Deemed IC supplies and acquisitions Non-transfers Valuation of

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Deemed IC supplies and acquisitions Non-transfers Valuation of Powered By Docstoc
					    Deemed IC supplies and
          acquisitions
         Non-transfers


Valuation of and work on movable
       tangible property
    Deemed IC supplies

2
Transfer


     The transfer by a taxable person of goods forming part of his
     economic activity to another Member State shall be treated as
     an intra-Community supply of goods for consideration
     Goods shall be deemed to be transferred by a taxable person to
     another MS, if they are transported by or on his behalf from
     Malta to another MS for the purposes of his economic activity…

       Art. 6 VAT Act         Item 17 Second Schedule



 3
Transfer: characteristics

• Move from Malta to another Member State (without transaction)
• By a taxable person (article 10, article 11, person only doing
  exempt without credit operations)
• Of goods forming part of his economic activity
     =
• Intra-Community supply
• For consideration

  All the rules related to intra-Community supplies are applicable
 mutatis mutandis including compliance (recapitulative statement)
 4
Transfer: example

MALTA                                          Other EU MS
                   A = taxable person                                 Premises of A

Move (transport) of goods from the                   A has to register for VAT purposes
stock of A in Malta to the stock of A in                 in the other Member State
another MS (without underlying
transaction
• (Deemed intra-Community) supply by a taxable person? YES
• Supply in the scope of VAT (e.g. for consideration)? YES
• Place of supply? In Malta (where transport begins)
• Is there an exemption? Yes (if 2 conditions are fulfilled: (1) transport and (2) VAT
number of the acquirer (A’) in the other MS)
• Person liable to pay VAT? N/A
    5
    Non-transfers

6
    Non-transfer

    Goods shall not be deemed to be transferred if they are transported
    from Malta to another MS for the purposes of one of the following
    transactions: (1)
•   A supply with installation or assembly in the other MS
•   A supply of these goods, which constitutes a distance sale taxable in the other MS
•   A supply of these goods by or on behalf of the taxable person on board ships,
    aircraft and trains that takes place in the other MS
•   A supply of these goods that is treated as an intra-Community supply exempt from
    VAT, as a supply exempt from VAT for export… (see items 1 to 9 of the Fifth
    Schedule, Part One)

            Art.6 VAT Act and item 17(2)(a,b,c and d) Second Schedule
      7
                              No special compliance
    Non-transfer
… : (2)
•   the supply of services to the taxable person involving work on those goods
    physically carried out in the other MS provided the said goods are returned to that
    person in Malta on the completion of the said work
•   the temporary use of those goods in the other MS for the purpose of the supply of
    services by the taxable person if that person is established in Malta

•   the temporary use of those goods in the other MS for a period not exceeding
    twenty-four months if the importation of those goods into that State for temporary
    use would qualify for a full exemption from import duties

             Art.6 VAT Act and item 17(2)(e,f and g) Second Schedule
             Special compliance (register of non-transfers = Item 1(i)
      8                         Eleventh Schedule)
Non-transfer: temporary use with full
exemption from import duties
•   Examples: temporary use of those goods in the other MS for a period not
    exceeding twenty-four months if the importation of those goods into that State
    for temporary use would qualify for a full exemption from import duties
    –   Goods sent in the frame of a trade fair, exhibition…
    –   Goods on trial (all goods): art. 16, §1er, b, Regulation EEC 3599/92 of
        21/12/92
    –   Goods on sight: precious stones, carpets and jewelleries, manufactured
        fur-skins (Art. 16, §1er, d, Regulation EEC 3599/92 of 21/12/92)
    –   Forms of transport



    9
Non-transfer becomes a transfer

 If a move of goods satisfies the conditions to be a non-transfer
 and if afterwards these conditions are no longer met, this non-
 transfer becomes a transfer with all the consequences

      Art. 6 VAT Act         Item 17(3) Second Schedule


 Simplification measures are possible (regulations)

      Art. 6 VAT Act
                             Item 17(4) Second Schedule
 10
 Non-transfer: example

 MALTA                                      Other EU MS
                  A = taxable person                                 Export by A

Move (transport) of goods from Malta to
another MS in order to export these goods
(in the framework of a transaction)

     • (Deemed intra-Community) supply by a taxable person? NO
      BUT
     • Supply by a taxable person? YES
     • Supply in the scope of VAT? YES
     • Place of supply? In Malta (where transport begins)
     • Is there an exemption? YES (if goods are transported outside the EU)
     • Person liable to pay VAT? N/A
     11
Non-transfer: example

MALTA                                      Other EU MS
               A = taxable person                                      B

  IC supply by A to B

  • (Deemed intra-Community) supply by a taxable person? NO
  BUT
  • Supply by a taxable person? YES
  • Supply in the scope of VAT? YES
  • Place of supply? In Malta (where transport begins)
  • Is there an exemption? YES (if 2 conditions are fulfilled: (1) transport and (2)
  VAT number of the acquirer (B) in the other MS)
  • Person liable to pay VAT? N/A
 12
Non-transfer: example

MALTA                              Other EU MS
              A = taxable person                              B

  Distance sale by A to B

  • (Deemed intra-Community) supply by a taxable person? NO
  BUT
  • Supply by a taxable person? YES
  • Supply in the scope of VAT? YES
  • Place of supply? In the other MS (where transport ends)
  • Is there an exemption? N/A
  • Person liable to pay VAT? N/A

 13
Non-transfer: example

MALTA                                   Other EU MS
               A = taxable person                                   B

                                           Supply with installation by A

  • (Deemed intra-Community) supply by a taxable person? NO
  BUT
  • Supply by a taxable person? YES
  • Supply in the scope of VAT? YES
  • Place of supply? In the other MS (where goods are installed or assembled)
  • Is there an exemption? N/A
  • Person liable to pay VAT? N/A

 14
Non-transfer: example

MALTA                                        Other EU MS
                  A = taxable person                                     B

Supply from A to B on board ships:
place of departure in the other MS

        • (Deemed intra-Community) supply by a taxable person? NO
        BUT
        • Supply by a taxable person? YES
        • Supply in the scope of VAT? YES
        • Place of supply? In the other MS (point of departure of transport of
        passengers)
        • Is there an exemption? N/A
   15   • Person liable to pay VAT? N/A
Non-transfer: example

MALTA                                      Other EU MS
                 A = taxable person                            B : processing



Move of goods from Malta to the other
MS in order to be processed
After completion of the work, goods
are going back to Malta

        • (Deemed intra-Community) supply by a taxable person? NO
        • Compliance: register of non-transfers (movements of goods)
        • For service from B to A: see hereafter
   16
(Non)-transfer: example

MALTA                                          Other EU MS
                  A = taxable person                                 B : processing

Move of goods from Malta to the other
MS in order to be processed                               A has to register for VAT
After completion of the work, goods                       purposes in the other MS
are not going back to Malta

        • (Deemed intra-Community) supply by a taxable person? YES
        • Supply in the scope of VAT (e.g. for consideration)? YES
        • Place of supply? In Malta (where transport begins)
        • Is there an exemption? Yes (if 2 conditions are fulfilled: (1) transport
        and (2) VAT number of the acquirer (A’) in the other MS)
        • Person liable to pay VAT? N/A
   17
Non-transfer: example

MALTA                                       Other EU MS
                  A = taxable person                            A : service

Move of goods by A from Malta to the
other MS in order to be used in the
framework of a service made in the
other MS


        • (Deemed intra-Community) supply by a taxable person? NO even if A
        has to register for VAT purposes in the other MS for the service rendered
        • Compliance: register of non-transfers (movements of goods)


   18
Non-transfer: example

MALTA                                       Other EU MS
                  A = taxable person                        B : goods on trial



Move of goods by A from Malta to B in
the other MS on trial
After trial (not satisfactory), goods are
going back to Malta

     • (Deemed intra-Community) supply by a taxable person? NO
     • Compliance: register of non-transfers (movements of goods)


   19
Non-transfer followed by a transfer:
example
MALTA                                     Other EU MS
               A = taxable person                             B : goods on trial




  Move of goods by A from Malta to B in the other MS on trial. After trial,
  goods are acquired by B




 20
Non-transfer followed by a transfer:
example (continued) – No simplification

Operation 1 (no simplification in the other MS : transfer)

•   (Deemed intra-Community) supply in Malta by a taxable person? YES (from
    the moment goods are acquired by B). VAT registration of A in the other MS
•   Supply in the scope of VAT (e.g. for consideration)? YES
•   Place of supply? In Malta (where transport begins)
•   Is there an exemption? Yes (if 2 conditions are fulfilled: (1) transport and (2)
    VAT number of the acquirer (A’) in the other MS)
•   Person liable to pay Maltese VAT? N/A




    21
Non-transfer followed by a transfer:
example (continued) – No simplification

Operation 2 (no simplification in the other MS : supply of goods to B)

•   Supply of goods by a taxable person? YES
•   Supply in the scope of VAT? YES
•   Place of supply? In the other MS (where goods are at the time they are put at
    the disposal of B)
•   Is there an exemption? N/A
•   Person liable to pay VAT? N/A




    22
Non-transfer (followed by a transfer):
example (continued) - Simplification
    Operation 1 and 2 (simplification in the other MS : movement of goods and
    supply of goods to B)

•   (Deemed intra-Community) supply in Malta by a taxable person? NO (from the
    moment goods are acquired by B)


•   Supply of goods by a taxable person? YES
•   Supply in the scope of VAT? YES (IC supply from Malta)
•   Place of supply? In Malta (where transport of the goods to B on trial began)
•   Is there an exemption? Yes (if 2 conditions are fulfilled: (1) transport and (2)
    VAT number of the acquirer B in the other MS)
•   Person liable to pay VAT? N/A

    23
Deemed IC acquisitions

24
Deemed intra-Community acquisition:
definition

  The use in Malta by a taxable person for the purpose of his
  economic activity of goods transported by him or on his behalf
  from another Member State within the territory of which those
  goods were produced, extracted, purchased, acquired or
  imported by him for the purpose of his economic activity, where
  the transport of those goods would, if made from Malta to
  another Member State, be treated as a transfer of goods to
  another Member State, shall be treated as an intra-
  Community acquisition for consideration

      Art. 6 VAT Act    Item 18(1)(b) and 18(2) Second Schedule

 25
Deemed intra-Community acquisition:
characteristics
• Move from another Member State to Malta (without transaction)
• By a taxable person
• Of goods forming part of his economic activity
  =
• Intra-Community acquisition
• For consideration

All the rules related to intra-Community acquisitions are applicable
mutatis mutandis including compliance (recapitulative statement in
                   the Member State of departure)
 26
Deemed intra-Community acquisition:
example
Other EU MS                                      Malta
                  A = taxable person                              Premises of A

Move (transport) of goods from the                        A has to register for VAT
stock of A in the other MS to the stock of                   purposes in Malta
A in Malta (without underlying
transaction

• (Deemed intra-Community) acquisition by a taxable person? YES
• Deemed ICA in the scope of VAT (e.g. for consideration)? YES
• Place of ICA? In Malta (where transport ends)
• Is there an exemption? NO (assumption)
• Person liable to pay VAT? A (must register for VAT purposes in Malta)
    27
       No deemed
     IC acquisitions

28
    No deemed intra-Community
    acquisition
    Goods shall not be deemed to be intra-Community acquired for
    consideration if they are transported from another MS to Malta for
    the purposes of one of the following transactions: (1)
•   A supply with installation or assembly in Malta
•   A supply of these goods, which constitutes a distance sale taxable in Malta
•   A supply of these goods by or on behalf of the taxable person on board ships,
    aircraft that takes place in Malta
•   A supply of these goods that is treated as an intra-Community supply exempt from
    VAT, as a supply exempt from VAT for export…


           Art. 6 VAT Act and item 17(2)(a, b, c and d) Second Schedule
      29
                               No special compliance
    No deemed intra-Community
    acquisition
… : (2)
•   the supply of services to the taxable person involving work on those goods
    physically carried out in Malta provided the said goods are returned to that person
    in the Member State of departure on the completion of the said work
•   the temporary use of those goods in Malta for the purpose of the supply of services
    by the taxable person if that person is established in the other Member State

•   the temporary use of those goods in Malta for a period not exceeding twenty-four
    months if the importation of those goods into Malta for temporary use would qualify
    for a full exemption from import duties

            Art. 6 VAT Act and item 17(2)(e, f and g) Second Schedule
            Special compliance (register of materials received for first
      30             bullet point : Item 1(j) Eleventh Schedule)
The no deemed ICA becomes an ICA

 If a move of goods to Malta satisfies the conditions to be a non-
 transfer from Malta (and therefore a no deemed ICA in Malta )
 and if afterwards these conditions are not longer met, this non
 transfer (no deemed ICA) becomes a transfer (and
 consequently an ICA) with all the consequences

      Art. 6 VAT Act      Items 17(3) and 18(2) Second Schedule

 Simplification measures are possible (regulations)

      Art. 6 VAT Act
                             Item 17(4) Second Schedule
 31
  No deemed intra-Community
  acquisition: example
Other EU MS                                      Malta
                    A = taxable person                                 Export by A

Move (transport) of goods from another
MS to Malta in order to export these
goods (in the framework of a transaction)

          • (Deemed) ICA in Malta by a taxable person? NO
          BUT
          • Supply by a taxable person? YES
          • Supply in the scope of VAT? YES
          • Place of supply? In the other MS (where transport begins)
          • Is there an exemption? N/A (Yes in the other MS if goods are transported
          outside the EU)
     32
          • Person liable to pay VAT? N/A
No deemed intra-Community
acquisition: example
Other EU MS                               Malta
               A = taxable person                    B

   IC supply by A to B

   • (Deemed) ICA in Malta by a taxable person? NO
   BUT
   • ICA in Malta by a taxable person? YES (B)
   • ICA in the scope of VAT? YES
   • Place of ICA? In Malta (where transport ends)
   • Is there an exemption? NO (assumption)
   • Person liable to pay VAT? B

  33
No deemed intra-Community
acquisition: example
Other EU MS                                    Malta
                 A = taxable person                                  B

       Distance sale by A to B


  • (Deemed) ICA in Malta by a taxable person? NO
  BUT
  • Supply by a taxable person? YES (A)
  • Supply in the scope of VAT? YES
  • Place of supply? In Malta (where transport ends)
  • Is there an exemption? NO (assumption)
  • Person liable to pay VAT? A (must register for VAT purposes in Malta)

  34
No deemed intra-Community
acquisition: example
Other EU MS                                      Malta
                A = taxable person                                       B

                                                Supply with installation by A

   • (Deemed) ICA in Malta by a taxable person? NO
   BUT
   • Supply by a taxable person? YES (A)
   • Supply in the scope of VAT? YES
   • Place of supply? In Malta (where goods are installed or assembled)
   • Is there an exemption? NO (assumption)
   • Person liable to pay VAT? Either B if he is registered under article 10 or A if B
   is not registered under article 10
  35
No deemed intra-Community
acquisition: example
Other EU MS                                        Malta
                   A = taxable person                            Passenger


                                               Supply by A on board ships: place
                                               of departure in Malta

       • (Deemed) ICA in Malta by a taxable person? NO
       BUT
       • Supply by a taxable person? YES (A)
       • Supply in the scope of VAT? YES
       • Place of supply? In Malta (point of departure of transport of passengers)
       • Is there an exemption? YES or NO
       • Person liable to pay VAT? A (if any)
  36
No deemed intra-Community
acquisition: example
Other EU MS                                       Malta
                   A = taxable person                            B : processing



Move of goods from the other MS to
Malta in order to be processed
After completion of the work, goods
are going back to the other MS

        • (Deemed) ICA in Malta by a taxable person? NO
        • Compliance: register of materials received (movements of goods)
        • For service from B to A: see hereafter
   37
(No) deemed intra-Community
acquisition: example
Other EU MS                                        Malta
                    A = taxable person                             B : processing

Move of goods from the other MS to
Malta in order to be processed                           A has to register for VAT
After completion of the work, goods                         purposes in Malta
are not going back to the other MS


        • (Deemed) ICA in Malta by a taxable person? YES
        • ICA in the scope of VAT (e.g. for consideration)? YES
        • Place of ICA? In Malta (where transport ends)
        • Is there an exemption? NO
        • Person liable to pay VAT? A (must register for VAT purposes in Malta)
   38
No deemed intra-Community
acquisition: example
Other EU MS                                    Malta
                A = taxable person                           A : service


Move of goods by A from the other MS
to Malta in order to be used in the
framework of a service made in Malta




    • (Deemed) ICA in Malta by a taxable person? NO (even if A has to register
    for VAT purposes in Malta for the service rendered)

   39
No deemed intra-Community
acquisition: example
Other EU MS                                   Malta
                  A = taxable person                      B : goods on trial



Move of goods by A from the other MS
to B in Malta on trial
After trial (not satisfactory), goods are
going back to the other MS

        • (Deemed) ICA in Malta by a taxable person? NO



   40
No deemed ICA followed by a deemed
ICA: example
Other EU MS                                  Malta
                   A = taxable person                B : goods on trial


Move of goods by A from the other MS
to B in Malta on trial. After trial, goods
are acquired by B (assumption that B is
registered under article 10 and that A is
not established nor registered under
article 10)



    41
No deemed ICA followed by a deemed
ICA : example (continued) – No
simplification
 Operation 1 (no simplification in Malta : ICA)

 •        (Deemed) ICA in Malta by a taxable person? YES (from the moment goods
          are acquired by B). VAT registration of A in Malta
 •        ICA in the scope of VAT (e.g. for consideration)? YES
 •        Place of ICA? In Malta (where transport ends)
 •        Is there an exemption? NO (assumption)
 •        Person liable to pay Maltese VAT? A (must register for VAT purposes in
          Malta)




     42
No deemed ICA followed by a deemed
ICA : example (continued) – No
simplification
 Operation 2 (no simplification in Malta : supply of goods to B)

 •        Supply of goods by a taxable person? YES
 •        Supply in the scope of VAT? YES
 •        Place of supply? In Malta (where goods are at the time they are put at the
          disposal of B)
 •        Is there an exemption? NO (assumption)
 •        Person liable to pay VAT? B




     43
No deemed ICA (followed by a deemed
ICA): example (continued) -
Simplification
    Operation 1 and 2 (simplification in the other MS : movement of goods and
    supply of goods to B)

•   (Deemed) ICA in Malta by a taxable person? NO (from the moment goods
    are acquired by B)

AND

•   ICA in Malta by a taxable person? YES (B)
•   ICA in the scope of VAT? YES
•   Place of ICA? In Malta (where transport of the goods to B on trial ended)
•   Is there an exemption? NO (assumption)
•   Person liable to pay VAT? B

    44
      Valuation of and
     work on movable
     tangible property
45
Valuation of and work on movable
tangible property

DEFINITION
• Work on movable tangible property: all human and
  mechanical operations made to a movable tangible good. It
  concerns services consisting in a treatment to or a
  processing of movable tangible property
• Valuation of movable tangible property: every act consisting
  in assessing the characteristics or appraising a movable
  tangible good



46
Valuation of and work on movable
tangible property – Question 3

PLACE OF SUPPLY
• Principle: where the services are physically carried out



                        Art. 7 VAT Act
                  Item 9 (1) Third Schedule




47
Valuation of and work on movable
tangible property – Question 3

PLACE OF SUPPLY
• Exception: in the Member State that granted the VAT
  identification number for the purpose of those services, if
  the following conditions are met:
     – The goods are transported out of the Member State where the services are
       physically carried out after having been processed; AND

     – The services are provided to customers that communicate a VAT
       identification number (with prefix) of another Member State than the
       Member state where the services are physically carried out


48
                          Item 9 (2) Third Schedule
Valuation of and work on movable
tangible property – Question 4

EXEMPTION
• Work on movable goods acquired or imported for the
  purpose of undergoing such work within Malta, and
  transported outside the Community by or on behalf of either
  the supplier of the services or the customer (if the latter is
  not established within Malta) (Item 1 (3), Part One, Fifth
  Schedule)
                       Sixth Directive?

• International goods traffic: work on movable goods to be
  placed or placed under a customs duty suspension regime
  (Item 2 (2), Part One, Fifth Schedule)
49
Valuation of and work on movable
tangible property – Question 4

EXEMPTION
• Sea vessels: modification and maintenance (Item 6 (3), Part
  One, Fifth Schedule) and some other services for the direct
  needs of these vessels or their cargo (Item 6 (5), Part one,
  Fifth Schedule)
• Aircraft: modification and maintenance (Item 7 (3), Part One,
  Fifth Schedule) and some other services for the direct
  needs of these aircraft or their cargo (Item 7 (5), Part One,
  Fifth Schedule)


50
Valuation of and work on movable
tangible property – Question 5

PERSON LIABLE TO PAY MALTESE VAT
• Principle: the supplier
                                    Art. 20 (1) (a) VAT Act

• Exception: the customer under the following conditions:
     – The supplier is not established in Malta AND not registered under art. 10
       VAT Act; and

     – The customer is established in Malta AND registered under art. 10 VAT Act

            Art. 20 (2) (c) VAT Act                         Sixth Directive?
51
Record of received goods


• When a supplier receives goods in Malta coming from
  another EU Member State to carry out a valuation of or
  works on tangible movable property, he has to keep a
  special record


      Art. 48 VAT Act and item 1 (j) Eleventh Schedule




52
Record of received goods

• This record has to contain the following elements:
     – A sequential number
     – Date of receipt of the goods
     – Name, address and VAT number of the customer (if any)
     – Quantity and description of the goods received
     – Date of dispatch to the customer of the processed goods

     – Quantity and description of the dispatched goods
     – Quantity and description of the goods that are not sent back to the client
     – Date and reference to the documents issued related to the services
53     supplied
Record of sent goods (Register of
non-transfers)

• When the customer sends goods from Malta to another EU
  Member State to have a valuation of or works on tangible
  movable property carried out, he has to keep a special
  record.


      Art. 48 VAT Act and item 1 (i) Eleventh Schedule




54
Record of sent goods (Register of
non-transfers)

• This record has to contain the following elements:
     – a description of the goods;
     – their quantity;
     – their value;
     – their movements;
     – a description and the quantity of the goods not transported back;
       and
     – the date and the reference to the documents issued, if any, relating
       to these operations
55
     Questions?

56