Free online invoicing software
with KSeF support
Are you involved in transactions where you are one of the parties selling the same product? Triangular transactions are important in EU trade. A special simplified procedure removes the need for the sales intermediary to register in the country where the goods are delivered. Read on to learn how the procedure works and its conditions!
What is a triangular transaction?
A triangular transaction is a simpler form of chain transaction, describing several entities successively selling the same product. The first party gives it directly to the last, while the supply is made through the intermediary.
The specific conditions in Article 135(1)(2) of the VAT Act must be met:
- Three VAT taxpayers must participate, registered for intra-Community transactions in three different member states;
- The transaction must involve supply of the same goods;
- The first party must hand the goods directly to the last, the final buyer, but the goods must be supplied between the first and second parties and between the second and last parties, so an intermediary stands between original seller and final buyer;
- The goods are dispatched or transported by or on behalf of the first or second VAT taxpayer from one member state to another.
Accounting that understands your business
Leave your email address and receive guides supporting your business’s growth once a week
Triangular transactions: simplified procedure
Meeting those conditions enables a special simplified procedure removing the need for the intermediary to register where the goods are delivered.
The procedure is detailed in Article 135(1)(4) of the VAT Act. Its sequence, and the obligations of each participant, are:
- The first party, a VAT taxpayer:
- Hands the goods directly to the final party;
- Makes and properly reports an intra-Community supply of the same goods to the second taxpayer;
- The second taxpayer, who under this provision cannot have their registered business seat in the member state where transport ends:
- Uses the same VAT identification number for dealings with both the first and final taxpayers, assigned by a member state other than where transport starts or ends;
- Makes an intra-Community acquisition of the goods;
- Names the final counterparty as responsible for settling VAT on the triangular transaction;
- The final VAT taxpayer:
- Settles VAT on the supply made under the simplified procedure;
- Uses the VAT identification number of the member state where transport ends.
Triangular VAT transactions and the simplified procedure: summary
Three different entities in three different EU member states take part. The first delivers the goods to the last, while the second acts as intermediary and supplier. Thanks to the simplified procedure under Article 135(1)(4) of the VAT Act, the intermediary need not register for VAT in the destination country.
If you found this article interesting, explore our tax advisory services and read how we can help you:
Summary
Do you operate in e-commerce and take part in triangular transactions?
Explore our comprehensive e-commerce services throughout Europe! Let us help with accounting and VAT settlement.
Contact us today for a personalised offer!
Interested in this article?
Enter your email address and once a week you will receive practical materials and tips to help you grow your business.
Book a free consultation
Grow your business with accounting combined with advisory services:
or
