ECJ judgments

The CJEU confirms: the triangular simplification may also apply to four-party chain transactions

T 646/24 – MS KLJUČAROVCI, d.o.o.

Under the EU VAT system, the conditions for applying the triangular simplification may also be met in four-party chain transactions where the goods are actually delivered to the domestic customer of the third party in the chain (Party “C”), in the Member State of destination. If the chain transaction involves evidenced tax evasion, the tax authority of Member State “B” may impose a sanction-based VAT liability linked to the use of the VAT identification number, and such VAT cannot be reclaimed on the ground that the intra-Community acquisition was taxed in Member State “C”.

MS KLJUČAROVCI, d.o.o. is a company registered in Slovenia that purchased goods from a German trader, with the goods intended for three Danish customers. The transport was organised by MS acting as the intermediary operator. A single transport operation took place, moving the goods from Germany to Denmark. Acting as the “B” operator, MS applied the triangular simplification using its Slovenian VAT number and indicated the reverse charge on the invoices. Through international administrative cooperation, the Slovenian tax authority established that the Danish customers of MS had in fact not acquired the goods; instead, the real acquirer was ANC Group, a customer of those Danish companies, and MS was aware of this. In other words, the goods were dispatched from Germany to Denmark, but not to the Danish customers acting as “C” operators, rather to their own Danish customer. The Slovenian tax authority consequently denied the application of the triangular simplification and, due to MS’s use of its Slovenian VAT number, imposed a sanction-based VAT liability in Slovenia.

In this case, the CJEU confirmed the interpretation provided previously by the Explanatory Notes to the Quick Fixes: triangular simplification may also be applied in four-party chain transactions where the final destination of the goods is in the Member State of the “C” operator, but the goods are delivered not to the “C” operator itself, but to its domestic customer, provided that all other conditions for triangular simplification are fulfilled. Where fraudulent intent is proven, the Member State of the “B” operator may apply its sanction-based VAT rules linked to the use of the VAT identification number and may demand the VAT due on the intra-Community acquisition deemed to take place in Member State “C”. In such circumstances, a “B” operator proven to have participated in tax evasion cannot subsequently reduce the taxable amount on the ground that the intra-Community acquisition was also taxed in Member State “C”.

Full English text of the judgement

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