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Submission of report on Intra-Community supply

We briefly dwell on more spread intra-Community transactions and acts and give an overview of what should you particularly observe on declaration of the said transactions. The comprehensive survey of intra-Community supply and acquisition together with all exceptions and nuances is given here (in Estonian).

How to submit form VD/VDP? (595.28 KB, PDF)

Completion of Report on intra-Community supply in the e-Tax/e-Customs (in Estonian (222.93 KB, PDF))

What to declare

According to § 28 of the Value-Added Tax Act, a taxable person is required to submit a report on intra-Community supply (Form VD (216.29 KB, PDF) (in Estonian here)) if:

  1. it has effected intra-Community supply of goods during a taxable period or it has transferred goods as a reseller in a triangular transaction during a taxable period;
  2. it has provided to a taxable person or taxable person with limited liability of another Member State a service specified in clause 10 (4) 9) of the Value-Added Tax Act which is subject to taxation except the taxation with the 0 per cent value added tax rate, in the Member State of the recipient of the service.

On Form VD no services provided to a third country person, intra-Community acquisitions, domestic supply or import/export of goods are declared.

VD report shall be submitted by the twentieth day of the month following each calendar month. If there is no supply of goods or services mentioned above, then no report shall be submitted.

When do declare

Supply shall be deemed to have been created both in the case of intra-Community supply created or intra-Community acquisition effected on the fifteenth day of the month following the month in which the goods obtained by the intra-Community acquisition of goods are dispatched or made available or on the date on which an invoice is issued if it is prior to the mentioned fifteenth day (subsection 11 (2) of the Value-Added Tax Act).

Upon provision of services to foreign persons or receipt of services from foreign persons the time of supply is deemed to be the date on which the first of one of the following acts has been performed pursuant to the general rule of subsection 11 (1) of the Value-Added Tax Act:

  • the services are provided;
  • full or partial payment is received for the services or, in the case of the receipt of services, full or partial payment is made.

If a taxable person cancels an invoice concerning goods/services or submits a credit invoice, the corresponding amendments concerning the taxable period during which the (credit) invoice was submitted shall be indicated in the report on intra-Community supply (subsection 28 (3) of the Value-Added Tax Act). Thus, a taxable person shall declare the amendments concerning the same taxable period resulting from the cancellation of an invoice or from the submission of a credit invoice both in the value-added tax return (KMD) and in the report on intra-Community supply (VD).

The information about intra-Community supply of goods is provided for in § 7 of the Value-Added Tax Act. Intra-Community supply of goods means, as a rule, the transfer of goods to a taxable person or taxable person with limited liability of another Member State together with the transport of the goods from Estonia to the other Member State.

Besides the sale of goods, intra-Community supply of goods means also the transport of goods to another Member State for them to be used for business purposes there. A company, for example, may transport goods to its company or branch registered as a taxable person in Finland for them to be used for business there. Intra-Community transportation of goods from one Member State to another one for business purposes presumes that the transportation shall be considered as an intra-Community acquisition of goods in the other Member State – thus, an Estonian company has generally to register itself as a taxable person in this other Member State.

Intra-Community supply of goods shall be declared in boxes 3, 3.1 and 3.1.1 of Form KMD and in column 3 of Form VD. Box 3.1.1 ‘Intra-Community supply of goods’ in Form KMD of the corresponding calendar month equals generally to the total amount in column 3 ‘Taxable value of goods’ of Form VD. A difference may occur on selling goods to persons not registered as taxable persons in the special cases given in the Value-Added Tax Act (for example, sale of new means of transport).

The place of supply of services is provided for in § 10 of the Value-Added Tax Act. In the report on Form VD such services shall be declared which upon provision to taxable persons of another Member State shall be subject to taxation according to the so-called basic rule (clause 10 (4) 9) of the Value-Added Tax Act) by the recipient in his or her Member State (clause 28 (1) 2) of the Value-Added Tax Act). Thus, the services that are connected with the so-called ‘seat’ and the place of providing services is not related to the recipient of the service (for example, the services connected with an immovable).

Besides, the services subject to taxation with 0 per cent value added tax rate by the recipient shall not be declared in VD reports, for example, transport services for the export or import of goods (the list of services subject to taxation with 0 per cent value added tax rate is provided for in subsection 15 (4) of the Value-Added Tax Act). 

The services to be declared in VD report shall be indicated in boxes 3 and 3.1 of Form KMD and in column 5 of Form VD. The taxable value of services in column 5 of Form VD equals, as a rule, to the difference between boxes 3.1 and 3.1.1 of Form KMD.

The remaining services subject to taxation with 0 per cent value added tax rate pursuant to the Value-Added Tax Act shall be declared in box 3 of Form KMD only where the total supply subject to taxation with the 0 per cent value added tax rate shall be declared.  Thus, all the services connected with the so-called ‘seat’ and the services subject to taxation with the 0 per cent value added tax rate under the specific provisions, for example, the services connected with an immovable, transport services for the export of goods, the provision of services for vessels navigating in international waters, and similar services shall be declared in row 3 of Form KMD only.

Declaration of a triangular transaction

As an exception, the definition of a triangular transaction is given in subsection 2 (8) of the Value-Added Tax Act. ‘A triangular transaction’ means a transaction for the transfer of goods, which involves taxable persons from three different Member States and who all are registered in their own Member States as taxable persons. In the case of a triangular transaction, the transaction is in question where goods are sold in two consecutive sales transactions and all three parties are situated in different Member States. According to the sales transaction, a taxable person A established in the first Member State (the transferor in the triangular transaction) sells the goods to a taxable person B established in the second Member State (the reseller in the triangular transaction) and who then in turn sells it on into the third Member State C (the acquirer in the triangular transaction); whereby the goods in question are transported directly from Member State A to Member State C.

If an Estonian taxable person is the transferor in the triangular transaction (A), he or she shall declare the intra-Community supply of goods in boxes 3, 3.1 and 3.1.1 of Form KMD and in column 3 of Form VD. If an Estonian taxable person is the reseller in the triangular transaction (B), he or she shall declare the triangular transaction in column 4 of Form VD. The resale in the triangular transaction is not the intra-Community supply of goods and the transaction shall not be declared in Form KMD. If an Estonian taxable person is the acquirer in the triangular transaction (C), he or she shall declare the acquisition in box 1 or 2, in boxes 4 and 7 of Form KMD. If such goods have been acquired wherefrom the input value added tax is entitled to be deducted, the amount of the calculated value-added tax shall be shown also in box 5 of Form KMD as the deductible input value-added tax.

Declaration of intra-Community acquisition of goods and services received from another Member State taxable person in Form KMD

Intra-Community acquisition of goods has been provided for in § 8 of the Value-Added Tax Act which generally means the acquisition of goods from taxable persons of another Member State together with transportation of these goods (whether by or on behalf of the seller or the purchaser) to the Member State of the purchaser of the goods. Intra-Community acquisition of goods also includes the transport of goods used for business purposes from another Member State to Estonia for the purpose of business carried out in Estonia.

Value added tax on the intra-Community acquisition of goods will be calculated by the recipient of the goods. On the intra-Community acquisition you should fill in boxes 1 or 2 (taxable supply), 4 (value-added tax), also 6 and 6.1 (informative boxes for the intra-Community acquisition) in Form KMD. If goods have been acquired for taxable supply, a taxable person may deduct the value added tax calculated on the acquisition of goods as the input value added tax in the same Form KMD declaring this in box 5.

The taxable value (pursuant to subsections 10 (1) and (2) of the Value-Added Tax Act) of the services received from a taxable person of another Member State which shall be taxed with the 20 or 9 per cent value added tax rate shall be declared in boxes 1 or 2 and 6 of Form KMD. If the service has been received for taxable supply, a taxable person may deduct the value added tax calculated on the service as the input value added tax in the same Form KMD declaring this in box 5.

Acquisition of other goods and the receipt of service subject to value added tax in Estonia shall be indicated in boxes 1 or 2, 4 and 7 of Form KMD. If the goods have been acquired or the service received for taxable supply, a taxable person may deduct the value added tax calculated on the acquisition of the goods/on the service received as the input value added tax in the same Form KMD declaring this in box 5.

For example, the acquisition of goods in Estonia that are to be installed or assembled, the acquisition of goods in Estonia by way of a triangular transaction, as well as the taxable value (except the amount given in box 6) of goods acquired or the services received that are subject to value added tax in Estonia from a foreign person engaged in business but not registered as a taxable person in Estonia shall be indicated here.

Forms VD and VDP


Forms for submission by electronic means

22.06.2016