The value-added output tax is one of the most important taxes within the EU, not only in terms of amount but also one of the taxes most vulnerable to fraud and manipulation. The EU Commission therefore proposed, on 25th May 2018, some significant changes to the current VAT system for the movement of goods within the EU1 by business to business (B2B) traders. The changes are due to come into force on 1st July 2022.

Current situation

Under the present system, intra-community trade in goods is split, from the VAT point of view, into two (artificial) transactions: a VAT-exempt sale in the country of origin (ie. the seller's home state) and a taxed purchase in the country of destination (ie. the buyer's state). The purchasing process occurs in the county of destination and is subject to the `reverse-charge system', where the purchaser reports in his VAT statement both transactions: output value-added tax and deductible input tax, resulting a nil-VAT declaration with no actual VAT cashflow.

Planned changes

The purpose of these changes is to create a uniform EU-VAT area. The cross-border trade in goods will then be defined as `uniform taxable delivery', and the delivery of goods within the EU will no longer be exempt from tax. It is necessary to ensure that the goods will be taxed in the member state in which their transport ends.

Charging VAT should take place through the seller: VAT will be applied to the sale of goods to a client in another member state, at the rate of VAT levied by the country of destination. This will create an actual output tax cashflow, with national and EU cross-border purchase of goods being treated equally for the first time. Until now, the purchase of goods from another EU state was more advanatageous than a national purchase since only national puchases were burdened with the payment of the output tax.

`One-Stop-Shop' for merchants

To make the suggested changes as smooth as possible for traders, the foundations are being laid for an online portal for all business-to-business traders. A uniform system for the payment of output tax would do away with the need for VAT registration in different EU states, as the declaration, payment and deduction of output tax for all purchases of goods within the EU will take place through this uniform online portal.


A merchant registered for VAT in Germany sells and delivers goods from Germany to an entrepreneur VAT-registered in Romania. The end-delivery site is in Romania. The German merchant issues an invoice including Romanian VAT (19%). The German trader is not VATregistered in Romania, and pays the Romanian VAT collected by him, in Germany, through a uniform system (One-Stop-Shop). The Romanian output tax is then forwarded by the German tax authority to the Romanian fiscal authority.

Exception: certified taxable person

The idea of the certified taxable person (CTP) means that companies trading goods within the EU community should registered as a CTP with their national tax authorities if they meet certain requirements. For deliveries to a CTP, the existing reverse-charge system will still apply.


The changes recommended by the EU Commission aim to achieve an equal treatment of intracommunity and national purchases of goods, which would mean a drastic change in the intracommunity treatment of VAT. The purpose of these changes is to cut down on fraud (especially the `VAT carousel') to simplify administration for companies concerned. The recommendations should be put into national legislation by 2022. Since the changes will affect significant business processes for companies, an early intellectual debate on the plans of Commission would be advisable. Please note that the recommendations refer only to the movement of goods not provision of services between EU countries.