Tax law special feature: Triangular transaction or chain transaction and input tax
July 5, 2018 | 30,00 EUR | answered by Oliver Burchardt
An entrepreneur A in Cologne receives an order from an entrepreneur B in Vienna. Entrepreneur A in Cologne places this order with an entrepreneur C in Munich, and entrepreneur C in Munich produces the goods and ships them directly to Vienna, thus supplying company B directly.
Entrepreneur A receives an invoice from company C with value added tax within Germany and then charges company B in Vienna.
The question here is:
How is this process viewed from a tax perspective for entrepreneur A? Is this an intra-community acquisition? Is it a chain transaction or a triangular transaction? Does entrepreneur A invoice entrepreneur B in Vienna without VAT and can he then claim the input tax credit?
Is it more tax-efficient for entrepreneur A to pick up the goods himself and ship them to Vienna, or to hire a freight forwarder?
Dear inquirer,
thank you for your inquiry, which I will gladly answer as part of an initial consultation.
From a sales tax perspective, this transaction is a triangular transaction (also known as a chain transaction).
In the business you described, the following invoices need to be issued:
Company C to Company A
- C must issue an invoice to A without showing sales tax. The delivery is tax-free according to § 4 No. 1 lit. b of the German Sales Tax Act, as it is an intra-community delivery to Austria.
Company A to Company B
- A must issue an invoice to B with Austrian sales tax, as the acquisition takes place in Austria and is tax-free there.
At the same time, Company A must register for tax purposes in Austria and declare and pay tax on the intra-community acquisition.
From a tax perspective, it is irrelevant whether Company A delivers the goods itself or not, as the sales tax does not represent a final burden for any company.
Even if A is the supplier, there are no significant differences in the effects. Since the machine will be delivered in Austria in any case, A must issue an invoice with Austrian sales tax. Only the taxation of an intra-community acquisition by A in Austria would be eliminated.
Best regards,
Burchardt
Tax advisor
