CYIL vol. 13 (2022)

CYIL 13 ȍ2022Ȏ CURRENT ISSUES OF CAROUSEL INTERNATIONAL TRADE IN THE EU… Concerning these issues, it is possible to note that if the supplier and the intermediary properly identify and verify their business partner, then they cannot become a guarantor for the tax in accordance with Section 109 et seq. of Act no. 235/2004 Coll. on the Value Added Tax, as amended, because… Furthermore, it is possible to mention the judgment of the Supreme Administrative Court [8 Afs 14/2010-195], which dealt with the identification of business partners in the case of supply of goods to another Member State, which is an exempt supply entitled to the VAT deduction (Section 64 of the VAT Act). In this case, the supplier made the identification by verifying the submitted tax identification number of the VAT payer and requested a copy of the VAT payer’s registration certificate. In this case, the supplier proceeded by issuing an invoice for a domestic taxable supply, subject to the value added tax, and only when the purchaser proved that the goods had been transported to another Member State did it issue a new tax document after checking the matter again in the VIES system. Concerning such issues, it is possible to note that this procedure is not correct and the supplier undergoes the risk that the first tax document for the price of the goods subject to the VAT, i.e., a domestic taxable supply, will be in circulation somewhere and it may happen that an unreliable business partner could abuse this tax document to extract a tax advantage. Verification of VAT payers within the framework of the European Union can be carried out in the VIES application. 22 Verification should be carried out at the time of conclusion of the business contract and subsequently still on the day of issuing the tax invoice. This verification should be archived for any subsequent tax proceedings.The VIES system allows for a record with specification of the date and transaction number of the verification. The correct procedure is to issue an ordinary tax document and to specify all related and required documents for the transportation of the goods to another Member State and other conditions already in a written contract, including the specific persons who are obliged to provide these documents, including their positions and contact data. Nevertheless, the verification of the VAT identification number in the VIES system is not sufficient for identifying the business partner as evidence for possible tax proceedings. Each tax entity should have an internal guideline setting out what evidence 23 should be provided in order that it can be possible to conclude a business contract at all. Since it is the duty of every tax entity to assess the risks of a business deal and thus to avoid the need to prove that it could or should have known that its business partner would not pay the value added tax. 22 VIES – VAT number validation. Available from: https://ec.europa.eu/taxation_customs/vies/. 23 Evidence for the identification of a business partner may include, for example - Extract from the Commercial Register, Trade Licence, VAT payer’s registration certificate, Verification of an Unreliable Payer, Scheme of Related Persons if the business partner does not provide it in the Financial Statements, Verification of the Person Acting for the Tax Entity, including the AML questionnaire, check of the registered office of the tax entity to see if it is situated at a virtual address or not, although it has already been ruled that the virtual office may not be aggravating in tax proceedings. Further, verification of the bank account number for tax purposes and its disclosure at the tax administrator, the Financial Statements and their disclosure in the collection of documents, or if the delivery of the goods takes place to the purchaser’s warehouse, then a copy of the warehouse lease agreement indicating the authorised person who can receive the goods in the warehouse and sign the CMR transport document, their position and relationship to the tax entity. And last but not least, the international transport order.

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