Posted by: IS | August 13, 2009

VIES – VAT Information Exchange System.


The EU established the VAT Information Exchange System (VIES) to deter abuse of the zero-rate sales tax provisions for goods traded in the EU by EU member traders. Each Member State must collect and store specific information about traders and their trades.

Basically, if an Irish based trader sells goods to another Irish based trader, then the sales invoice includes VAT (currently say 21.5%). If the same trader sells to a VAT Registered trader in another EU member State, then Zero VAT can be charged. In order to stop traders being fraudulent (ie selling goods to a ‘consumer’ in another EU country, and not charging VAT)…VIES was introduced. There are no thresholds like with Intrastat. Every single sale you make to another VAT registered trader in another EU Member State, where you charge Zero Rate VAT , must be included on your VIES return. Returns are due monthly or quarterly – yearly in exceptional cases. There are specific steps you must take (ie including their VAT numbr on invoices)…if you are intending to charge zero rate VAT, so check with your home tax authorities for details.

The onus is on the seller to ensure that the buyer is VAT registered. Receiving confirmation of their VAT registration number usually suffices. If they are not VAT registered, then the prevailing sales tax rate of the home country is charged, and the transaction is irrelevant from a VIES reporting point of view.

In GP, the most common solution to automating the production of data for your VIES return is to set up EU specific Sales Tax Schedules…for example: SALES-EU-ZERO…this distinguishes this transaction from another transaction for zero VAT within the home country or legitimte Zero rated goods sold to consumers. The standard VAT reports then can be used to analyse your transactions by Tax Schedule, thus getting the data required for the VIES return.

Remember this only applies to export sales, so ignore purchases…if you import goods from another VAT registered trader, in another member state, they will charge you Zero Rate Sales Tax. They will return this data to VIES…not you! Nil declarations must be made where appropriate.

In the EU, VAT registration numbers are somewhat standardised and start with the Member State prefix as follows:

Austria – AT, Belgium – BE, Bulgaria – BG, Cyprus – CY, Czech Republic – CZ, Denmark – DK, Estonia – EE, Finland – FI, France – FR, Germany – DE, Greece – EL, Hungary – HU, Ireland – IE, Italy – IT, Latvia – LV, Lithuania – LT, Luxembourg – LU, Malta – MT, Netherlands – NL, Ploand – PO, Portugal – PT, Romania – RO, Slovakia – SK, Slovenia – SI, Spain – ES, Sweden – SE, United Kingdom – GB.

Ian Stewart
Supporting US Corporations with a European presence.
Local knowledge, local timelines, local GP talent.
Genesys Financial Systems (Ireland)
Microsoft Gold Certified Partner
http://www.genesys.iehttps://dynamicsgp.wordpress.com/


Responses

  1. Dear Sir,

    I am a free lancer consultant and i have a customer (company) registered in X country (EU member state). The customer is not registered in VIES but he ensures me that this is only a procedural problem and he sends me his VAT-number and all details in official paper from his tax administration. Is clear for me that the VAT is valid (it exists) and the company is legal but they are not registered to VIES. So, i issue for them a zero-VAT invoice.

    What we do in this case? What is the UK approach on this? Obviously, both of us (free lancer and company in the other MS) we have VAT number but the company missed to register it self in VIES by mistake (they will do it now they told me). So, the problem is procedural and not that i issued an invoice to a non-existing company.

    • Hi, Not sure I understand your problem. As far as I can tell (I’m not a TAX advisor!!) the fact that the customer is not registered for VIES is no concern of yours. This is an obligation for them and shouldn’t stop you trading with them. Its up to them to report their intra EC sales of goods and services on their VIES return. If you are registered for VAT, then you must report your sales on your VIES return – but again, the fact that they eithre make a VIES return or not, is not your problem. You should seek professional advice about this though. This blog is all things Dynamics GP, and not an expert blog on European tax legislation.

  2. Hi, thanks a lot for your opinion. I agree that is the customer’s obligation but the issue is, as far as i know, that the law obliges me to check first in VIES if he is registered – a thing that i didnt do. Thus, i am worrying whether i have consequences.

    • I believe all you need to verify is that they are registered for VAT in their country – and this is just so you can handle VAT properly. It has nothing to do with VIES – VIES is a reporting requirement that is the responsibility of the reporting entity – not its trading partners. It is their responsibility to submit VIES returns, and I believe not a requirement that they have done so before you can trade with them. You have already verified that they are VAT registered and so have charged them zero VAT. If this is a large monetary value, you might wat to get professional advice?

      • I agree, after all this is the point. Thank you a lot!


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