ic special cases distance sales new means of transport excise goods

IC Special cases

Distance sales

New means of transport

Excise goods

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IC SUPPLIES TO OR ACQUISITIONS BY

MEMBERS OF THE “GROUP OF ¾”

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DEFINITION

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Definition of “Group of 3/4”

The “Group of 3/4” consists of:

1. The non-taxable legal persons (essentially public authorities acting as such and not performing activities referred to in Schedule 1 as well as some pure holdings)

2. The small undertakings registered under article 11

3. he other taxable persons not registered under articles 10 and 11 that only make exempt operations without any right to deduct VAT (e.g. bank, insurance companies, non-profit making organisations, hospitals…)

4. The farmer subject to the flat-rate scheme in some Member States (thus “Group of 4”) = not applicable in Malta

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THRESHOLD AND OPTION

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Threshold and registration art.12 in MaltaA threshold of the equivalent in MT liri of EUR 10,000 has been fixed:

– Under which or up to which the intra-Community acquisition by a member of the “Group of 3” is not subject to VAT in Malta

– Above which the intra-Community acquisition by a member of the “Group of 3” is subject to VAT in Malta (= registration art.12)

The threshold is calculated on an annual (calendar year) basis

If the threshold is exceeded, Maltese VAT is due on all intra-Community acquisitions for the rest of the calendar year during which the threshold has been exceeded and for at least the following calendar year. If the threshold is also exceeded during this following year, the same rules apply regarding the liability of Maltese VAT on the intra-Community acquisitions.

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Option in Malta = application for registration art.12

The member of the “Group of 3” is liable to pay Maltese VAT on all his intra-Community acquisitions from the moment he opts for (registration under art.12):

• for the rest of the calendar year during which he has opted

• as well as for at least the two following calendar years.

If the threshold is in any case exceeded during the second following calendar year, the rules regarding the threshold also apply regarding the liability of Maltese VAT on the intra-Community acquisitions made by the member of the “Group of 3”

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Threshold in another MS

A threshold has been fixed:

– Under which or up to which the intra-Community acquisition by a member of the “Group of 3/4” is not subject to VAT in the other MS

– Above which the intra-Community acquisition by a member of the “Group of 3/4” is subject to VAT in the other MS (= in principle registration under the equivalent of art.12)

The threshold is calculated on an annual (calendar year) basis

If the threshold is exceeded, VAT of the other MS is due on all intra-Community acquisitions for the rest of the calendar year during which the threshold has been exceeded and for at least the following calendar year. If the threshold is also exceeded during this following year, the same rules apply regarding the liability of VAT of the other MS on the intra-Community acquisitions.

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Option in the other MS

The member of the “Group of 3/4” is liable to pay VAT of the other MS on all his intra-Community acquisitions from the moment he opts for (in principle registration under the equivalent of art.12):


• as well as for at least the two following calendar years.

If the threshold is in any case exceeded during the second following calendar year, the rules regarding the threshold also apply regarding the liability of VAT of the other MS on the intra-Community acquisitions made by the member of the “Group of 3/4”

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EXAMPLES

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FACTS: IC acquisition in Malta

• A member of the “Group of 3” purchases goods in Italy

• Goods are not excise goods nor new means of transport (special regime examined in next session)

• Goods are transported from the other Member State to Malta on behalf of the member of the “Group of 3” (special regime for distance sales examined in next session)

Other EU MS Malta

AA B = member of “Group of 3”B = member of “Group of 3”Sale of goods

Transport on behalf of B

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First hypothesis

The member of the “Group of 3” does not exceed the threshold at the time of the acquisition and did not exceed it during the previous calendar year and he does not opt for the taxation of its intra-Community acquisitions in Malta

1. Is there an ICA in Malta? YES

2. Where is the place of this ICA? In Malta (where transport ends)

3. Is this ICA subject to VAT in Malta? NO

4. Is there any exemption? N/A

5. Who is liable to pay VAT? N/A

Art. 4(b)(i) and 12 VAT ActArt. 4(b)(i) and 12 VAT Act

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Second hypothesis

The member of the “Group of 3” exceeds the threshold at the time of the acquisition or he has exceeded this threshold during the previous calendar year or he has opted for the taxation of its intra-Community acquisitions in Malta

1. Is there an ICA in Malta? YES

2. Where is the place of this ICA? In Malta (where transport ends)

3. Is this ICA subject to VAT in Malta? YES

4. Is there any exemption? NO (assumption)

5. Who is liable to pay VAT? The member of the “Group of 3” Art. 4(b)(i),12 and 20(1)(b) VAT ActArt. 4(b)(i),12 and 20(1)(b) VAT Act

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COMPLIANCE

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Obligations to be respected by the member of the “Group of 3”The member of the “Group of 3” must:

· Inform the VAT Commissioner that the threshold will be exceeded

· Ask for a VAT registration under article 12

· Keep records of the intra-Community acquisitions made (Art.30(2) VAT Act)

· Submit a special VAT form (Art.21(5) VAT Act) for the month during which he has made intra-Community acquisitions and during the period during which he is liable to pay Maltese VAT on these acquisitions (only if there are ICA made)

· Pay VAT due on these intra-Community acquisitions by not later than the fifteen day following the month during which the tax becomes chargeable

· Communicate his VAT identification number to his suppliers in other EU Member States during the period he is liable to pay Maltese VAT on his intra-Community acquisitions

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FACTS: supply from Malta

• A member of the “Group of 3/4” purchases goods in Malta from A established and registered under art.10

• Goods are not excise goods nor new means of transport (special regime examined in next session)

• Goods are transported from Malta to the other MS on behalf of the member of the “Group of 3/4” (special regime for distance sales examined in next session)

Malta Other EU MS

AA B = member of “Group of 3”B = member of “Group of 3”Sale of goods

Transport on behalf of B

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First hypothesis

The member of the “Group of 3/4” does not exceed the threshold at the time of the acquisition and did not exceed it during the previous calendar year and he does not opt for the taxation of its intra-Community acquisitions in the other MS

1. Taxable person? Yes (A)

2. Operation in the scope of VAT? Yes (supply of goods)

3. Place of operation? In Malta (where transport begins)

4. Is there any exemption? No

5. Who is liable to pay VAT? A

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Second hypothesis

The member of the “Group of 3/4” exceeds the threshold at the time of the acquisition or he has exceeded this threshold during the previous calendar year or he has opted for the taxation of its intra-Community acquisitions in the other MS

1. Taxable person? Yes (A)

2. Operation in the scope of VAT? Yes (supply of goods)

3. Place of operation? In Malta (where transport begins)

4. Is there any exemption? Yes (if 2 conditions are met)


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DISTANCE SALES

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SCOPE ANDPRINCIPLE

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Definition

A distance sale means an intra-Community supply of goods that are transported from a Member State to another Member State BY or ON BEHALF of the supplier and that satisfies some conditions

Art. 7 VAT ActArt. 7 VAT ActItem 4(1) Third ScheduleItem 4(1) Third Schedule

EU MS 1 EU MS 2

AA BBSale of goods

Transport by A or on his behalf

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CONDITIONS

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Principle

A distance sale takes place in the Member State where transport ends provided the total value of such sales by the supplier exceeds a threshold fixed by the Member State of destination during the year in which the distance sale takes place or during the previous calendar year or the supplier has opted in his Member State for the taxation of all his distance sales in the Member State of destination

Art. 7 VAT ActArt. 7 VAT Act Item 4(2) and (3) Third ScheduleItem 4(2) and (3) Third Schedule

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THRESHOLD AND OPTION

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Threshold (35.000 or 100.000 EUR)

A threshold (in Malta the equivalent in Maltese liri of EUR 35,000) is fixed by the Member State of destination:

– Under which or up to which the place of supply remains in the Member State of origin (where transport begins)

– Above which the place of supply is shifted to the Member State of destination (where transport ends)

This threshold is calculated on an annual (calendar year) basis

If the threshold is exceeded, the supplier is liable to pay VAT of the MS of destination on all his distance sales made to this MS for the rest of the calendar year during which the threshold has been exceeded and for the following calendar year. If the threshold is also exceeded during this following year, the same rules apply regarding the liability of the VAT of the MS of destination on such supplies

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Option: Member State by Member State

The supplier may opt (in the MS of establishment) to pay VAT of the MS of destination on all his distance sales from the moment of the option:


• as well as for the two following calendar years.

If the threshold is in any case exceeded during the second following calendar year, the rules regarding the threshold also apply regarding the liability of VAT of the MS of destination on such supplies

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DISTANCE SALES AND ICABY A MEMBER OF THE

“GROUP OF 3 (4)”

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Example: supply from Malta

• Goods are supplied by A (taxable person registered under art.10) in Malta to B in another MS

• Goods are not excise goods nor new means of transport (special regime) and are not exempt from VAT

• Goods are transported from Malta to the other Member State on behalf of A

Malta Other EU MS

A (taxable person, art.10)A (taxable person, art.10)

BBSale of goods

Transport on behalf of A

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First hypothesis

The distance sales threshold fixed by the MS of destination is not exceeded and there is no option by A to pay VAT in this MS. The purchaser is a member of the “Group of 4“ (+ flat-rate farmers in some MS) who does not exceed the acquisition threshold fixed by the MS of destination and has not opted to be liable to VAT in this MS on his intra-Community acquisitions or he is a private individual

1. Is it a supply made by a taxable person?YES

2. Is it a supply in the scope of VAT? YES (supply of goods)

3. Where is this supply taking place? In Malta (where transport begins)


5. Who is liable to pay VAT? A

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Second hypothesis

The distance sales threshold fixed by the MS of destination is not exceeded and there is no option by A to pay VAT of this MS. The purchaser is a member of the “Group of 4“ (+ flat-rate farmers in some MS) who exceeds the acquisition threshold fixed by the MS of destination or has opted to be liable to VAT in this MS on his intra-Community acquisitions


2. Is it a supply in the scope of VAT? YES


4. Is there any exemption? YES


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Third hypothesis

The distance sales threshold fixed by the MS of destination is exceeded or A has opted to pay VAT in this MS. The purchaser is a member of the “Group of 4“ (+ flat-rate farmers in some MS) who does not exceed the acquisition threshold fixed by the MS of destination and has not opted to be liable to VAT in this MS on his intra-Community acquisitions or he is a private individual



3. Where is this supply taking place? In the other MS (where transport ends)



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Fourth hypothesis

The distance sales threshold fixed by the MS of destination is exceeded or A has opted to pay VAT in this MS. The purchaser is a member of the “Group of 4“ (+ flat-rate farmers in some MS) who exceeds the acquisition threshold fixed by the MS of destination or has opted to be liable to VAT in this MS on his intra-Community acquisitions




4. Is there any exemption? YES


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Example: distance sale to Malta

• Goods are supplied by A (regular taxable person) in another MS to B in Malta

• Goods are not excise goods nor new means of transport (special regime) and are not exempt from VAT

• Goods are transported from the other Member State to Malta on behalf of A

Other EU MS Malta

A (regular taxable person)A (regular taxable person)

BBSale of goods

Transport on behalf of A

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First hypothesis

The distance sales threshold fixed by Malta is not exceeded and there is no option by A to pay VAT in Malta. The purchaser is a member of the “Group of 3“ who does not exceed the acquisition threshold fixed by Malta and has not opted to be liable to VAT in Malta on his intra-Community acquisitions or he is a private individual



3. Where is this supply taking place? In the other MS (where transport begins)



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Second hypothesis

The distance sales threshold fixed by Malta is not exceeded and there is no option by A to pay VAT in Malta. The purchaser is a member of the “Group of 3“ who exceeds the acquisition threshold fixed by Malta or has opted to be liable to VAT in Malta on his intra-Community acquisitions

1. Is there an ICA ? YES

2. Is this ICA in the scope of VAT? YES

3. Where is this ICA taking place? In Malta (where transport ends)


5. Who is liable to pay VAT? B

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Third hypothesis

The distance sales threshold fixed by Malta is exceeded or A has opted to pay VAT in Malta. The purchaser is a member of the “Group of 3“ who does not exceed the acquisition threshold fixed by Malta and has not opted to be liable to VAT in Malta on his intra-Community acquisitions or he is a private individual



3. Where is this supply taking place? In Malta (where transport ends)


5. Who is liable to pay VAT? A (must register for VAT purposes in Malta under art.10)

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Fourth hypothesis

The distance sales threshold fixed by Malta is exceeded or A has opted to pay VAT in Malta. The purchaser is a member of the “Group of 3“ who exceeds the acquisition threshold fixed by Malta or has opted to be liable to VAT in Malta on his intra-Community acquisitions

1. Is there an ICA ? YES

2. Is this ICA in the scope of VAT? YES

3. Where is this ICA taking place? In Malta (where transport ends)


5. Who is liable to pay VAT? B

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NEW MEANS OF TRANSPORT

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DEFINITION

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• Motorised land vehicles the capacity of which exceeds 48 cc or the power of which exceeds 7,2 kw

– supplied not more than 6 months after the first entry into service or

– that have not travelled more than 6.000 km

• Vessels exceeding 7,5 meters in length (except « commercial vessels)


– that have not sailed for more than 100 hours

• Aircraft the take-off weight of which exceeds 1.550 kg (except airlines)


– that have not flown for more than 40 hours

Land vehicles, vessels, aircraft (intended for transport of passengers or goods)

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INTRA-COMMUNITYACQUISITION

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• Whatever is the quality of the vendor (never treated as a second-hand goods…)

• Whatever the qualifications of the acquirer (taxable person, non-taxable legal person, private individual)

• (Even if there is no transaction)

• Without the application of any threshold

• Distance sales regime never applicable

Art. 4(1)(b) VAT ActArt. 4(1)(b) VAT Act Item 2(a) Part Two Sixth Schedule Item 2(a) Part Two Sixth Schedule

Always subject to VAT in Malta

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INTRA-COMMUNITYSUPPLY

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Acting in the framework of his economic activity

– Always exempt from VAT if transport is proven

– Whatever the qualifications of the acquirer (taxable person, non-taxable legal person, private individual)

Art. 9 VAT ActArt. 9 VAT Act

Item 3(1) or (2) Part One Fifth Schedule Item 3(1) or (2) Part One Fifth Schedule

By a taxable person art.10 acting as such

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• Supplier becomes in any case a taxable person for this supply

• Supply exempt with right to deduct VAT (refund)

• Refund is however limited to the tax that would be chargeable if the supply by him of the means of transport were a taxable supply

• Moreover, refund is in any case limited to the VAT paid on the purchase made by the vendor

Art. 5(4) and 25(1) VAT ActArt. 5(4) and 25(1) VAT ActItem 3(2) Part One Fifth Schedule Item 3(2) Part One Fifth Schedule

By another person than a taxable person art.10

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– A Maltese private individual purchases a car for 25,000 liri + VAT (18%) = 4,500 liri

– He sells the car to an Italian private individual after 5 months (10,000 kilometers) for 30,000 liri. The car is transported to Italy.

– The Italian VAT is due by the Italian private individual = 30,000 liri in EUR X 20%

– The Maltese private individual can deduct Maltese VAT paid on the purchase up to 30,000 liri x 18% = 5,400 liri but the deduction will be limited to 4,500 liri

The Maltese private individual becomes an occasional taxable person for this operation

Example: intra-Community supply by a private individual

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EXCISE GOODS

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DEFINITION

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•Definition in the (Excise) Directive 92/12/EEC

– Mineral oils

– Alcohol and alcoholic beverages

– Manufactured tobacco

EU Directive Excise

Sixteenth ScheduleSixteenth Schedule

Excise Duty ActExcise Duty Act

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INTRA-COMMUNITYACQUISITION IN MALTA

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• Maltese VAT is always due

• No threshold applicable

Art. 4(1)(b)(iii) VAT Act Art. 4(1)(b)(iii) VAT Act

Art. 12 VAT Act and Item 2(a) Part Two Sixth Schedule Art. 12 VAT Act and Item 2(a) Part Two Sixth Schedule

By a taxable person or a non-taxable legal person

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DISTANCE SALESFROM MALTA

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• Goods are transported by or on behalf of the vendor

– No threshold applicable

– Place of supply by the vendor always in the other MS

– VAT of MS of destination always due

– In principle VAT registration of the vendor in the other MS = person liable to pay VAT

Art. 7, 12 and 20(1)(a) VAT ActArt. 7, 12 and 20(1)(a) VAT Act

Item 4(2) Third Schedule and item 2 Part Three Sixth Schedule Item 4(2) Third Schedule and item 2 Part Three Sixth Schedule

Supplies to private individuals

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DISTANCE SALESTO MALTA

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• Goods are transported by or on behalf of the vendor

– No threshold applicable

– Place of supply by the vendor always in Malta

– Maltese always due

– In principle VAT registration of the vendor in Malta = person liable to pay VAT

Art. 7, 12 and 20(1)(a) VAT ActArt. 7, 12 and 20(1)(a) VAT Act

Item 4(2) Third Schedule and item 2 Part Three Sixth Schedule Item 4(2) Third Schedule and item 2 Part Three Sixth Schedule

Supplies to private individuals

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PAYMENT OF VAT

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• Payment of VAT on supplies by a foreign vendor in specific situations

– Simplifications possible

– Will be dealt with by customs and excise

• Payment of VAT on intra-Community acquisitions made by members of the «Group of 3»

– Will be dealt with by customs and excise

Distance sales to MaltaIntra-Community acquisition

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TAXABLE VALUE

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• The taxable person is either a « licensed warehouse keeper » or a « registered operator » or a « non registered operator »

– In this case, the taxable person is authorised to « receive » excise goods in suspension

of payment of foreign and Maltese excise duties

– But, an intra-Community acquisition takes place for VAT purposes and must be declared

– The taxable value of this intra-Community acquisition does not take into account Maltese

excise duties to be paid at a later stage

– From the moment Maltese excise duties are paid (release from the excise suspension

regime), the taxable value of the intra-Community acquisition must be adjusted by

adding excise duties to this value

– VAT has to be paid on the value of the excise duties paid (no adjustment if the taxable

person is entitled to deduct entirely VAT)

Intra-Community acquisition: taxable value for taxable person art. 10

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• The taxable person is not authorised to « receive » excise goods in suspension of payment of foreign and Maltese excise duties

– In this case, the taxable value of the intra-Community acquisition will include foreign and Maltese excise duties

– From the moment foreign excise duties are refunded by the vendor, the taxable value of the intra-Community acquisition must be adjusted by deducting foreign excise duties refunded

– VAT paid on the value of these excise duties at the origin must be refunded to the taxable person (no adjustment is made if the taxable person is entitled to deduct entirely VAT)

Art. 18 VAT ActArt. 18 VAT Act Item 10 (1)(3)(4) Seventh ScheduleItem 10 (1)(3)(4) Seventh Schedule

Intra-Community acquisition: taxable value for taxable person art. 10

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QUESTIONS ?

ic special cases distance sales new means of transport excise goods

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