On 4 October 2017, the EU Commission set out a process to come to a new intra EU VAT regime for cross-border business-to-business trade. The cornerstone of the proposal is the 'destination'-principle: according to this business-to-business transactions will be taxed with EU VAT in the Member State of destination rather than in the Member State of the supplier or origin. 

The new system should tackle cross border EU VAT fraud and make the system more business friendly at the same time. It is expected to enter into force in 2022.

EU VAT system: Destination-principle

In the future, a supplier resident in a Member State will have to charge EU VAT at the rate applicable in the (other) Member State of destination. The supplier does not necessarily have to be registered in the Member State of destination to declare and pay VAT, but can make use of a 'one-stop-shop' digital portal in their home country. This online portal will allow a supplier to declare and pay all EU VAT on cross-border transactions in a single EU VAT return in its home country. It will be a similar system to the one already used for EU cross-border e-services.

EU VAT system: No direct impact for Swiss suppliers

The new system will not apply to transactions by Swiss suppliers to EU based business customers, but only to intra EU cross-border business-to-business transactions. It may however, have an impact on exports by Swiss businesses to the EU followed by intra EU transactions.

Certified Taxable Person

In addition, a new system is proposed for customer recognition (Certified Taxable Person or CTP). No actual EU VAT payment is due in the event of a cross-border supply to a CTP. Instead, the CTP would, under a reverse charge mechanism, be liable for the EU VAT on goods or services purchased from abroad. As of 2019, taxable persons can already obtain the status of CTP. It is proposed that CTPs can benefit from some proposed short-term measures ('quick fixes') that should improve the functioning of the current cross border EU VAT system.