The international sales of horses are frequent and VAT invoicing methods can sometimes be complicated to understand for amateurs and professionals. We decided to cover in this article, the topic of taxes to ensure to bring you clarity and help when it comes to understanding the taxes when buying, selling, importing and exporting a horse.
Note that this article has been produced based on research undertaken by our team but that we do not take responsibility for the given information and that for specific advice you should discuss with a tax specialist.
The French Version of this article has been provided by the IFCE and is available here: Click Here for the Original Version of this article
Basic rules to understand
Before diving into the details of international operations, it is necessary to ask yourself these very important questions:
- What are the countries of domicile of the parties or of destination of the goods (within the European Union, outside the European Union )?
- How to qualify the transaction: is it a transfer of property (sale of a horse for example) or a given service?
- Are the parties involved in the transaction liable for VAT?
Thanks to these three criteria, and except in special cases, we can understand what is the applicable VAT.
Nota Bene: Switzerland and the United Kingdom are not part of the European Union
In a second place tt is very important to know whether the person you are dealing with is liable for VAT in their country or not.
In the European Union
Note that VAT exists in all countries, so all professionals in the EU have an intra-community VAT number.
For countries outside the European Union
VAT does not necessarily exist. In this case, the foreign professional must determine whether he is acting in his country as if he were liable. Is he considered a professional?
Non-taxable persons are individuals or professionals who are not in the VAT system (free for example).
What to conclude?
Once the three criteria have been defined (country, nature of the transaction and VAT liability), we can understand the applicable rules.
What happens in the case of an import or an export?
The export and import regime presupposes:
- Country qualification: border crossing to a country outside the European Union.
- The qualification of the operation: transfer.
- The qualification of the parties: it does not matter, the rules are the same in the presence of taxpayers or non-payers.
In the case of an exportation outside of the European:
Rule: VAT exemption (whether or not the buyer is liable for VAT, professional or private) You must mention on the invoice: “VAT exemption – Article 262 – I-1 ° of the CGI”
Administrative procedures :
It is necessary to clear the goods through customs with a DAU template.
It is also important to obtain an EORI number. This is a form to be completed online with the customs administration.
In the case of an importation within the EU:
You are buying a good from another country outside the EU.
Rule: You should be invoicing excluding taxes (HT) by the seller and settle the payment of the European Country’s VAT to customs during customs clearance.
At the time of customs clearance of the goods, customs will charge you VAT. You will pay it, then it can be deducted during the VAT return if you meet the conditions.
Intra-community deliveries / acquisitions
The intra-community delivery / acquisition regime presupposes:
- Country qualification: border crossing to a country of the European Union.
- The qualification of the operation: transfer.
- The qualification of the parties: liable or not.
Intra-community delivery to a taxpayer:
You transfer a good (with border crossing) to another country of the European Union to a person liable for VAT. Do not hesitate to ask the buyer for the VAT number.
Administrative procedure: It is necessary to complete a Declaration of Exchange of Goods (DEB) with customs on the 10th working day following the shipment of the goods. And that, from the first euro of transfer on the customs site.
Intra-community delivery to a non-liable:
You transfer property to an EU country to a non-taxable person (professional not liable for VAT or an individual).
Rule: the EU Country’s VAT will be applicable.
It is important to have the buyer’s intra-community VAT number and to check it to find out whether your country’s VAT is applicable or not.
Intra-community acquisition from a taxpayer
You buy a good (with border crossing) coming from another EU country from a person liable for VAT.
Rule: invoicing excluding taxes (HT) by the seller and self-liquidation in Europe
This means that you charge the VAT to yourself. You record it and you mention it in VAT collected on your return (and in deductible VAT if it meets the classic deduction conditions).
Administrative procedure: It is necessary to complete a DEB on the 10th working day following the acquisition of the property, only if the cumulative amount of acquisitions of the previous calendar year exceeds 460,000 € or exceeds this threshold since the beginning of the year. .
Intra-community acquisition from a non-liable
You buy a good from another EU country from a non-VAT professional or a private individual.
Rule: There is no need to carry out a self-assessment of VAT since the seller is not liable for this tax.
You therefore buy the property without VAT and you do not materialize the latter.
Recommendations and alerts: Declaration of Exchange of Goods (DEB)
In the event of the purchase or sale of a good in an EU country (therefore intra-community delivery / acquisition), a Declaration of Exchange of Goods (DEB) must be completed.
Acquisition:
Below 460 000€: No Declaration
Above 460 000€: Detailed declaration (complete all fields)
Delivery
Below 460 000€: Simplified Declaration
Above 460 000€: Detailed declaration (complete all fields)
There are new rules since 01/01/2020. If you make intra-community deliveries, you will need to set up a process:
- Make sure to check the buyer’s VAT number on the site http://ec.europa.eu/taxation_customs/vies/?locale=en. Be careful, some professionals can give a false VAT number.
- Complete a DEB the month following delivery on the site https://pro.douane.gouv.fr/ after creating your space. The Internet space is to be preferred over the paper approach.
If these steps are not taken, the penalties are as follows: - In the event of non-filing: fine of € 750 per declaration that is missing or filed after the deadline, increased to € 1,500 if the debtor does not correct his situation within 30 days of the formal notice.
- In the event of an omission or error: € 15 / omission or error within the limit of € 1,500.
- Questioning of the VAT exemption for intra-community deliveries: the tax authorities can request the refund of VAT.
To Conclude:
• It is necessary to qualify the countries (EU or non-EU), the operation (goods or services) and the parties (liable or not liable).
• A transfer is an international transaction only if the asset crosses a border.
• In the provision of services, they are qualified as international if one of the parties is domiciled in another country.
• The qualification of taxpayer or not taxpayer is carried out in particular by checking the VAT number (if EU) or according to his professional actions (if outside the EU).