained below.

Variation 1 – Supplier is already registered as a non-established taxable person in MS2

In question 7 the MS were asked to indicate whether a current VAT registration in MS2 of the Supplier would change the answers. In half of the Member States (14 MS) the answer was ‘Yes’: this would change the treatment and the simplification would not be available.

The changes appeared in 2 of the 4 MS applying Model 2, 4 of the 8 MS applying Model

3 and 8 of the 11 MS applying Model 4. Only 9 MS would maintain the simplification.

Variation 2 – Supplier (or a third party on his behalf) manages the warehouse

Question 8 inquired whether the VAT treatment would change if the Supplier managed the warehouse. In 10 MS the response was that this would change the treatment and the simplification would not be available. The changes appeared in 2 of the 4 MS applying

Model 2, 3 of the 8 MS applying Model 3 and 5 of the 11 MS applying Model 4. It should be noted that there is only partial overlap between the 14 MS that answered ‘yes’ in question 7 above and the 10 MS mentioned here, which is a further illustration of the fact that the current practices are very diverse.

Variation 3 –Several known Buyers

In question 15 we have released the restriction on the number of Buyers by asking about the consequences of having multiple known Buyers. The consequence is that this would change the VAT treatment in 15 MS, leaving only 8 MS with unchanged simplification procedures in place. The changes appeared in 1 of the 4 MS applying Model 2, 5 of the 8

MS applying Model 3 and 9 of the 11 MS applying Model 4.

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Variation 4 – the Buyer is not known at the time of transportation

Question 16 concerns a situation where the Buyer is not known in advance. In this situation the VAT treatment would change in 18 MS applying Model 2, 3 or 4, leaving only 2 MS with full simplification under Model 4 and 3 MS with the limited Model 2simplification.

Variation 5 – Several unknown Buyers

Question 17 concerned a case of a consignment stock situation where the Buyers are not known in advance. In this situation the VAT treatment would change in 17 MS, leaving only Bulgaria, Ireland and The Netherlands with full simplification and Sweden, Portugal and Spain with a limited simplification consisting of a reverse charge.

A full summary of the survey is in Annex B to this Report.

6.

A

SSESSMENT OF THE CURRENT STATE

6.1 Assessment criteria for businesses

In order to be able to give a more structured assessment of the identified current models the below list of simplification criteria, in order of importance, was put together, from the perspectives of industry:

1. compliance, filing obligations and compliance burden (costs, additional work)

2. financial aspects and cash flow

3. systems and automation aspects

4. legal certainty

5. accounting obligations

The representatives of the three business organisations which were members of the sub-

Group did a limited survey and discussed the topics with relevant expert groups within their respective organisations or took soundings from individual advisors or business representatives. In doing this, they attributed a score between 1 and 3 to the four current

Models in order to be able to compare the feedback. A score of 3 would indicate that the model is conceived as favourable, 2 would be average and 1 would be below average.

6.2 Outcome of the assessment by business representatives

The business organisations representatives have assessed the models both from the perspective of the Supplier and the Buyer as the Buyer needs to find the model attractive before entering into a consignment or call-off stock arrangement. Below we have inserted the consolidated results of the assessment. Due to the limited statistical basis, we have illustrated the answers by colour coding (3=dark blue; 2=yellow; 1=dark orange).

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Businesses – Supplier

Model 1 Model 2 Model 3 Model 4




4. legal certainty


Average

Businesses – Buyer




4. legal certainty


Average

Business overall average

Although the number of responses cannot be classified as representative for the European business community, the results do show a trend. This trend is favouring Model 4. In general, Model 4 is seen as a significant simplification and has beneficial cash flow aspects.

From a Supplier perspective Model 4 provides a simplification due to the fact that the

VAT treatment follows the commercial transactions and the Supplier would not need to get registered. From the Buyer side, Model 4 is attractive for the same reasons.

As a consequence Model 4 combines the advantages of treating call-off stock transactions as intra-EU supplies, linking the taxable event to the moment in the buy/sell process when the parties exchange invoices for business reasons. This Model does not create VAT reporting that is not aligned with business processes.

Model 4 is also attractive for SMEs as it gives them the level playing field of being able to enter into a call-off stock set-up in order to meet the commercial requirements from their

Buyers without having to get registered or without a separate document flow.

However, Models 1 and 2 are from the perspective of the Buyer similar to normal business transactions and therefore these Models are also perceived to be attractive from a VAT perspective. Having said this, Models 1 and 2 do in reality not align the VAT treatment with the commercial reality of consignment stock, but are rather seen as a more general solution that also caters for warehouses.

6.3 Assessment by Member States representatives

The fact that the Member States have interpreted the provisions of the VAT Directive applicable to consignment stock quite differently and apply various kinds of provisions is in itself a shortcoming which complicates the VAT system and creates additional

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VEG N o 028 compliance costs and legal uncertainty for businesses. These differences are also problematic as regards a VAT neutral treatment of EU businesses.

The present situation is also problematic for Member States. The uncertainty of the correct interpretation of the Directive may have prevented Member States from providing clear legislation or guidance on consignment stock which would have fulfilled both simplification and control needs.

The information collected on the intra-EU supplies and acquisitions should mirror each other in order to enable effective cross-checking. Where the Member State of Departure and the Member State of Arrival apply different systems as regards goods placed in consignment stock, the information received on intra-EU supplies and acquisitions might not be comparable e.g. as regards timing. In addition as some Member States apply simplification systems where the recapitulative statements and VAT returns on intra-EU transaction are only given at the time when the goods are taken out of the warehouse, there may well be a significant delay before the Member State of Arrival is informed about the arrival.

It is obvious that the different provisions in force in Member States can affect the completeness, reliability and comparability of the VIES system, and create possibilities or risks of fraud.

During recent years it has been considered important to speed up the collection and exchange of information on all intra-EU-transactions by reducing the period for declaring intra-EU-supplies in recapitulative statements and the period for transmission of this information between Member States.

It is clear that a common solution is needed.

The common simplification model should cater for the control needs of the tax authorities.

The tax authorities of the Member State of Arrival should have information on the goods transferred from another Member State to a call-off stock. This information would enable the Member State of Arrival to carry out specific controls where considered necessary.

The Member State of Arrival should receive this information at least within a time period in which it would receive the information based on normal recapitulative statements for deemed intra-EU supplies.

Member States have differing views on what kind of a simplification is possible according to the present rules of the VAT Directive and have different systems in place. Discussions have been carried out between the Member States without reaching a common view on this subject. In addition it may be difficult to achieve a fully harmonised and detailed system through non-legislative means. The common simplification should be realized by amending the VAT Directive.

7.

S UGGESTION FOR A C OMMON S IMPLIFICATION

7.1 The case for change

As stated above, the variances between Member States as to how call-off stock transactions are treated cause problems both to businesses and Member States.

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Therefore the sub-Group proposes to introduce the following common simplification of call-off stock transactions. Taking into account the various interpretations of the VAT

Directive by the Member States, the suggestion is built on the assumption that the common model would be stipulated in the Directive and possibly, in addition, in the VAT

Implementing Regulation

2

.

7.2 Summary of the suggested simplification

7.2.1. Scope of the simplification

The simplification applies to call-off stock transactions as described in Section 3. This means that the Buyer has to be known at the time that the transport begins and that he has to have a right to take goods out of the warehouse at his own discretion. This includes the situation where there are several identified Buyers. In that particular situation it is required that the goods are identified as destined for an identified Buyer. For the application of the simplification, it is irrelevant who manages the warehouse but the Buyer should be aware of the quantities of goods available for him in the warehouse.

The simplification could be applied only if the Supplier is not established and the future

Buyer is registered in the Member State where the warehouse is located.

Consequently, the simplification would cover variations 1 through 3 of the basic scenario but not variations 4 and 5, as described in Section 5.2.

7.2.2. Description of the simplification

The transfer of goods to another Member State where the call-off stock is held is ignored.

If and when the Buyer takes goods from the call-off stock two taxable events are considered to take place: (i) an intra-EU supply of the goods carried out by the Supplier and (ii) an intra-EU acquisition of the goods carried out by the Buyer.

The Supplier would not be required to get registered for VAT and account for a deemed intra-EU acquisition nor for a domestic supply of goods in the Member State where the call-off stock is located. Neither would he be required to account for a deemed intra-EU supply in his recapitulative statement.

All regular obligations concerning normal intra-EU transactions would apply. This would mean:

- in the VAT return covering the period during which the goods have been taken out of the stock, the Supplier accounts for an intra-EU supply and the Buyer accounts for an intra-EU acquisition;

- the Supplier should report the intra-EU supply in his recapitulative statement;

- the time limit for issuing an invoice concerning the intra-EU supply would start running when the goods are taken out of the stock.

2 Council Regulation (EU) No 282/2011 of 16 March 2011 laying down implementing measures for

Directive 2006/112/EC on the common system of value added tax (Recast)

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7.2.3. Specific administrative requirements

The following specific administrative obligations would be laid down:

- The Supplier should keep a register as described in Article 243(1) of the VAT

Directive of all goods dispatched or transported to a call-off stock in another

Member State. This register must also mention the address(es) where the call-off stock is. The Buyer would be required to keep storage accounts as described in

Article 243(2) of the VAT Directive, if he manages the warehouse where the goods are stored. If the warehouse is managed by the Supplier or a third party on his behalf this obligation would be on him.

- The Supplier would be required to give a notification of the VAT number of the

Buyer to the Member State of Departure.

- Depending on the notification option to be chosen, also the Buyer would have to give a notification of the VAT number of the Supplier to the Member State of

Arrival.

There are two options on which the notification obligation could be built:

1.

A pre-notification before the supplier starts to transport goods to a new call-off customer and a notification when the call-off stock arrangements with that customer cease. No notifications should be given during the time when the call-off stock arrangements with a notified customer apply. There are two different alternatives for stipulating this obligation:

 including the VAT identification numbers in the recapitulative statement

(see more in Section 7.3.3),

 a separate notification by the Supplier to his tax administration. In this case also the Buyer would have an obligation to notify his tax administration of the VAT number of the call-off supplier before shipments to the stock begin and when the call-off arrangements end;

2.

A monthly notification in a recapitulative statement covering all call-off customers to which the Supplier has transported goods during each month.

Neither of these notification possibilities needs to contain values of the transactions. The notifications would simply be a list of the VAT registration numbers of the Buyers at the disposal of which the call-off stock is put.

If the other conditions are adopted, there seems not to be enough reasons to set a time limit.

The possible rules concerning goods which disappear from the warehouse should be discussed as well.

7.2.4 Conclusion

With all the specific obligations and details of the system suggested above it could be concluded that the fact that the goods would be sent to another Member State under a common simplification scheme would not increase possibilities for fraud but would instead be a considerable step forward compared to the present situation. This would be due to several reasons.

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The harmonised simplification model suggested above would be a substantial step forward, also as regards businesses. The harmonised system would reduce the administrative burden of businesses and offer equal treatment and legal certainty in all

Member States. The obligation to keep a register and storage accounts would not mean additional administrative burdens for the Supplier and the Buyer because they would do it already for commercial and bookkeeping reasons. The obligation to pre-notify the VAT numbers of call-off stock customers should generally not be a considerable burden for

Suppliers.

7.3. The reasoning behind the suggested simplification

7.3.1 The justification and scope of the simplification

A call-off stock was defined in Section 3 as a situation where the Supplier transfers goods to the Buyer without transferring the ownership of the goods and where the Buyer has a right to take goods out of this stock at his own discretion.

Detailed conditions applicable to call-off stock are normally agreed between parties. The contract specifies usually e.g. where the goods should be kept, the quantities of goods to be continuously kept in the stock by the supplier and who is the party carrying the risk for damages to the goods in the warehouse. The supplier is normally given a right to make audits in the warehouse.

Because there is no binding sales agreement yet, the Buyer does not have an obligation to take the goods and the Supplier has a right to e.g. return the goods to the Member State of

Departure. In practice though, since the Supplier is contractually obliged to keep certain amounts of goods in stock, he usually only takes goods from the warehouse if the Buyer rejects them.

The situation of a call-off stock could be seen economically as comparable to a normal sales contract and could, in a way, be seen as one stage in transferring the ownership. The goods are in a warehouse managed by the Buyer, the Buyer has an exclusive right to take goods out of the warehouse and as of that moment the Buyer may also carry the risk for damages to the goods.

This could be seen as an argument for treating this specific situation similarly to cases where the goods are supplied to Buyer without applying a call-off stock. Similar treatment would mean that instead of an intra-EU transfer and a following domestic supply, only a normal intra-EU supply and acquisition would take place.

In the case of a call-off stock as described above the future buyer is always known at the time of the transport. The question arises whether the simplification should cover other kinds of consignment stock. If the future buyer is not yet identified at the time of the transport, there is no Buyer with the right to take goods from the warehouse at his discretion. When the Buyer is found and the sales agreement has been made, either the

Supplier or the Buyer or a third party on behalf of either transports the goods from the warehouse.

The argument of comparing the transfer of goods as regards call-off stock to a normal supply of goods to the buyer does not apply as such to other kinds of consignment stock.

The only exception in the existing VAT Directive to the rule of treating the transfer of own goods to another Member State as a deemed intra-EU-transaction concerns cases

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VEG N o 028 where the transfer is only temporary. Consequently, the application of a similar simplification to these kinds of consignment stock could be said to represent a deviation from the logic of the existing Directive. This situation would require further studies.

The first task then is to define the scope of the simplification. Above a description of a call-off stock as well as an argument why a simplification would be justified was given.

This should form the basis of the scope.

The goods should be stored in a place identified as the place of storage in the contract concerning the stock separately from goods owned by the Buyer.

The future Buyer of the goods should be known at the time of transport. The simplification would cover also a situation where the goods intended for several Buyers are kept in the same warehouse on the condition that it is identified which goods are intended for which Buyers.

The Buyer has to have a right to take the goods at his own discretion from the warehouse.

In the case of several Buyers, this right covers the goods identified for each Buyer. If the

Buyer applies this right, the goods have to be physically removed from the place identified as the place of storage in the contract.

The warehouse could be managed also by the Supplier, or by a third party on his behalf, if all other conditions are met. In order that this situation is similar to a normal call-off stock situation and the Buyer is in practice able to use his right to take goods from the stock, an additional condition should be laid down: the Buyer should be aware of the quantities of goods available for him in the warehouse.

The main reason for the simplification is to alleviate the administrative burden of the

Supplier by releasing him from the obligation to get registered in the Member State of

Arrival. However, the application of the simplification could be useful for the Supplier even in a situation where he is already registered in the Member State e.g. the Buyer may prefer for cash flow reasons an invoice without VAT. The sub-Group considers that the registration of the Supplier should not prevent the application of the simplification.

The simplification should not apply if the supplier is established in the Member State where the warehouse is located.

For control reasons the simplification should apply only if the future Buyer is VAT registered in the Member State where the warehouse is located.

7.3.2 Basic options for the simplification

As explained in the Commission documents GFV 022 and VEG 013, there are two basic options for a simplification. Instead of an intra-EU transfer and the subsequent domestic supply of goods carried out by the supplier there would be only one single transaction subject to VAT, an exempt intra-EU supply carried out by the supplier and an intra-EU acquisition carried out by the buyer. The chargeable event of the transaction would be

- either the actual transfer of the goods to a warehouse in another MS;

- or the point in time when the goods are taken out of the warehouse which is usually at the same time of the transfer of the ownership.

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Albeit that also the first option would free the Suppliers from the biggest administrative burden, the VAT registration, this option may be seen as not a real simplification for them.

The goods may not necessarily be finally purchased by the Buyer. The goods may be faulty or the Supplier may allocate the goods elsewhere (provided the agreed minimum stock levels are maintained). This would mean that both the Buyer and the Supplier would have to make corrections to recapitulative statements and VAT returns. In addition, the final price is not necessarily known when the goods arrive in the warehouse. The invoice would for commercial reasons be issued, often drawn up by the Buyer via a self-invoice, only when the goods are taken out of the warehouse. The application of this option would, however, mean that the time limit for invoicing stipulated in Article 222 would start running at the time of arrival of the goods in the warehouse. Meeting the time limit for issuing an invoice would be problematic if the goods are not taken out of the warehouse or the relevant information for invoicing is not available yet.

In order to be a real simplification for the businesses, the intra-EU supply and intra-EU acquisition should be considered to take place at the moment when the goods are taken out of the warehouse by Buyer.

From the Member States’ point of view this option could be seen as problematic because this model allows the transfer of goods to another Member State without informing that

Member State of the arrival of the goods on its territory. However, as said above, also the present situation where Member States have their own simplifications in place has the same drawback. In addition the conclusion was already made above that the common simplification system should make sure that the Member State of Arrival is given such information which would enable it to carry out specific controls where needed and that this information is received at the latest when the information based on normal recapitulative statements on deemed intra-EU transactions would have been received.

Therefore a common simplification system based on a model where the intra-EU transaction takes place at the moment when the goods are taken out of the warehouse would be better than the present situation also from the perspective of the Member States if the system would take care of the need of the Member State of Arrival to receive necessary information in time.

7.3.3 Specific administrative obligations

A register and storage accounts

According to Article 243(1) every taxable person shall keep a register of the goods dispatched or transported by him, or on his behalf, to a destination outside the territory of the Member State of Departure but within the Community for the purposes of transactions consisting in valuations of those goods or work on them or their temporary use as referred to in points (f), (g) and (h) of Article 17(2). Here it is a question of situations which are exceptions to the rule of a deemed supply, triggered by the transfer of own goods to another Member State.

It would be reasonable to impose a similar obligation on the Supplier, which uses the simplification for goods sent to call-off stock. This obligation would not mean an additional administrative burden for the Supplier because he is expected to keep this kind of register already for commercial and bookkeeping reasons. The register should identify the quality and quantity of the goods transported to a call-off stock, the VAT identification

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VEG N o 028 number of the Buyer, the time of the transport and the time when the supply to the customer is made or the goods have been returned. Also the addresses of the warehouses should be given.

According to Article 243(2) every taxable person shall keep accounts in sufficient detail to enable the identification of goods dispatched to him from another Member State, by or on behalf of a taxable person identified for VAT purposes in that other Member State, and used for services consisting in valuations of those goods or work on those goods.

A similar obligation could be justified for the Buyer or the Supplier, if he manages the consignment stock. This obligation would not create an additional administrative burden because such storage accounts are kept already for commercial reasons. The storage accounts should identify the quality and quantity of the goods located in the warehouse, the VAT identification number of the Supplier (or Buyer), the date on which the goods arrived in the warehouse and the date on which the goods were taken out of the warehouse.

An obligation to notify the Member State of Arrival

As concluded above the Member State of Arrival needs information on the fact that goods are sent to a consignment stock located on its territory. This information enables it to carry out further audits where necessary. The information should be received at the latest when the information based on the normal recapitulative statements would be received.

There are two basic alternatives on either of which such an obligation could be built. The first is here called as a pre-notification option and the second as a monthly notification option.

In the pre-notification option the Supplier would have an obligation to declare in a recapitulative statement the VAT identification numbers of those new Buyers with which he has concluded a contract according to which the Buyer has the right to take goods out of a call-off stock at its own discretion. This information would be marked with a code which refers to the call-off stock simplification.

This information should be given by the Supplier only once i.e. before he starts to send goods to a new Buyer. According to Article 263(1) of the VAT Directive the recapitulative statement shall be drawn up for each calendar month within a period not exceeding one month. In other words, the VAT number of a Buyer should be reported in a recapitulative statement given for the month which is two months prior to the month during which the transport of the goods to the warehouse starts. For example, if the first shipment takes place on the 15th of January, the pre-notification needs to be given in

December in the recapitulative statement for November. Another alternative would be to require the information to be submitted in a recapitulative statement given for the month which is one month prior to the month during which the transport of the goods to the warehouse starts. This alternative would mean that the Supplier should give the information during the same month he starts the shipments. If the first shipment takes place on the 15 January, the pre-notification needs to be given in January, in the recapitulative statement for December. According to Article 20 of the Regulation on the

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Administrative Cooperation

3

the Member States must submit the information given in recapitulative statements to the other Member States within one month.

If the call-off stock arrangements with a Buyer come to an end, the Supplier should notify this. He should do this by stating in the recapitulative statement given for the last month of the arrangements applying the VAT number of the customer and a code referring to the end of the call-off stock simplification.

In the monthly notification option the Supplier would have an obligation to submit each month in a recapitulative statement the VAT numbers of those Buyers in other Member

States, to which he has sent goods in that month, and which have a right to take goods out of the stock at their own discretion. This information would be marked with a code which refers to the call-off stock simplification.

Both of these options would have the following advantages:

- the obligation would be fulfilled by applying existing procedures;

- the handling of the information could be as far as automated as possible for both taxable persons and the tax authorities;

- both the Member State of Departure and the Member State of Arrival would be informed;

- the obligation would rest upon the Supplier who is the one benefiting the most from the simplification and, hence, the supplier would be in control of legal certainty;

- the information given would be limited but sufficient to enable the Member State of Arrival to carry out further audits by means of e.g. checking the information of storage accounts and the register. The Member State of Arrival receives the VAT numbers of the future Buyers; in the present system based on intra-EU transfers and later domestic supplies this information is not given in the recapitulative statements.

It seems that neither of these options would mean an excessive administrative burden for the Supplier. The pre-notification option seems to be slightly easier in this respect.

The pre-notification model would be a better model from the perspective of the tax authorities in that it would allow them to receive the information earlier than in the other option. This fact would be an essential benefit for the controls exercised by tax administrations. Risk analysis and the choosing of targets for investigation is a crucial stage in the VAT control. The earlier the tax administration would receive the information, the better this is for purposes of control and auditability.

Both of these options would require some adjustments to the IT-systems of the tax administrations because of the extra code in the recapitulative statement. The prenotification option would also require that a link to a separate data base would be established.

Another alternative to realise the pre-notification option would be to oblige both Supplier and Buyer to submit to their tax administrations a separate pre-notification of the VAT

3 Council Regulation(EU) No 904/2010 on administrative cooperation and combating fraud in the field of valued added tax

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VEG N o 028 identification number of the other party. The Supplier could require the Buyer to send him a copy of the Buyer’s notification for his legal certainty. This alternative would require manual work, but each tax administration could at its own discretion transfer the information to their electronic databases in order to improve the use of the data. This alternative has the benefit of more flexibility for business.

The existing obligation to report the values of the transferred goods has been found very burdensome by businesses. There do not seem to be strong enough reasons to require these to be given when the notifications of the VAT numbers of the call-off stock customers are given. The values based on invoices are not necessarily available at the time of the notifications. In addition, the values of the goods sold later to the customers are given in the normal recapitulative statements.

Normal VIES obligations

In addition to the specific obligations explained above, the Supplier and the Buyer would have all normal obligations according to the existing VAT Directive e.g. the Supplier would have to report the intra-EU supplies in his recapitulative statements and the Buyer the intra-EU acquisitions in his VAT Return.

7.3.4 Returned goods

If the Buyer rejects the goods or the Supplier transports the goods for other reasons back to the Member State of Departure, no specific effects would occur. Naturally, the Buyer has to add this information to the storage accounts and the Supplier to his register, but there is no need to consider a deemed intra-EU transaction.

7.3.5 Time limit and missing goods

It needs to be considered whether there should be a time limit or not. The speed at which the stored goods circulate is normally quite high. However, some businesses require the presence of spare parts for immediate repairs of crucial machinery. In this case, if the goods exceed their economic lifetime period, the goods will be either returned or disposed of locally.

The supplier usually carries out a count of the goods located in consignment stock at the end of each accounting year (inventory count). This helps the Supplier in respecting a possible time limit. In order to give the Supplier some time to react after the inventory count, the time limit should be longer than a year. If the goods would not be taken out of the warehouse either by Supplier or Buyer within the time limit, an intra-EU supply and acquisition would be deemed to take place on the day following the end of the time limit.

Since the supplier owns the goods, these intra-EU transactions would be deemed to be made by the supplier i.e. a transfer according to Article 17 and 21 would be deemed to take place on that date. This provision would be similar to Article 17(3) according to which the goods shall be regarded as having been transferred to another Member State if one of the conditions of 17(2) is no longer met. In such cases, the transfer shall be deemed to take place at the time when that condition ceases to be met.

However, it could be said that there is no need for a time limit for control reasons. The most important issue to the Member States as regards call-off stock is that they receive information on a call-off stock as early as possible. If this is taken care of, the Member

State is able to carry out further control measures if considered necessary by means e.g. of

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VEG N o 028 checking whether the storage accounts, registers, commercial documents and the goods actually kept in the warehouse match. Normally the goods do not stay in the warehouse very long, but, as indicated above, in certain cases longer storage periods are necessary for business reasons. A time limit, which would not give much added value to the tax administrations, would prevent businesses from applying the simplification in these cases.

If the other suggestions of the sub-Group would be adopted, there do not seem to be sufficiently strong reasons to set a time limit.

The question whether there should be common rules concerning goods which disappear from the warehouse should be discussed.

8.

C ONCLUSIONS AND RECOMMENDATIONS

The sub-Group on Consignment Stock has reached the following conclusions:

- The cross-border VAT treatment of call-off stock and other kinds of consignment stock is complex for businesses, in terms of both the concepts and the interpretation of

VAT legislation.

- Various formal and informal practices applied in the Member States have led to widely varying VAT rules and conditions for transactions relating to this stock.

- The differences between the Member States give rise to increased costs of VAT accounting, increased risks of VAT fraud and avoidance, inconsistencies in VIES, reduced auditability for Member States, systems issues, legal uncertainties and distortions of competition between businesses. SMEs suffer more under the situation than large business and domestic suppliers have an advantage over non-resident suppliers.

- The approaches that Member States have taken can be grouped into four different categories, each with their own characteristics.

- For businesses compliance costs, cash flow, systems implementation and legal certainty are the most important issues. SMEs and even large business indicate that for them consistency and (legal) certainty are very important, especially from a systems and implementation perspective.

- From the Member States’ point of view a common simplification system would be needed in order to increase the credibility of the VIES system and reduce the risks of fraud. The present situation may also have prevented Member States from providing clear legislation or guidance which would have taken both simplification and control issues into account. The common simplification should be accomplished by amending the VAT Directive.

- The sub-Group suggests a common simplification approach, that takes into account the interests and concerns of both Member States and businesses.

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On the basis of these conclusions the sub-Group has come to the following recommendations:

1. The common simplification approach, as described in Section 7 of this Report, qualifies as a potential future regime for call-off stock situations, where it is a given that the Buyers are known in advance. In this model, the cross-border transfer of goods is treated as a regular intra-EU transaction at the time that the Buyer takes the goods from the stock. The model is built on the assumption that the common regime would be laid down in the VAT Directive. The sub-Group expresses the strong wish that the suggested solution for call-off stock receives wide support from both Member

States and business. This support is vital in order for the solution to be taken to the next stage.

2. Given the inherent risks and financial interests that are at stake for both Member

States and businesses an impact assessment on the preferred approach is recommended. The results of this assessment should allow the Commission to add the required level of detail to its proposal for the new regime for call-off stock.

3. The collected information on the VAT treatment of consignment stock and call-off stock in the Member States should be made public and, preferably, be updated, in anticipation of a common regime.

4. The application of a similar simplification to other kinds of consignment stock could be said to represent a deviation from the logic of the existing Directive. The sub-

Group believes that a study should be carried out to assess whether the solution proposed for call-off stock could be applied for consignment stock more generally.

9.

N EXT STEPS

The sub-Group’s Report will be sent to the VEG and GFV and be made public via CIRC-

ABC. The Report will be presented and discussed in their meetings of 6 February 2014 subsequently 10 February 2014. The presentation will be done by delegated members of the sub-Group.

The Commission Services will take note and collect the reactions from both GFV and

VEG and suggest follow-up actions.

Annexes: A. Overview of meetings and conference calls and of participants of the sub-Group and organisations that they represent

B. Survey of the current situation in the Member States [ Excel file available in CIRCABC ]

*

* *

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Annex A

Overview of meetings and conference calls and of participants of the sub-Group and organisations that they represent

The Sub-Group Consignment Stock met in all-day meetings that took place at DG Taxud’s premises in Brussels. In advance of the meetings an agenda was prepared and circulated by the Commission Services. The various participants prepared pre-reads, which were shared in advance.

Additionally, in November and December 2013 several conference calls took place in which the reporting and the subsequent draft versions of the Report were discussed.

The physical meetings took place on 19 June, 8 and 22 October, 15 November and 11

December 2013. Conference calls were held on 22 and 29 November and 6 and 20

December 2013.

The below Individuals, Organisations and Member States have contributed to the meetings, calls and Report of the sub-Group.

Individuals

1.

Carlos Gómez Barrero

2.

Andrea Parolini

3.

Gottfried Schellmann

Organisations

4.

Business Europe

5.

Chartered Institute of Taxation (CIOT)

6.

Tax Executives Institute (TEI)

7.

EY

8.

KPMG

Member States

9.

Belgium

10.

Finland

11.

Italy

Kristian Koktvedgaard

Tarlochan Lall

Allard van Nes

Gijsbert Bulk

Suvi Anttila

Niall Campbell

Francois Coutureau

Patrizia De Iulis

The Organisations representing business communities briefly present themselves below.

BUSINESSEUROPE

BUSINESSEUROPE is the leading advocate for growth and competitiveness at an

European level, standing up for companies across the continent and campaigning on the issues that most influence their performance. A recognised social partner, we speak for allsized enterprises in 35 European countries of which national business federations are direct members. Through our 41 member federations, BUSINESSEUROPE represents 20 million companies.

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The views presented on the assessment of the different models have been discussed in the

BUSINESSEUROPE VAT Policy Group and are supported by this group.

CIOT

The Chartered Institute of Taxation (CIOT) is the leading professional body in the United

Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 16,500 members have the practicing title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

TEI

Tax Executives Institute is the preeminent association of in-house business tax professionals worldwide. Founded in 1944, TEI has grown to more than 7,000 members who represent 3,000 of the leading businesses in the United States, Canada, Europe, and

Asia. The EMEA chapter has a specialised committee for Indirect Tax, mainly focusing on

VAT. In this committee VAT professionals of the leading European businesses take part actively.

Through TEI and its 55 chapters TEI’s members play a critical role in identifying advocacy opportunities; as a member, you can lend your voice to the Institute’s efforts, and advance your company’s and community’s interests. Among the subject areas in which TEI has become involved in recent months are:

- FIN 48 (Uncertain Tax Principles) and IRS Announcement 2010-09

- International Financial Accounting Standards

- IRS Access to Tax Accrual Workpapers (Textron v. United States)

- Codification of Economic Substance Doctrine

- Tax Reform

- OECD Transfer Pricing Rules

- State Tax Apportionment Rules

- U.S. Cost Sharing Regulations

- Tax Penalties at the Federal and State Level

- 2015 Implementing regulation on EU VAT

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