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Background

Entry certificate in SAP

VAT directive backround (UstDV)

Stricter verification obligations

Documentation requirements for deliveries within the EU originally went into effect starting in 2012, and have become a source of great irritation within the industrial sector and among shipping companies. The objective of these entry certificates is to ensure verification that the goods in question shipped from Germany are actually sent to, i.e. “arrive”, in another EU member country. Deliveries within the EU are not subject to VAT, and the basic idea behind the move is that in order to enable the German tax authorities to more accurately document such deliveries, the receivers should confirm receipt of the goods. This confirmation should specify the quantity and commercial name of the goods, the date of receipt, the place where they were received and the signature of the receiver. In this age of streamlining bureaucracy and general rationalisation, such a move might sound like a bad joke. But Germany’s Federal Ministry of Finance (BMF) was by no means joking. After enormous protests from the business world, the law was revoked and then revised numerous times to be less stringent. What binding obligations went into effect on 1 October 2013? Tax exemption verification for the transport or shipping of intra-EU deliveries can be verified by Entry Certificate or other means of verification such as a CMR waybill, a shipping certificate, etc. The crucial issue is that the receiver and no longer the shipper or freight company is responsible for verifying the actual receipt of such deliveries. The Entry Certificate is the document verification form that the tax and finance authorities can most clearly and easily consult to check whether the prerequisites for the tax exemption on an intra-Community delivery are fulfilled. An Entry Certificate must contain at least the following items:

  • Name and address of the recipient
  • The quantity and commercial designation of the delivered goods; for vehicles, the Vehicle Identification Number as defined by VAT legislation (UStG) must also be included
  • Location and date of the goods’ concluded transport or shipment into the other EU country
  • Date the EC is issued (specifying the month is sufficient)
  • Signature of the recipient (not with electronic ECs)

 

Which simplifications are permitted for intra-Community deliveries

  • The Entry Certificate need not be associated with only a single document. Instead, it can consist of several documents containing the whole of the required information.
  • The Entry Certificate need not be in the officially prescribed form. However, the annex to the VAT Application Decree (UStAE) contains a sample Entry Certificate designed to make it easier for companies to properly execute verification.
  • In many cases, the signature of the recipient required for the Entry Certificate (confirmation of receipt of the delivered goods) can be substituted by a third party.
  • The Entry Certificate need not be created for each individual intra-Community delivery. A collective EC may be created (e.g. for all deliveries within one month or maximum within one quarter).
  • The Entry Certificate can also be conveyed electronically, in which case no signature is required.
  • In cases where goods and services are dispatched (also in corresponding cases of chain transactions) the Entry Certificate can consist of a dispatch document such as a CMR waybill documenting the receipt of the delivered goods and containing all the required information.
  • If the goods are transported by courier services, the verification of the arrival and receipt of the goods abroad can be submitted in simplified form, such as the courier order together with a tracking-&-tracing log and payment verification.
  • If the goods are transported by a postal service provider, a postal receipt is sufficient to document the verification of the arrival and receipt of the goods abroad.

 


“Safe Harbour” regulation extended to 31 December 2013

According to the BMF correspondence from 16.9.2013, while it is true that all of the new regulations went into effect on 1.10.2013, there is a transitional “safe harbour” period until 31.12.2013. “For intra-Community deliveries executed by 31 December 2013, no complaints will be filed if the documentation and proper verification entry fulfils the prerequisites of the legal basis applicable through 31 December 2011 for verifying tax exemption”. (Pg.25/Par. II./Sec.2./Line 3)

 

What can you do now?

Your company's tax department and other departments such as FI/CO or logistics should consider how your processes can be adapted to comply with the new verification obligations for intra-Community deliveries. As such adaptation also affects IT systems, only the greatest possible automation of processes (ranging from dispatch of Entry Certificates to communication with recipients to monitoring) makes it possible to keep the associated expenditures and effort to a minimum.