In European Court case no. C-247/21 (Luxury Trust Automobil GmbH), Advocate General Kokott has made a conclusion regarding the application of the simplified ABC scheme. This simplified ABC scheme has been included in European VAT legislation to prevent the party (B) that is located between the supplier (A) and the final customer (C) not having to register for VAT in other EU Member States.
It follows from the conclusion of the Advocate General that if all formal requirements are not met, the facility cannot be applied. This still leads to VAT registrations for party B in all EU Member States where goods are delivered to party C. If the European Court adopts the conclusion, entrepreneurs who invoice party C as party B must explicitly state that the VAT has been reverse charged to party C.
The comment ‘application of the simplified ABC scheme’ is then no longer sufficient.
It is recommended that international traders do now check to what extent they are affected by this arrangement and whether the invoices meet all formal requirements, in order to avoid mandatory VAT registrations in other EU Member States.
