INTRA-COMMUNITY ACQUISITIONS BY MEMBERS OF THE

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INTRA-COMMUNITY ACQUISITIONS BY MEMBERS OF THE
GROUP OF 3
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DEFINITION
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Definition of Group of 3

• The Group of 3 consists of
• The non-taxable legal persons (essentially public
  authorities acting as such and not performing
  activities referred to in Schedule 1 as well as
  some pure holdings)
• The small undertakings registered under article
  11
• The other taxable persons not registered under
  articles 10 and 11 that only make exempt
  operations without any right to deduct VAT (e.g.
  bank, insurance companies, non-profit making
  organisations, hospitals)
• The farmer subject to the flat-rate scheme in
  some Member States (thus Group of 4) not
  applicable in Malta

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THRESHOLD
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Threshold

• A threshold of the equivalent in Maltese liri of
  EUR 10,000 has been fixed
• Under which or up to which the intra-Community
  acquisition by a member of the Group of 3 is
  not subject to VAT in Malta
• Above which the intra-Community acquisition by a
  member of the Group of 3 is subject to VAT in
  Malta
• The threshold is calculated on an annual
  (calendar year) basis

Art. 12(1) VAT Act
Item 1 Part Two Sixth Schedule
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Threshold

• The calculation of the threshold must take into
  account
• The value of all intra-Community acquisitions
  following purchases made in all other Member
  States, except those listed in next slide
• The value of the transaction that leads to
  exceeding the threshold
• The value of importation made by a non-taxable
  legal person in another EU Member State of goods
  that are transported to Malta after importation
• The value of importation made by a supplier in
  another EU Member State of goods that are
  supplied and transported to Malta after
  importation (will be examined during the session
  on importation)

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Threshold

• The calculation of the threshold must not take
  into account
•     The value of intra-Community acquisitions of
  excise goods made by the member of the Group of
  3 (no threshold for excise goods)
•     The value of intra-Community acquisitions of
  new means of transport made by the member of the
  Group of 3 (no threshold for new means of
  transport)
•     The value of supplies with installation made
  to this member of the Group of 3 by a taxable
  person established in another EU Member State for
  which Maltese VAT is due
•     The value of distance sales made to this
  member of the Group of 3 by a taxable person
  established in another EU Member State that are
  deemed to take place in Malta

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Threshold exceeded

• Once the threshold is exceeded, the member of
  the Group of 3 is liable to pay Maltese VAT on
  all his intra-Community acquisitions for the rest
  of the calendar year during which the threshold
  has been exceeded and for at least the following
  calendar year. If the threshold is also exceeded
  during this following year, the same rules apply
  regarding the liability of Maltese VAT on the
  intra-Community acquisitions made by the member
  of the Group of 3
•  Example
• If a member of the Group of 3 exceeds the
  threshold in March 2005, he will be liable to pay
  Maltese VAT on all his intra-Community
  acquisitions made in 2005 as from the moment the
  threshold is exceeded (March 2005) as well as
  those made at least in 2006. He will also have to
  register under art.12 by not later than the date
  of that acquisition

Art. 12(1), (4) and (5) VAT Act
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OPTION
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Option application for registration art.12

• The member of the Group of 3 is liable to pay
  Maltese VAT on all his intra-Community
  acquisitions from the moment he opts for and for
  the rest of the calendar year during which he has
  opted as well as for at least the two following
  calendar years. If the threshold is in any case
  exceeded during these following years, the rules
  regarding the threshold also apply regarding the
  liability of Maltese VAT on the intra-Community
  acquisitions made by the member of the Group of
  3
•  Example
• If a member of the Group of 3 opts in March
  2005 for taxation in Malta of all his
  intra-Community acquisitions, he will be liable
  to pay Maltese VAT on all his intra-Community
  acquisitions made as from the moment of the
  option (March 2005) as well as those made at
  least in 2006 and 2007. If the threshold is
  exceeded in 2007, he will be in any case liable
  to pay Maltese VAT on all his intra-Community
  acquisitions in 2008

Art. 12(2) and (6) VAT Act
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EXAMPLES
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FACTS

• A member of the Group of 3 purchases goods in
  Italy
• Goods are not excise goods nor new means of
  transport (special regime examined in next
  session)
• Goods are transported from the other Member State
  to Malta on behalf of the member of the Group of
  3 (special regime for distance sales examined in
  next session)
• Other EU MS Malta

Sale of goods
A
B member of Group of 3
Transport on behalf of B
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First hypothesis

• The member of the Group of 3 does not exceed
  the threshold at the time of the acquisition and
  did not exceed it during the previous calendar
  year and he does not opt for the taxation of its
  intra-Community acquisitions in Malta
• Is there an ICA in Malta? YES
• Where is the place of this ICA? In Malta (where
  transport ends)
• Is this ICA subject to VAT in Malta? NO
• Is there any exemption? N/A
• Who is liable to pay VAT? N/A

Art. 4(b)(i) and 12 VAT Act
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Second hypothesis

• The member of the Group of 3 exceeds the
  threshold at the time of the acquisition or he
  has exceeded this threshold during the previous
  calendar year or he has opted for the taxation of
  its intra-Community acquisitions in Malta
• Is there an ICA in Malta? YES
• Where is the place of this ICA? In Malta (where
  transport ends
• Is this ICA subject to VAT in Malta? YES
• Is there any exemption? NO (assumption)
• Who is liable to pay VAT? The member of the
  Group of 3

Art. 4(b)(i),12 and 20(1)(b) VAT Act
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COMPLIANCE
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Obligations to be respected by the member of the
Group of 3

• The member of the Group of 3 must
•   Inform the VAT Commissioner that the threshold
  will be exceeded
•   Ask for a VAT registration under article 12
•   Keep records of the intra-Community
  acquisitions made (Art.30(2) VAT Act)
•   Submit a special VAT form (Art.21(5) VAT Act)
  for the month during which he has made
  intra-Community acquisitions and during the
  period during which he is liable to pay Maltese
  VAT on these acquisitions (only if there are ICA
  made)
•   Pay VAT due on these intra-Community
  acquisitions by not later than the fifteen day
  following the month during which the tax becomes
  chargeable
•   Communicate his VAT identification number to
  his suppliers in other EU Member States during
  the period he is liable to pay Maltese VAT on his
  intra-Community acquisitions