General Court T-646/24 (MS KLJUCAROVCI) – Judgment – Triangular transactions can qualify for VAT simplifications despite delivery variations

On December 3, 2025, the General Court issued the Judgment in the case T-646/24 (MS KLJUCAROVCI) .

Context: Reference for a preliminary ruling – Harmonisation of tax laws – Common system of VAT – Articles 41 and 42 of Directive 2006/112/EC – Place of intra-Community acquisition of goods – Article 141(c) of Directive 2006/112 – Triangular transaction – Simplification measure – Supply chain comprising four operators identified in three different Member States – Taxable person having or ought to have had knowledge of transactions constituting an abuse of the VAT system

Summary

Facts of the Case: The case involves MS Kljucarovci, a Slovenian VAT-registered company, which engaged in a triangular transaction involving goods acquired from Germany and sold to Danish companies. The Slovenian tax authority determined that the company was not entitled to the simplification measures for triangular transactions due to the involvement of four operators across three Member States and alleged VAT fraud.
Questions to the Court: The Slovenian Administrative Court sought clarification on the interpretation of Articles 41 and 141 of the VAT Directive regarding the conditions for triangular transactions. Specifically, the court questioned whether the physical transport of goods to the final customer rather than the intermediary affects the compliance with VAT regulations in triangular arrangements.
Court’s Decision on the First Question: The General Court ruled that the condition in Article 141(c) is satisfied even if the goods are not physically transported to the intermediary but to their customer, as long as the customer is VAT-registered in the same Member State. This interpretation supports the objective of facilitating intra-Community trade without imposing unnecessary barriers.
Court’s Decision on the Second Question: The court concluded that the awareness of the intermediary regarding the delivery destination does not affect the compliance with the conditions of Article 141(c). This ruling reinforces the principle that VAT transactions should be assessed based on objective characteristics rather than subjective knowledge of the operators involved.
Court’s Decision on the Third Question: The General Court determined that authorities in the Member State assigning the VAT identification number can deny the simplification benefits if it is established that the purchaser knowingly participated in VAT fraud. This decision emphasizes the importance of combating VAT fraud while maintaining the integrity of the VAT system across Member States.

Articles in the EU VAT Directive 2006/112/EC

Article 41 (first paragraph) and 141(c) of the EU VAT Directive 2006/112/EC

Article 41
Without prejudice to Article 40, the place of an intra-Community acquisition of goods as referred to in Article 2(1)(b)(i) shall be deemed to be within the territory of the Member State which issued the VAT identification number under which the person acquiring the goods made the acquisition, unless the person acquiring the goods establishes that VAT has been applied to that acquisition in accordance with Article 40.

Article 141
Each Member State shall take specific measures to ensure that VAT is not charged on the intra-Community acquisition of goods within its territory, made in accordance with Article 40, where the following conditions are met:
(c) the goods thus acquired by the taxable person referred to in point (a) are directly dispatched or transported, from a Member State other than that in which he is identified for VAT purposes, to the person for whom he is to carry out the subsequent supply;

Key Facts

Company Profile and Transactions: The applicant, a Slovenian VAT-registered company, purchased soya seed and rapeseed products from German suppliers and resold them to Danish companies, identified as shell companies by the tax authority.
Transportation and VAT Reporting: The applicant organized the transportation of goods directly from Germany to Denmark, reporting these transactions in its VAT returns in Slovenia while indicating a “Reverse Charge” in invoices to customers.
Delivery Issues: The goods were delivered to various warehouses in Denmark, not directly to the Danish companies, complicating the supply chain and raising concerns about the legitimacy of the transactions.
Tax Authority Investigation: The Slovenian Tax Authority sought confirmation from Danish authorities regarding the acquisition declarations and VAT payments by the Danish companies, which reported no such transactions or receipt of goods.
Suspicion of VAT Evasion: The tax authority identified several red flags, including unusual payment methods, late VAT reporting, and the involvement of intermediary operators linked to offshore entities, suggesting the applicant was aware of potential VAT evasion.
Tax Inspection Findings: The Slovenian Tax Authority assessed the applicant company for VAT obligations for 2015 and 2016, determining a payable VAT amount of €1,802,408.04, along with default interest totaling €458,834.77.
Triangular Transaction Regulations: The Tax Authority concluded that the applicant could not apply the simplification for triangular transactions because more than two supplies occurred in a single transport operation, impacting the VAT liability location.
Rejection of Administrative Action: The Finance Ministry upheld the Tax Authority’s findings, stating the transactions did not meet the criteria for genuine triangular transactions, as the goods were not made available to the third party in the supply chain.
Judicial Action by the Applicant: The applicant contested the decision in the Administrative Court of Slovenia, arguing that the simplification rules could apply to more than three taxable persons in a chain and that delivery logistics did not negate the triangular transaction definition.
Court Consideration and Referral: The Administrative Court is tasked with determining if genuine triangular transactions occurred and whether the applicant was aware of any VAT system abuse, potentially leading to additional tax liabilities.

Source ecer.minbuza.nl

Questions

Should Article 141(c) of the VAT Directive, the non-application of Article 41, first paragraph, of the VAT Directive depending on Articles 42 and 197 thereof, be interpreted to mean that the condition set out in this provision is met when the goods in question are delivered with a single transport action (that is to say, made available or transferred in ownership) to the customer of the customer (and not to the third party in the chain of transactions), who is registered for VAT purposes in the same member state as the third party in the chain of transactions?
Is it relevant for the fulfillment of the condition of Article 141(c) of the VAT Directive that the party relying on the simplified scheme for triangle transactions is aware of the subsequent delivery?

Depending on the answer to the two questions above, the Upravno sodišče poses the following third question:

Should Article 41, first paragraph, of the VAT Directive be interpreted in this case to mean that VAT can be levied in the state of identification of the taxpayer who is the second party in the chain of transactions (in Slovenia), without the tax base being reduced in accordance with Article 41, second paragraph, of the Directive, if it is established that the taxpayer knew or should have known that they were participating in transactions that constitute an abuse of the VAT system?

AG Opinion

None

Judgment

1. Article 141(c) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2010/45/EU of 13 July 2010,

must be interpreted as meaning that:

the fact that the goods delivered in the context of a triangular transaction are not physically transported to the person for whom the subsequent supply is made, but to his customer, to whom he resells them and who is identified for value added tax (VAT) in the same Member State as the reseller, shall not preclude the condition laid down in that provision from being regarded as satisfied.

(2) Article 141(c) of Directive 2006/112, as amended by Directive 2010/45,

must be interpreted as meaning that:

the fact that the trader benefiting from the simplification measure provided for triangular transactions is aware that the goods concerned are not physically transported to the person for whom the subsequent supply is made, but to his customer, to whom he resells them and who is registered for VAT purposes in the same Member State as the reseller, does not affect compliance with the condition laid down in that provision.

(3) Articles 41 and 42 of Directive 2006/112, as amended by Directive 2010/45,

must be interpreted as meaning that:

it is for the authorities and courts of the Member State which has assigned the VAT identification number under which a purchaser subject to VAT has made an intra-Community acquisition of goods to refuse to grant that purchaser the benefit of the scheme provided for in Articles 42 and 141 of that directive and of the reduction of the taxable amount provided for in Article 41, of that directive, if it is established that the purchaser knew or ought to have known that, by the transaction relied on to justify the application of that scheme, he was participating in VAT fraud committed in the context of a chain of supplies.

Relevant Jurisprudence:

The case cites recent case law from the Court of Justice of the European Union, including:

Commission/Hungary (C-580/16): Addressing the interpretation and application of VAT regulations.
Other Relevant Judgments: Further clarifications on the principles surrounding VAT and intra-community transactions.

Source