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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).

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 (in Estonian here)) if:

  1. it has effected intra-Community supply of goods during a taxable period, it has transferred goods as a reseller in a triangular transaction during a taxable period or it has transported from Estonia to another Member State call-off stock, including in the case when the acquirer of call-off stock changes or call-off stock has been returned to Estonia;
  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 to 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. The transfer of goods, transported from Estonia to another Member State as call-off stock, is also treated as intra-Community supply.

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.

As the amendment, since 01.01.2020 the transport to another Member State of goods meeting the conditions of call-off stock is not treated as intra-Community supply. The transport to another Member State of call-off stock is not treated as intra-Community supply also in case when the initially agreed acquirer has replaced with another acquirer in the same Member State within 12 months as of the arrival of call-off stock and in case when the goods are not transferred in another Member State within 12 months as of their arrival and are returned to Estonia during the same time.

Intra-Community supply of goods (incl. the transfer of goods, transported from Estonia to another Member State as call-off stock) 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.

The goods treated as call-off stock shall not be declared in Form KMD. The goods transported to another Member State as call-off stock shall be declared in Form VD, indicating in the report the code of the country of the acquirer of call-of stock (column 1 in the paper form) and the VAT identification number of the acquirer of call-off stock (column 6 in the paper form).

If the transport of the goods to another Member State as call-off stock was failed to present on time in Form VD, it shall be presented in the report on the amendment of intra-Community supply (Form VDP), indicating in row "corrected" the code of the country of the acquirer of call-of stock (column 2 in the paper form), the VAT identification number of the acquirer of call-off stock (column 7 in the paper form) and code of the act "1" "Transport of the goods to another Member State" (column 8 in the paper form).

The replacement of the acquirer of call-off stock with another acquirer in the same Member State or return of call-off stock to Estonia shall be presented in Form VDP, indicating in row "corrected":

  1. if the acquirer was replaced with another acquirer, the code of the country of the new acquirer (column 2 in the paper form) and the VAT identification number of the new acquirer (column 7 in the paper form); if call-off stock was returned to Estonia – the code of the country of the initially agreed acquirer (column 2 in the paper form) and the VAT identification number of the initially agreed acquirer (column 7 in the paper form);
  2. code of act, correspondingly "2" – "return of the goods to Estonia" or "3" – "the replacement of the acquirer of call-off stock with another acquirer“ (column 8 in the paper form);
  3. as "yes/no" answer, whether the act took place in full or not (it means whether the taxable person is about to transfer to the new acquirer or to return to Estonia the total amount of goods, transported to another Member State as call-off stock, or only part of it) (column 9 in the paper form).

In row "initially declared" on both cases shall be indicated the code of the country of the initially agreed acquirer of call-of stock (column 2 in the paper form), the VAT identification number of the initially agreed acquirer of call-off stock (column 7 in the paper form) and code of act (column 8 in the paper form).
 

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 call-off stock electronically in the e-MTA


The definition of call-off stock you find in subsection 2 (31) of the Value Added Tax Act. Call-off stock is goods transported to another Member State and waiting there for transfer, if all following conditions are met:

  1. the goods are transported by the taxable person to another Member State for the purpose of transferring the goods there to a person who is registered in that other Member State as a taxable person within 12 months as of their arrival, in accordance with an agreement concluded between taxable persons;
  2. the person to whom the goods are transported for transfer is registered as a taxable person in the Member State where the goods are transported and that person and the number of registration as a taxable person issued thereto in that Member State are known to the taxable person transporting the goods;
  3. the taxable person who is transporting the goods to another Member State does not have a seat or permanent establishment in the other Member State to which the goods are supplied;
  4. the taxable person keeps records of goods transported to another Member State pursuant to the procedure established on the basis of subsection 36 (5) of Value Added Tax Act;
  5. the taxable person presents the details of the acquirer of goods transported to another Member State in the report on intra-Community supply (Form VD).

Call-off stock shall be declared in Form VD/VDP in special block (separately from the block of intra-Community supply).

Upon the transport of call-off stock to another Member State, in Form VD (if the transport of call-off stock to another Member State was failed to present on time, then in Form VDP) shall be declared only the code of the country of the acquirer of call-of stock and the VAT identification number of the acquirer of call-off stock (it means, the taxable value shall not be declared). 

If the goods transported to another Member State as call-off stock are not transferred there and are returned to Estonia within 12 months as of their arrival, Form VDP shall be filled in.

Filling in Form VDP, a taxable person must:  

  1. find "Kauba teise liikmesriiki toimetamise toiming" ("Act of transport of the goods to another Member State"), using the button "Otsi" ("Search");
  2. push the button "Lisa uus rida" ("Add new row") and choose the new code of act "Kauba tagasi toimetamine Eestisse" ("Return of the goods to Estonia");
  3. choose "Toimingu periood" ("Period of act") – when the act took place;
  4. choose "Kas toiming täies mahus?" ("Act in full or not") as "Jah/Ei" ("Yes/No") answer – whether the total amount of goods, transported to another Member State as call-off stock, was returned to Estonia or only part of it.

If the initially agreed acquirer was replaced with another acquirer in the same Member State within 12 months as of arrival of call-off stock (it means, the conditions of call-off stock are still met), also Form VDP shall be filled in.

Filling in Form VDP, a taxable person must: 

  1. find "Kauba teise liikmesriiki toimetamise toiming" ("Act of transport of the goods to another Member State"), using the button "Otsi" ("Search");
  2. push the button "Lisa uus rida" ("Add new row") and choose the new code of act “Kauba soetaja asendamine teise maksukohustuslasega” ("The replacement of the acquirer of call-off stock with another acquirer");
  3. choose "Toimingu periood" ("Period of act") – when the act took place;
  4. choose "Kas toiming täies mahus?" ("Act in full or not") as "Jah/Ei" ("Yes/No") answer – whether the taxable person is about to transfer to the new acquirer the total amount of goods, transported to another Member State as call-off stock, or only part of it;
  5. choose “Eelmise soetaja käibemaksukohustuslasena registreerimise number” ("VAT identification number of the previous acquirer").

Intra-Community acquisition of goods and the services received from a taxable person of another Member State shall be declared only in Form KMD and not in Form VD.
 

Forms VD and VDP

 
Forms valid from 01.01.2020 » 

(in Estonian)


Forms valid until 31.12.2019
Forms for submission by electronic means
02.03.2020