Special care should still be taken where the middleman (party B) is in charge of the transport
The Court of Justice of the EU (CJEU) reminds us that taxpayers are not free to do whatever they like when they are involved in triangular transactions. The VAT treatment of supply chains are subject to strict rules, notably regarding the attribution of the transport.
Reminder of the principles
The so-called ABC supply chains cover the situations where 3 taxpayers conclude successive agreements for the supply of the same goods, while only one single transport from the first supplier (A) to the last customer (C) takes place.
In an ABC supply chain, the intracommunity transport can only be ascribed to one single supply (A-B or B-C). The other operation therefore qualifies as a supply without transportation. Particular caution is necessary where the transport is performed by or on behalf of party B, as the latter is simultaneously involved in the first supply as a customer and in the second one as a supplier.
The European case-law
In order to determine to which supply the transport should be attributed, the CJEU prescribes “an overall assessment of all the circumstances of the case in order to establish which of those two supplies fulfils all the conditions relating to an intra-Community supply.”
It appears crucial to ascertain that the right to dispose of the goods as owner is transferred to the second customer (C) in the Member State of destination, i.e. after that the intra-EU shipment has started (instead of in the Member State of departure as this would be a case of two successive supplies under the ex-works incoterm).
The CJEU recently confirmed that “a supply of goods by a taxable person established in a first Member State is not exempt from value added tax […] where, prior to entering into that supply transaction, the person acquiring the goods, who is identified for value added tax purposes in a second Member State, informs the supplier that the goods will be resold immediately to a taxable person established in a third Member State, before he takes them out of the first Member State and transports them to that third taxable person […]” (CJEU, 26/07/2017, Toridas, C-386/16 – we underline).
In the same judgment of 26 July 2017, the Court also mentioned that the VAT identification of B in another Member State than the one of departure of the goods cannot be a criterion allowing to classify a supply as an intracommunity transaction (contrary to what could have been possibly implied by a previous case-law). In other words, the use of one of his VAT numbers by B should be the consequence of the correct analysis of the supply chain rather than a free choice that would be left to the taxpayer.