Prior a triangular transaction existed if exactly three traders in three different Member States concluded turnover transactions for the same goods and these goods were transported or dispatched directly from the first supplier to the last recipient.
The moving supply between the supplier and the purchaser is an intra-Community supply which is tax-exempt if certain conditions are met.
- In principle, the acquirer makes an intra-Community acquisition in the country where the goods are located at the end of the transport. The acquirer would therefore be liable to pay acquisition tax in the country of the recipient.
- If the acquirer uses a VAT number different from the destination country of the goods (e.g. that of his home country) vis-à-vis the supplier, the acquisition is generally deemed to have been made in the territory of that Member State until the acquirer proves that the acquisition has been taxed in the country of destination (so-called “double acquisition”).
The dormant supply between the acquirer and the recipient would in itself be a taxable supply to be registered in the country of destination. Therefore, the acquirer would be obliged to register for VAT purposes in the country of destination.
Rules for simplification
The following simplification rules exist for the acquirer:
- This is exempt from the acquisition tax liability in the country of destination.
- The tax liability for the subsequent (dormant) supply is transferred to the recipient (reverse charge).
- The intra-Community acquisition shall be deemed to be taxed in the Member State of the UID used.
The result of the triangular transaction is that the acquirer can use the VAT of his home state, but does not have to pay tax on an intra-Community acquisition either in that state or in the country of destination.
If the triangular transaction is disallowed (e.g. due to an incorrect invoice), the double acquisition remains. This means that the acquirer must pay the acquisition tax, but may not claim this amount as input tax at the same time as usual.
The “new” triangular transaction
The legislator has extended the scope of application of the triangular transaction with effect from 1 January 2023. The simplification rules for triangular transactions now also apply within chain transactions with more than three companies, however, only one trader in the chain can claim them, namely the taxable person within the chain who makes the intra-Community acquisition, i.e. is the recipient of the moving supply.
Although chain transactions with more than three companies can benefit from the simplification rules, the simplification is limited to transactions with UID numbers from a maximum of three different member states.
It should be noted that this represents the Austrian legal situation and that there is no complete harmonisation in this area at EU level. In order to avoid high back tax payments, it is therefore necessary to continue to check, on the one hand, whether the other Member States involved also accept a triangular transaction in the planned constellation and, on the other hand, whether the corresponding invoices have been issued correctly.
The consignee AT resident in Austria orders tool parts from the acquirer 2 DE resident in Germany that are not in stock there. DE passes the order on to the French-based purchaser 1 FR with the request to deliver them directly to the recipient AT in Austria. As FR does not have the tool parts in stock either, he orders them from the Spanish supplier ES and transports them to AT for his account. FR uses his Spanish VAT number, all other traders use the VAT number of their country.
There is a chain transaction between ES, FR, DE and AT. As FR acts as an intermediary with its Spanish VAT number, the transport of its supply is attributed to DE, whereby DE realises an intra-Community acquisition in Austria. If the conditions are met, this intra-Community acquisition by DE is tax-exempt in Austria and the tax liability for the supply from DE to AT is transferred to AT. In this case, DE, as the acquirer, must issue a corresponding invoice to AT and enter this supply in its ZM (in Germany) with a reference to the triangular transaction supply.
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