CMR – an important document for proving cross-border supply

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.

The documents you must hold in relation to an intra-Community supply are set out in Article 45 of the VAT Implementation Regulations, namely:

• invoice for the delivery and

• documents proving that the goods have been dispatched or transported from the territory of the country to the territory of another Member State.

The invoice must comply with the requirements of Article 114(1) of the Value Added Tax Act, according to which the invoice must contain:

1. document title;
2. a sequential ten-digit number, consisting solely of Arabic numerals, based on one or more series depending on the taxpayer’s accounting requirements, which uniquely identifies the invoice;
3. date of issue;
4. the supplier’s name and address;
5. the supplier’s identification number under Article 94(2), or the number under Article 84 of the Tax and Social Security Procedure Code – where the supplier is a person not registered under that Act;
6. the name and address of the consignee;
7. the recipient’s identification number under Article 94(2), or the number under Article 84 of the Tax and Social Security Procedure Code – where the recipient is a person not registered under that Act, VAT identification number – where the recipient is registered in another Member State; or another identification number for the person, where such a number is required under the legislation of the country in which the recipient is established;
8. the quantity and type of goods, the type of service;
9. the date on which the taxable event relating to the supply occurred, or the date on which payment was received;
10. the unit price excluding tax and the taxable amount of the supply, as well as any trade discounts and reductions granted, if these are not included in the unit price;
11. the tax rate, and where the rate is zero – the grounds for its application, as well as the grounds for not charging tax;
12. the amount of tax;
13. the amount payable, if it differs from the sum of the tax base and the tax;
14. the circumstances that define the goods as a new means of transport – in the case of an intra-Community supply of new means of transport. Where the tax is payable by the recipient, the invoice shall not specify the amount of tax or the tax rate. In this case, the invoice shall state ‘reverse charge’ and the grounds for this.

With regard to documents proving the dispatch or transport of goods from the territory of the country to the territory of another Member State, the Regulations for the Implementation of the VAT Act /PPZDDS) and the rules of the Convention on the Contract for the International Carriage of Goods by Road shall apply. In the case of the international carriage of goods by road, the main transport document is the international consignment note for road transport.

In Bulgaria, the common name is CMR, which derives from the Convention on the Contract for the International Carriage of Goods by Road. The CMR contains details of: the consignor, the carrier and the consignee of the goods; the nature of the goods; the place of loading and the place of unloading of the goods; the means of transport used for the carriage; the date, signature and stamp of the consignor, the carrier and the consignee.

In this respect, the CMR fully complies with the requirements of Article 45 of the VAT Implementation Regulations concerning the documents proving the dispatch or transport of goods from the territory of the country to the territory of another Member State, namely:

            1. a transport document or written confirmation from the consignee or a person authorised by the consignee, certifying that the goods have been received within the territory of another Member State – where the transport was carried out by the consignee or by a third party on the consignee’s behalf; the written confirmation shall specify the date and place of receipt, the type and quantity of the goods, and the type, make and registration number of the vehicle used for the transport;

            2. a transport document certifying that the goods have been received within the territory of another Member State – where the transport has been carried out by the supplier or by a third party on the supplier’s behalf.

            Since Article 53 of the VAT Act defines intra-Community supplies as taxable supplies subject to a zero rate of VAT, it is important to provide the necessary documents to prove intra-Community supplies in order to determine the tax liability for the relevant tax period. Pursuant to Article 46(1) of the VAT Implementation Regulations, if the taxable person fails to obtain the aforementioned documents by the end of the calendar month following the calendar month during which the tax on the supply became chargeable, the supply shall be deemed to be taxable at a rate of 20 per cent.