Dear clients and partners,

At the end of 2018, the Council of the European Union endorsed “quick fixes” to the VAT system ‒ temporary measures which should help solve problems arising in trade between EU member states. Over the course of 2019, companies will have to get ready for the new rules that will apply from 1 January 2020 – Estonia will have to transpose the new rules into the Law on Value Added Tax by this date.

In this newsletter, we present the main aspects of the “quick fixes” to the VAT system.


The VAT identification number of the buyer must be obtained when applying zero rate VAT for goods supplied to another EU member state

Bottom line: in order to apply zero rate VAT for goods supplied, all EU countries will have the same requirement for the supplier to obtain the buyer’s VAT identification number and to specify it in the intra-EU sales report.

Consequences of non-compliance: failure to comply with this requirement means that zero rate VAT cannot be applied, regardless of whether the other conditions for zero rating are present.

Nevertheless, companies will be left with the opportunity to prove that they were acting in good faith and to justify the application of zero rating even without having the buyer’s VAT identification number. However, it is still unclear what kind of evidence will be required by the tax administrator in these cases.

The fact of goods being transported to another EU member state will be presumed with specific evidence

Conditions for applying the presumption: the fact of goods being transported to another EU member state will be presumed (i.e. no additional proof will be necessary) if the supplier has two pieces of evidence from the list provided:

  • The first piece of evidence relates to transport of goods. This could be a consignment note or an invoice issued by the carrier for transportation services.
  • The second piece of evidence offers several alternatives. This could either be another document related to transportation of goods to another EU member state (issued by a person other than the one who issued the first piece of evidence), or one of the following documents: an insurance policy related to transportation of goods, proof of payment for the shipment, a receipt from the warehouse to which the goods were delivered, or confirmation of delivery to the country of destination issued by an official (e.g. a bailiff).

It is important to note that the second piece of evidence must come from a person other than the one who issued the first piece of evidence. In addition, the person who issued it will have to be independent of both the supplier and the buyer.

If the shipment is organised by the buyer, it will be mandatory to have a fixed content buyer’s confirmation in addition to the above evidence.

In the absence of the documents specified: if companies do not have the documents listed, they will not be able to benefit from the new rules and the fact of the goods being transported will have to be proven in the same way as it is now.

It is important for businesses to assess what other entities’ documents they can obtain and to change their internal procedures accordingly. Otherwise, it will not be possible to benefit from the new rules to facilitate the complex process of proof.


Purpose of the rule: in cases where several supplies of goods take place but only one transportation between EU member states occurs, zero rate VAT can only be applied to one of the supplies. In practice, a number of problems arise in deciding which supply transport is assigned and zero rate VAT is applied to. Most problems arise when transportation of goods is organised by an intermediary who does not adequately inform the first supplier about further resale and transport of the goods, which leads the first supplier to apply the zero rate incorrectly.

Bottom line: in cases where transportation of goods is organised by an intermediary, the first supplier will not be able to apply zero rate VAT only if the intermediary arranging the transportation of goods gives the supplier its VAT identification number issued in the country of dispatch. In other cases, the first supplier will be able to apply zero rate VAT, so the intermediary will likely be subject to VAT registration in the country of delivery of the goods.

Call-off stock rules

Purpose of the rule: these rules are designed to enable companies to not register for VAT purposes in another EU member state if they operate under a call-off stock model. If a supplier from another EU member state brings goods to Estonia which are temporarily stored in the warehouse of the future buyer, but the right to dispose of those goods is transferred to the buyer later (usually when the buyer finds subsequent buyers for the goods), this has raised questions about the VAT treatment of the situation.

Bottom line: if a person from another EU member state has put goods to an Estonian warehouse then according to the new rules the buyer will have to declare the purchase only after taking over disposal of the goods. In addition, rules will be established for cases when the buyer does not take over the goods within 12 months, when one buyer is replaced by another, and when goods are returned to the supplier’s country. Special requirements for declaring such supplies will also be established.


The measures in question are temporary because the goal is to reform the entire VAT system for intra-EU trade in goods. The plan is that the new system will be based on a one-stop-shop similar to the one currently used for provision of electronic services. The supply of goods would be taxed in the buyer’s country, but VAT would be calculated by the seller, who would be able to declare VAT in their own country via an e-portal, and the countries would distribute the amounts of VAT collected among themselves.