Comments on GC T-646/24: Simplification measure for triangular transactions applicable to fourth link in the chain

ABC regulation in four-party chain: physical delivery and abuse

Triangular Transaction and VAT Fraud: The Slovenian intermediary MS KLJUČAROVCI engaged in a triangular transaction scheme by purchasing goods from German suppliers and selling them to Danish customers, while the goods were actually transported directly to a fourth party in Denmark. The Slovenian tax authorities deemed this fraudulent, holding MS KLJUČAROVCI liable for VAT.
Legal Interpretation of Article 141: The referring court sought clarification on whether the simplification scheme for triangular transactions applies when goods are transported directly to a final customer rather than through the intermediary, as stated in Article 141(c) of the VAT Directive.
General Court’s Ruling: The General Court ruled that the simplification measure can apply in a four-party chain without physical delivery to the third party; however, it also stated that tax authorities can deny this benefit if the intermediary knew or should have known about the VAT fraud involved in the transactions.

The Court of First Instance determined that for the application of Article 141(c) of the VAT Directive, it is irrelevant whether MS Ključarovci, d.o.o. knew the goods were transported to the ANC Group instead of the three Danish companies, as long as the ANC Group is subject to VAT in Denmark.
MS purchased goods from German companies, organized their transportation to Denmark, and applied a simplification measure for triangular transactions, transferring the VAT obligation to the Danish companies, despite the Slovenian tax authorities questioning the legitimacy of this arrangement due to the absence of those companies in Denmark.
The court noted that MS could lose the simplification measure if it is proven that it was aware or should have been aware that its transactions were part of a VAT fraud scheme involving the supply chain, highlighting the importance of due diligence in VAT compliance.