The intra-Community supply (ICS) scheme is regulated by Article 7(1) of the VAT Act. For this scheme to apply to a given supply of goods, the following conditions must be met cumulatively:
1. the supplier is a person registered under the Value Added Tax Act within the country’s territory on the date of the taxable event. An exception is made for persons registered pursuant to Articles 97a, 99 and 100(2) of the VAT Act.
2. the recipient is a person registered for VAT purposes in another Member State on the date of the chargeable event.
3. The supply relates to goods within the meaning of Article 5 of the VAT Act.
4. the supply is for consideration – the definition of a supply being for consideration should be inferred by a contrario reasoning from § 1(8) of the Supplementary Provisions to the VAT Act.
5. The goods are transported from the territory of the country to the territory of another Member State. An intra-Community supply of goods occurs both when the transport is carried out by or on behalf of the supplier and when it is carried out by or on behalf of the recipient.
- an invoice for the supply, stating the grounds for applying a zero VAT rate, and documents proving the dispatch or transport of the goods from the territory of the country to the territory of another Member State, such as a consignment note,
- or written confirmation from the consignee that the goods have been received within the territory of the Member State of destination, a handover report, and so on.
Goods are very often transported by road. The international carriage of goods by road is governed by the Convention on the Contract for the International Carriage of Goods by Road. The international consignment note for road transport is commonly known as the CMR.
The Convention on the Contract for the International Carriage of Goods by Road applies to any contract for the carriage of goods by road in vehicles for remuneration, where the place of taking over of the goods for carriage and the intended place of delivery are situated in two different countries, at least one of which is a Contracting Party. The contract of carriage is evidenced by a consignment note (CMR).
The absence, irregularity or loss of the consignment note shall not affect either the existence or the validity of the contract of carriage, which shall remain subject to the provisions of this Convention.
Where the goods being carried are to be loaded onto different means of transport, or where different types of goods or individual consignments are involved, the consignor or the carrier is entitled to require that as many consignment notes (CMR) be drawn up as there are vehicles, or as there are types of goods or individual consignments.
Since the CMR is a contract between the consignor (the supplier of the goods), the carrier and the consignee of the goods, and the carrier is a third party, usually independent of the consignor and the consignee, it is advisable for the consignor to always have a correctly completed CMR for the transport carried out.
The Value Added Tax Act (VAT Act) and the Regulations for the Implementation of the VAT Act (VAT Implementation Regulations) permit a written confirmation from the recipient to be used as evidence of an intra-Community supply.
- The written confirmation shall specify the date and place of receipt, the type and quantity of the goods, the type, make and registration number of the vehicle used for transport, and the name of the person who delivered the goods. It must be a document issued by a person representing the consignee or by a person authorised by the consignee.
- The confirmation must be the original document and must bear the signature of the person representing the recipient.
- The confirmation may also be sent electronically, by fax or by any other means customary in commercial correspondence.
- There is no legally prescribed form or content for the confirmation. Its content must allow for an unequivocal conclusion to be drawn as to the identity of the supply to which it relates with the intra-Community supply declared by the supplier.
- The confirmation should specify the capacity of the person from whom it originates; if that person is not a representative but, for example, an authorised representative, evidence of the existence of a power of representation must be provided.
It should be noted that, under the VAT Implementation Regulations, the written confirmation from the consignee must confirm receipt of the goods within the territory of the Member State of destination, rather than stating that the goods will be transported.
