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EXPLANATORY NOTE
This Order, which comes into force on 1st January 2020, inserts a new Part 4 into the Value Added Tax (Place of Supply of Goods) Order 2004 (“the Place of Supply Order”) to make changes required by Council Directive (EU) 2018/1910 of 4 December 2018 (OJ No 311, 07.12.2018, p. 3-7) (“Directive 2018/1910”) in relation to the place of supply of certain supplies of goods.
Council Directive 2006/112/EC (OJ No 347, 11.12.06, p. 1) (“the Principal VAT Directive”) establishes a common system of value added tax applicable throughout the European Union.
Directive 2018/1910 made a number of ‘quick fix’ amendments to the Principal VAT Directive to improve the Union VAT rules for cross-border transactions. These included the insertion of a new Article 36a which makes provision in relation to chain transactions. Member States are required to transpose the amendments with effect from 1st January 2020.
This Order amends the Place of Supply Order by inserting a new Part 4 to make the necessary provision in respect of chain transactions which involve goods being dispatched directly from a supplier in the first member State in the chain to the last customer in the final member State in the chain.
It identifies the transaction in the chain that is to be treated as the intra-Community supply (the supply that involves the removal of the goods from one member State to another member State) and specifies how paragraph (2) of section 7 of the Value Added Tax Act 1994 (c. 23) (place of supply of goods) is to apply to all supplies of the goods that are made after that supply.
A Tax Information and Impact Note covering this instrument will be published on the HMRC website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.
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