Contract work abroad: VAT consequences
Imagine you have a product. It should undergo some treatment and this is best done abroad. You therefore send your products to another European country. Normally this is an intracommunity or export/import transaction. But administrative tolerances limit the administrative consequences.
Cross border contract work
If we follow the letter of the law, each time goods leave the Belgian territory an (assimilated) intracommunity transaction (transfer) or export/import takes place.
If e.g. you send goods to The Netherlands to undergo certain services and the goods return afterwards, this could be considered as a transfer of own goods, which should be treated in the VAT return as an (assimilated) intracommunity transaction and which would trigger an obligation to register for VAT purposes in The Netherlands. The envisaged services could be cleaning, repair, transformation. Also 'intellectual services' are considered e.g. laboratory services.
n order to avoid such additional administrative issues, the legislator considered the transfer of own goods - in our example from Belgium to The Netherlands - as a 'non-transfer'. Provided however that the goods only temporary stay in The Netherlands and return to Belgium afterwards. Recently the VAT authorities published a new circular letter on this matter.
First, there can be no 'non-transfer' in case also goods are supplied abroad. Imagine a small truck which is transferred to The Netherlands in order to fix a loading platform. This goes further than services, as goods are being supplied (installation of a loading platform). But the VAT authorities accept that there is no transfer of own goods and the Belgian VAT payer is preserved from a number of administrative obligations.
Furthermore, the law foresees that the goods which are transferred to another member state should return to the VAT payer. But imagine that the goods from the first member state do not return to Belgium, but are sent to another service provider for additional services. Under the old tolerance this was not considered as a non-transfer. Under the new tolerance, it does not matter whether the second service provider is established in another (third) member state, it is still considered a non-transfer.
Some (administrative) conditions have to be fulfilled for a non-transfer. As client you have to report the goods in a 'register of non-transfers' and the service providers should keep a detailed accounting to identify the goods received from other members states.
You can read between the lines that the member state to which the goods are sent, should also accept this administrative tolerance. Since this tolerance is an European initiative, this will not be such a big issue, but you better check with your counterpart whether they are also ready for such tolerance.