The final version of the new VAT system for Business to Business (B2B) intra-EU transactions on goods is essentially an overhaul of the treatment of B2B intra community supplies of goods. This was set out in the EC’s Action Plan in April 2016 as one of the medium term measures aimed at tackling the VAT gap at the level of the Member States.

Under the new system, the cross-border trade of goods will be treated as a 'single taxable supply', which will ensure that goods are taxed in the Member State where the transport of the goods ends. The seller will charge VAT at the rate of VAT in the Member State of destination.

The changes will also see the introduction of an online Portal or 'One Stop Shop' for all businesses, to avoid the need to register in every Member State.

This system will also be available to companies outside the EU that want to sell to other businesses within the EU and that would otherwise be required to register for VAT in every EU Member State. These businesses will simply have to appoint one intermediary in the EU to take care of the VAT obligations for them.

As an exception, VAT will still be payable by the taxable person to whom the goods are supplied if this is a certified taxable person, and if the goods are supplied by a taxable person not established within the territory of the Member State in which the VAT is due. The concept of certified taxable person was included in the Commission's proposal of 4 October 2017.

The new rules will come into effect from 1 July 2022. Member States will be required to transpose the amendments to the VAT Directive into their national laws by 30 June 2022.