Intra-Community Acquisition of Goods
0
0
European Union have 27 member states (earlier it was 28 member state, but UK left EU with effective from 1st January 2021 after the end of transition period) and it gives freedom to people and businesses to trade or travel from one member state to another without any custom borders or visa requirements.
For businesses, it can trade and supply goods from one member state to another without any import formalities. Any business which is established in one member state can buy goods from another business established in another member state. Such acquisition would an Intra-community acquisition of goods.
It means if one business established in one member state like France buys goods from another business established in another member state like Germany, then for French Business, such acquisition would be Intra-community acquisition of goods.
For Intra-community acquisition, business should be VAT registered in member state where transportation of goods end. It doesn’t matter whether transportation is completed by supplier, buyer or any third person on behalf of buyer. Also, purchase should be made from the supplier who is VAT registered in another member state which is other than member where transportation ends.
The person who acquire such goods is required to account for VAT under reverse charge mechanism and VAT rate should used for the member state where such acquirer of goods is established. In our above example, French business is acquiring goods from supplier located in Germany, therefore, French customer is required to account for French VAT @ standard VAT rate under reverse charge mechanism.
In Intra-community acquisition of goods, Place of supply shall be place where transportation of goods ends and further acquirer would require to obtain valid invoice from the supplier and it should have business name, address and its valid VAT number of both seller and purchaser on the invoice.
We hope you might have some insight about the Intra-community acquisition of goods, however, in case you have any question or any feedback, feel free to write us.
Team Taxation Insight
