The TEU commented on simplified tripartite transactions. In Poland, the legal basis for chain transactions is Article 7(8) Act on 11 March 2004 on tax on goods and services.
The Court stressed that WTT can be used after material conditions have been fulfilled, but that failure to comply with the formal conditions should not invalidate VAT clearance in accordance with the simplified procedure.
The Goods and Services Tax Act takes account of the case where the goods are sold successively by several entities, but is actually transported only from first suppliers to the last buyer. The described scheme is just a so-called chain transaction. Each operator involved in the transaction shall recognise the supply of goods to another supplier.
Chain transactions – scheme outline
Chain transactions may be both national where all entities are from the territory one the country and the goods are moved only within the territory of that country and internationally, where the operators come from two or more countries and the goods shall be moved between countries.
It should be noted that the transport of the goods concerned is not essential in chain transactions. The main importance of this transport is that the goods are actually moved from the territory one States to another area.
Taxation of subsequent supplies results from classification of transport only to one deliveries in series.
The structure of chain transactions for the supply of a particular commodity is as follows: sales are invoiced by several counterparties involved in the supply chain where first from the operators transport the goods directly to the final buyer. The specific goods shall be issued once, directly to the last buyer, but shall not be the object one, and a lot of transactions.
Each supply shall be treated separately. We can distinguish the delivery by moving – related to a one-time shipment of goods. In this case, the place of the benefit is the point where the goods are located at the time of commencement of dispatch.
Other deliveries are referred to as fixed deliveries, i.e. without real shipment of goods. In respect of such supplies, the indication of the place of the benefit shall be as for a commodity which is not broadcast, that is, according to the place where the goods were at the time of delivery.
In the pattern of chain transactions, an intra-Community transaction (or an export or import transaction respectively) will be a supply to which transport will be eligible. The pre-supply features of domestic deliveries in the country of delivery of goods.
On the other hand, all subsequent deliveries will be domestic in the country of destination. It is therefore essential to identify the actual organiser of the carriage of goods. Therefore, the method of taxation depends on the qualification of which supply is a mobile supply (i.e.
which is assigned to transport) and which supplies are stationary (for which the place of delivery will be determined in the country of dispatch or in the country of completion of delivery).
Under Article 22(2) The VAT Act contains the main rules for determining which supply is a mobile delivery in the event of transport by an intermediary.
According to this regulation, in the case of the dispatch or transport of goods by the buyer who also makes its delivery, it is assumed that the transport is attributable to the delivery made to that buyer (unless the delivery conditions indicate that the transport of goods is attributable to its delivery).
Where the delivery of goods precedes the transport of goods, it shall be deemed to have taken place at the place where the dispatch or transport of goods begins. However, where the supply of goods takes place after the transport of goods, it shall be deemed to have taken place at the place where the transport is completed.
As regards intra-Community transactions, where, as a result of several successive deliveries of the same goods, a single shipment or a single transport of those goods is carried out, that movement may only be attributed one of those supplies that will be the only one taxed 0% VAT rate as intra-Community supply of goods.
A particular type of transaction is the so-called intra-Community tripartite transaction according to the so-called simplified procedure. It provides for special rules for the clearing of the tax by entities involved in such a transaction. It is therefore essential for the taxpayer to identify an intra-Community transaction to which he is party and to identify which entity he is in order to: first, second Or the last one.
The conditions for the above mentioned transactions are included 135 section 1 point 2 VAT Act. The simplified procedure reduces the responsibilities of the intermediary, i.e. second in the order of the entity involved in the transaction. Delivery between second and the last taxable person is covered by the mechanism for calculating the tax by the purchaser for which it is an intra-Community acquisition of goods.
TEU position on tripartite transactions
The Court of Justice of the European Union (TEU) recently ruled in its judgment of 19 April 2018 on Hans Bühler KG, case C 580/16.
Hans Bühler was also registered as a German entity for VAT purposes, including in Austria. The company bought goods from German suppliers, which it subsequently sold to a Czech entity. The goods were transported directly by suppliers from Germany to their destination at the final buyer in the Czech Republic.
Although Hans Bühler was an entity from Germany, the Austrian VAT number was used for such operations in order to consider the transaction as an intra-Community tripartite transaction (WTT) in which the final purchaser of the WNT VAT settlement.
According to the decision of the TEU, the entity wishing to use WTT has the option to choose one VAT numbers in different EU countries.
The Court stressed that WTT can be used after material conditions have been fulfilled, but that failure to comply with the formal conditions should not invalidate VAT clearance in accordance with the simplified procedure.
This is a judgment that benefits taxpayers.