SUPPLY OF GOODS USING THE METHODOLOGY. 2 FIRST QUESTION

SUPPLY OF GOODS

USING THE METHODOLOGY

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FIRST QUESTION

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First question: a taxable person acting as such

• Supply of goods made by a taxable person

– Taxable person means a person who carries on an economic activity, whatever the purpose or the result of that activity

Art. 5(1)VAT ActArt. 5(1)VAT Act

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– Economic activity means an activity carried on by a person, other than an employee acting as such, and consisting of any one or more of the following:

– (a) any trade or business;

– (b) any profession or vocation and the provision of any personal services;

– (c) the exploitation of tangible or intangible property for the purpose of obtaining income therefrom on a continuing basis;

– (d) the provision by a club, association or organisation (for a subscription or other consideration) of the facilities or advantages available to its members;

– (e) the admission, for consideration, of persons to any premises.

Art. 5(2) VAT ActArt. 5(2) VAT Act

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– The activities of a public authority acting in the exercise of the functions assigned to it by law shall not be deemed to be an economic activity except as and to the extent provided in the First Schedule and except where such treatment as non-taxable persons would lead to significant distortions in competition


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– A person who does not carry on an economic activity within the meaning of the foregoing provisions but who, from time to time, makes an intra-community supply of new means of transport shall, for the purpose of any such supply, be treated as a taxable person


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SECOND QUESTION

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Second question: supply in the scope of VAT

• A supply of goods is the transfer of the right to dispose of tangible property as owner

– Legal ownership but also economic ownership

• Made for consideration

• By a taxable person acting as such

Art. 6 VAT ActArt. 6 VAT Act Item 1(a) Second ScheduleItem 1(a) Second Schedule

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THIRD QUESTION

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Third question: place of supply Transport versus no transport

• Goods ARE NOT TRANSPORTED : place is where the goods are at the time when they are placed at the disposal of the person acquiring those goods

• Goods ARE TRANSPORTED : place is where the goods are at the time when the transport begins

Art. 7 VAT ActArt. 7 VAT ActItem 1(a) Third ScheduleItem 1(a) Third Schedule

Art. 7 VAT ActArt. 7 VAT Act Item 1(b) Third ScheduleItem 1(b) Third Schedule

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A B C

MALTAMALTA

SaleTransport 1

SaleTransport 2

Both sales are taking place in Malta: where transport begins

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A B C

MALTAMALTA

Sale Sale

Sale A - B = sale with transport : place where transport beginsSale B - C = sale without transport : place where the goods are at the time they are placed at the disposal of C

One transport : in the relation A – B (contract)

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A B C

MALTAMALTA

Sale Sale

Sale B - C = sale with transport : place where transport beginsSale A - B = sale without transport : place where the goods are at the time they are placed at the disposal of B

One transport : in the relation B - C (contract)

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A B C

MALTAMALTA

SaleTransport 1

SaleTransport 2

Both sales are taking place in Malta: where transport begins

Other countryOther country

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A B C

MALTAMALTA

Sale Sale

Sale A - B = sale with transport : place where transport beginsSale B - C = sale without transport : place where the goods are at the time they are placed at the disposal of C

One transport : in the relation A – B (contract)


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A B C

MALTAMALTA

Sale Sale

Sale B - C = sale with transport : place where transport beginsSale A - B = sale without transport : place where the goods are at the time they are placed at the disposal of B

One transport : in the relation B - C (contract)


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Third question: place of supply Installation or assembly

• Goods ARE INSTALLED OR ASSEMBLED BY THE SUPPLIER OR ON BEHALF OF THE SUPPLIER : place is where the goods are installed or assembled

Art. 7 VAT ActArt. 7 VAT Act Item 2 Third ScheduleItem 2 Third Schedule

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CC

BB

AA

Third question: place of supply Installation or assembly

MALTA Other country

InvoiceInvoice

Installation by or for the account of A

Place of supplyA-B B-C

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Third question: place of supplyOn board ships or aircraft

A supply of goods on board ships, aircraft (or trains) during the part of a transport of passengers effected in the Community takes place at the point of departure of the transport of passengers


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Third question: place of supplyOn board ships and aircraft

Air Malta : flight Malta – Brussels (supply of perfumes, tobacco…)

Supply takes place in Malta

LuqaLuqaBrusselsBrussels

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Third question: place of supplyOn board ships and aircraft

Air Malta : flight Brussels - Malta (supply of perfumes, tobacco…)

Supply takes place in Belgium

BrusselsBrusselsLuqaLuqa

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Third question: place of supply Distance sales

Will be examined during the session distance sales


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Third question: place of supplySupply subsequent to an importation

Will be examined during the session importation

Art. 7 VAT ActArt. 7 VAT Act Item 1(c) Third ScheduleItem 1(c) Third Schedule

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FOURTH QUESTION

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Fourth question: exemptionsExemptions without credit

• Immovable property: no change

• Education: changes

– Supply of goods where the said supply is connected with and essential for the supply of educational services

• Supplies of goods in respect of which the supplier had not qualified for input tax credit: new

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Fourth question: exemptionsExemptions with credit

• Exports and services connected with exports: changes

– Supply of goods transported or dispatched outside the Community by or on behalf of the supplier

– Supply of goods transported or dispatched outside the Community by or on behalf of a purchaser not established in Malta with exceptions

– Work on movable tangible property acquired or imported for such work in Malta and transported outside the Community by the performer of the service or by the customer not established in Malta, or on their behalf (see also services)

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• International goods traffic: new

– The supply of goods intended to be placed or while they are placed under a customs duty suspension regime

– The supply of services other than those exempted by item 6 (read 5: brokers and intermediaries), consisting in work on movable goods that are intended to be placed or while they are placed under a customs duty suspension regime (see services)

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Fourth question: exemptionsExemptions with credit• Intra-Community supplies: new (see hereafter)

• International transport and ancillary services: new (see services)

– The international transport of persons; the transport of luggage and motor vehicles accompanying passengers and the supply of services related to the international transport of passengers

– The transport of goods from a third territory and the supply of services ancillary thereto, where the value of these transport and ancillary services are included in the taxable value of the importation of those goods

– The transport of goods which is directly connected with the export of those goods outside the Community

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• Brokers and other intermediaries: new (see sessions services)

• Sea vessels and aircraft: new wording

• Internal transport: no change (see services)

• Food: no change

• Pharmaceutical products: no change

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• Gold: new

– The supply of gold to the Central Bank of Malta.

– The supply of investment gold, including investment gold represented by certificates for allocated or unallocated gold or traded on gold accounts and including, in particular, gold loans and swaps, involving a right of ownership or claim in respect of investment gold, as well as transactions concerning investment gold involving futures and forward contracts leading to a transfer of right of ownership or claim in respect of investment gold.

– The supply of services of agents who act in the name and for the account of another when they intervene in the supply of investment gold for their principal.

– The exemptions in paragraphs (2) and (3) shall be subject to the option for taxation in terms of Part Six of the Fourteenth Schedule

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FIFTH QUESTION

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Fifth question: person liable to pay VAT

• If supplier established in Malta = person who makes the supply

• If supplier not established in Malta and not registered under art.10 VAT Act = person established in Malta and registered under article 10 VAT Act to whom the supply is made

• Special regime for triangulation : will be examined during the session triangulation

Art. 20(1)(a) VAT ActArt. 20(1)(a) VAT Act

Art. 20(2)(c) VAT ActArt. 20(2)(c) VAT Act

Art. 20(2)(a) VAT Act Art. 20(2)(a) VAT Act

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Fifth question: person liable to pay VAT

• Jointly and severally liable: the person who mentions the tax on an invoice or a document

• Representative


Art. 20(4) and 66 VAT ActArt. 20(4) and 66 VAT Act

INTRA-COMMUNITY SUPPLY OF GOODS

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Definition

• No legal definition in the Sixth Directive

• Concept

• Supply of goods THAT ARE TRANSPORTED by or on behalf of the supplier or the person to whom the supply is made from a Member State to another Member State

Part 1, Preliminary, Interpretation, 2(1), VAT ActPart 1, Preliminary, Interpretation, 2(1), VAT Act

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Characteristics: basic questions 1 and 2Operation in the scope of VAT

Supply of goods in the scope of VAT: YES if made by a taxable person acting as such

Art. 4, 5 and 6 VAT ActArt. 4, 5 and 6 VAT Act

Item 1(a) Second ScheduleItem 1(a) Second Schedule

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Characteristics: basic question 3Place of the supply

ALWAYS where transport begins

Art. 7 VAT ActArt. 7 VAT ActItem 1(b) Third ScheduleItem 1(b) Third Schedule

Part 1, Preliminary, Interpretation, 2(1), VAT ActPart 1, Preliminary, Interpretation, 2(1), VAT Act

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Characteristics: basic question 4Exemption

YES if:

• made to a person identified on the relative invoice by an EU VAT identification number excluding:

– a supply made by a person registered under article 11

– a supply that is subject to the special scheme of the profit margin

• Implicitly: goods are transported to another Member State

Art. 9(1)(a) VAT ActArt. 9(1)(a) VAT Act Item 3(1) Part One Fifth ScheduleItem 3(1) Part One Fifth Schedule

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Characteristics: basic question 5Person liable to pay VAT

If any VAT to pay: ALWAYS the person who makes the supply

A taxable person not established in Malta who, in terms of article 20 VAT Act, is liable for the payment of the tax on a supply shall apply to register under article 10 VAT Act (EVEN IF THERE IS AN EXEMPTION FOR IC SUPPLY : formalities such as the intra-Community sales listing)


Art. 20(1)(a) VAT ActArt. 20(1)(a) VAT Act

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Other questions : chargeable event and chargeability

The chargeable event takes place on the date when the goods are delivered

The tax becomes chargeable on the earlier of the following dates:

• The 15th day of the month following the date when the chargeable event takes place (compare with intra-Community acquisition)

• The date on which a tax invoice (for the whole price) is issued for that supply

Art. 8 VAT ActArt. 8 VAT Act Item 1(1) Fourth ScheduleItem 1(1) Fourth Schedule

Art. 8 VAT ActArt. 8 VAT Act Item 4 Fourth ScheduleItem 4 Fourth Schedule

INTRA-COMMUNITY SUPPLY OF GOODS

PRACTICAL CASES

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IC supply by a private individual

A Maltese private individual sells goods. Goods are transported to another Member State

– Is the supply made by a taxable person? NO

– Is the supply in the scope of VAT? N/A

– Where is the place of the supply? N/A

– Is there any exemption? N/A

– Who is liable to pay VAT? N/A

ATTENTION : SPECIAL REGIME FOR NEW MEANS OF TRANSPORT

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IC supply by a non-taxable legal person

A Maltese non-taxable legal person sells goods. Goods are transported to another Member State

– Supply made by a taxable person? NO (attention First Schedule)

– Supply in the scope of VAT? N/A

– Place of supply? N/A

– Is there any exemption? N/A

– Who is liable to pay VAT? N/AATTENTION : SPECIAL REGIME FOR NEW MEANS OF TRANSPORT

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IC supply by a taxable person doing only operations without creditA Maltese taxable person doing only operations without credit (even if registered under article 12 VAT Act) sells goods. Goods are transported to another Member State

– Supply made by a taxable person? YES

– Supply in the scope of VAT? YES

– Place of supply? In Malta (where transport begins)

– Is there any exemption? YES (but VAT Act, art.9(1)(a) and Fifth Schedule, Part Two, item 13)



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IC supply of goods subject to the profit margin scheme A Maltese taxable person registered under article 10 sells goods subject to the profit margin scheme. Goods are transported to another Member State




– Is there any exemption? NO (but Maltese VAT due on the profit margin)

– Who is liable to pay VAT? Maltese taxable person


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IC supply of goods by a taxable person registered under article 10 A Maltese taxable person registered under article 10 sells goods. Goods are transported to another Member State.




– Is there any exemption? YES (if 2 conditions are fulfilled: (1) transport and (2) VAT number of the acquirer in the other MS)


Compliance: recapitulative statement (Art.30(3) VAT Act)Compliance: recapitulative statement (Art.30(3) VAT Act)

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IC supply of goods exempt from VATCompliance

• Report of the operation in the proper tax records

• Report of the operation in the appropriate box of the VAT return

• Tax invoice on which is reported the EU VAT identification number of the recipient in another Member State (ISO Code)

• Report of the operation in the recapitulative statement to be submitted for each calendar quarter during which exempt intra-Community supplies take place

Art.30(3) VAT Act)Art.30(3) VAT Act)

Eleventh ScheduleEleventh Schedule

Art.27 VAT Act Art.27 VAT Act

Twelfth ScheduleTwelfth Schedule

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IC supply of goods exempt from VATProof of exemption

• Transport to another Member State

– Contracts

– Order forms

– Proof of payment

– Transport documentation (attention when the transport is made by the recipient or on his behalf)

– …

• Recipient is liable to pay VAT in the Member State of destination: communication of a valid VAT identification number of another Member State (preceded by the ISO Code for this Member State)

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IC supply of goods by a taxable person registered under article 10

A Maltese taxable person registered under article 10 sells goods. Goods are transported to another Member State.




– Is there any exemption? NO (if one of the 2 conditions are not fulfilled: (1) transport and (2) VAT number of the acquirer in the other MS)

– Who is liable to pay VAT? Maltese taxable person

DEEMED INTRA-COMMUNITY SUPPLY OF

GOODS (TRANSFER)

NON TRANSFER

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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 ActArt.6 VAT Act Item 17 Second ScheduleItem 17 Second Schedule

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

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Transfer: example

MALTA Other EU MS

A = taxable personA = taxable person Premises of APremises of A

Move (transport) of goods from the stock of A in Malta to the stock of A in another MS (without underlying transaction

A has to register for VAT purposes in the other Member State

A has to register for VAT purposes in the other Member State

• (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

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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 ScheduleNo special compliance Art.6 VAT Act and item 17(2)(a,b,c and d) Second ScheduleNo special compliance

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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 transfer = Item 1(i) Eleventh Schedule)

Art.6 VAT Act and item 17(2)(e,f and g) Second Schedule Special compliance (register of non transfer = Item 1(i) Eleventh Schedule)

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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

Simplification measures are possible (regulations)

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

Art. 6 VAT ActArt. 6 VAT ActItem 17(4) Second ScheduleItem 17(4) Second Schedule

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Non-transfer: example

MALTA Other EU MS

A = taxable personA = taxable person Export by AExport 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

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MALTA Other EU MS

A = taxable personA = taxable person BB

IC supply by A to B

• (Deemed intra-Community) supply by a taxable person? NOBUT• 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? NA

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MALTA Other EU MS


Distance sale by A to B

• (Deemed intra-Community) supply by a taxable person? NOBUT• 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

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MALTA Other EU MS


Supply with installation by A

• (Deemed intra-Community) supply by a taxable person? NOBUT• 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

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MALTA Other EU MS


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

• (Deemed intra-Community) supply by a taxable person? NOBUT• 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• Person liable to pay VAT? N/A

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MALTA Other EU MS

A = taxable personA = taxable person B : processingB : processing

Move of goods from Malta to the other MS in order to be processedAfter 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 session on services

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(Non)-transfer: example

MALTA Other EU MS

A = taxable personA = taxable person B : processingB : processing

Move of goods from Malta to the other MS in order to be processedAfter completion of the work, goods 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

A has to register for VAT purposes in the other MS

A has to register for VAT purposes in the other MS

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MALTA Other EU MS

A = taxable personA = taxable person A : serviceA : 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)

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MALTA Other EU MS

A = taxable personA = taxable person B : goods on trialB : goods on trial

Move of goods by A from Malta to B in the other MS on trialAfter 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)

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Non-transfer followed by a transfer: exampleMALTA Other EU MS

A = taxable personA = taxable person B : goods on trialB : 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

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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

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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

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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

Documents

SUPPLY OF GOODS USING THE METHODOLOGY. 2 FIRST QUESTION