- Triangular transactions are a VAT simplification for EU trade involving three parties in three different Member States, designed to prevent the intermediate supplier from needing VAT registration in the destination country, but their correct application is complex and requires strict adherence to specific EU VAT Directive articles (e.g., 141, 197, 226(11a), 265).
- Recent legislative changes (2020 Quick Fixes, notably Article 36a for transport allocation and Article 138 making VAT ID and EC Sales List reporting substantive conditions) and ECJ case law (e.g., Luxury Trust Automobil, C-247/21, emphasizing the critical importance of the “Reverse charge” wording on invoices) have increased the formal precision required for triangular simplifications to be valid.
- With the upcoming “VAT in the Digital Age” (ViDA) package and its move towards e-invoicing and digital reporting, triangular transactions will become “less forgiving” as errors will be more visible to tax authorities, demanding businesses implement rigorous VAT controls to ensure all legal conditions, transport allocations, invoicing, and reporting are precisely aligned.
Source Dennis Christoffersen
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