On 4 December 2018, the Economic and Financial Affairs Council (ECOFIN), of the European Union, put into effect a plan known as VAT Quick Fix.

VAT Quick Fixes addresses the following:

  • Uniform rules to simplify chain transactions
  • Mandatory VAT identification number to apply the zero percent VAT rate
  • Simplified proof of cross-border transactions
  • Simplified regulations for “call-off stock”

An essential element of the VAT Quick Fix plan is the new regulation for chain transactions and how to proceed when an intermediary arranges the transport.

What is a chain transaction?

A chain transaction is a name commonly given to the system that permits the supply of goods between entities before reaching the final client. However, article 36a (MwStSystRL) is only applicable if the transport is cross-border from one EU Member State to another. An important point of note is that only one company shall be involved in the arrangement of the transport to the final buyer. To date, there have been no regulations specifically addressing transactions taking place between a third party.

Why implement VAT Quick Fix

The applied VAT for cross-border transactions can vary from one EU member state to another. For this reason, the VAT Quick Fix regulation was implemented by ECOFIN as an attempt to bring uniformity to applied tax on these types of transactions.

Application of the new regulation

Recognizing which EU Member state to whom a VAT duty of a cross-border transaction between multiple entities belongs is a frequent a point of contention. The new VAT Quick Fix regulation states that the tax burden for cross-border transport between three or more EU Member States is defined by who arranges the transport of the goods to the end customer.

A typical cross border transaction would go as follows: after an entity-initiated transport, they must notify the first customer and provide them with their tax identification number. Subsequently the first customer and the final customer must repeat this process while taking into consideration the applicable VAT for the entity that initiated the transport as well.


With the application of the VAT Quick Fix regulation an entity has the right to choose with whom to allocate VAT deriving from the cross-border transport of goods.  This right is exercised by notifying the supplier, associated with the provided sales tax identification number, that VAT either will or will not be allocated to their entity. To date, no formally outlined measures for auditing this system of VAT allocation have been made public by ECOFIN.

If the entity that has initiated the cross-border transport of goods would like to deduct input tax from a local receipt, it may be necessary for that entity to prove that the identification number was presented at the time of the transaction. It has yet to be determined what measures are in place to deter various methods of fraud that could derive from this kind of self-reporting system.

Time will tell whether derivative interpretations of the VAT Quick Fix tax regulation will naturally evolve for each participating EU Member State over time, but almost certainly there will be amendments made to the regulation by ECOFIN as time goes on.

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All information contained in this publication is up to date on 2019. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.