Relevant articles in the EU VAT Directive
Supply of goods – Place of supply of Intra-Community Acquisition of Goods – Simplification for Triangulation
Article 42
The first paragraph of Article 41 shall not apply and VAT shall be deemed to have been applied to the intra-Community acquisition of goods in accordance with Article 40 where the following conditions are met:
(a) the person acquiring the goods establishes that he has made the intra-Community acquisition for the purposes of a subsequent supply, within the territory of the Member State identified in accordance with Article 40, for which the person to whom the supply is made has been designated in accordance with Article 197 as liable for payment of VAT;
(b) the person acquiring the goods has satisfied the obligations laid down in Article 265 relating to submission of the recapitulative statement.
ECJ Cases Decided
- Joined cases C-536/08 (X) and C-539/08 (fiscale eenheid Facet-Facet Trading) – No deduction on Intra-EU acquisitions taxed at the MS of identification of the purchaser, instead of the destination
- C-386/16 (Toridas) – Exemption of intra-Community supply of goods in a chain of supplies only applies to the supply to which that transport can be attributed
- C-580/16 (Hans Bühler) – A VAT list submitted too late is not a reason to refuse a VAT exemption
- On 19 April 2018, the CJEU ruled that taxpayers can apply the simplified rules for triangular sales for VAT purposes using a VAT number other than the number in the Member State of dispatch and arrival, even if they are also VAT registered in the Member State of dispatch.
- This decision provides flexibility in using VAT numbers for triangulation purposes
- C-247/21 (Luxury Trust Automobil) – Mandatory Invoice requirements for triangulation which can not be corrected later
- In December 2022, the European Court of Justice (ECJ) ruled in the Luxury Trust Automobil GmbH case that Party B can only apply the simplified triangulation scheme in cross-border supply chains of goods if the invoices issued by Party B to Party C explicitly state that the reverse charge mechanism applies.
- Failure to include this statement on the invoice cannot be corrected retrospectively by issuing a new invoice with the correct statement.
- The case highlights the importance of proper invoicing in triangulation transactions and the potential VAT-compliance burdens for businesses involved in such chains
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