Reporting 'VAT reverse charged’ mandatory with simplified ABC-scheme

On September 2, 2023, the State Secretary of Finance updated the Decree on administrative, invoicing and other obligations (the Decree). The reason for the State Secretary to update the decision concerns the judgment of the Court of Justice (ECJ) in the Luxury Trust Automobil GmbH case, in which the ECJ has ruled that party B is obliged to apply the simplified ABC scheme to the the invoice that is issued to party C must state the statement 'VAT shifted'. We have previously shared a news item about the Luxury Trust case. In the decision, approval for the statement 'intra-Community supply' on the invoice - which is issued by party B to party C - has been withdrawn. As a result, party B is obliged to state on the invoice issued to party C that the VAT has been transferred to party C.

What is the impact for your organisation?

With the amendment of this Decree, intermediaries who apply the simplified ABC scheme for VAT have received confirmation that the approval given by the Dutch State Secretary of Finance whereby the statement 'intra-Community supply' on the invoice issued by party B to party C no longer applies.

Without a statement that the VAT has been reverse-charged to party C, this means that the simplified ABC scheme will not be applied, which means that party B must register in the country where the goods arrive. This may result in having to register abroad for VAT purposes. We recommend mapping out whether your ERP system and invoice flows are set up correctly to prevent - among other things - unnecessary registrations.

Background

Until 2 September 2032 the Dutch State Secretary of Finance approved in its decree that, when applying the simplified ABC-scheme, the statement 'intra-Community delivery' was sufficient on the invoice issued by party B to party C. The ECJ ruled in the Luxury Trust case that in the case of a simplified ABC transaction, the final customer (party C) is not validly designated as the person liable for payment of VAT if the invoice drawn up by party B does not contain the statement ' VAT shifted'. Only on the basis of that statement can the customer of the service know that he is the one who owes the VAT.

Change in decision

As a result of Luxury Trust, the Secretary of State has withdrawn approval to include the statement 'intra-Community delivery' on the invoice issued by party B to party C. Although we are of the opinion that since the publication of the Luxury Trust judgment, taxpayers could no longer derive confidence from the Decree, the withdrawal of the Decree on this point by the State Secretary definitively shows that in practice it is only possible for Party B to apply the simplified ABC scheme if it is stated on the invoice that the VAT has been reverse charged to party C.