Intra-EU trade and chain transactions under EU VAT – between simplification measures and inconsistent results

Abstract: After nearly 20 years ago when the transitional arrangements for the taxation of trade between Member States was introduced it made a significant improvement compare to the old exports and imports system. However, the new arrangements have not eliminated obstacles completely for proper trade between Member States and proper functioning of the single market. It is still extremely challenging for businesses to deal with cross-border supplies and especially with chain transactions. This thesis seeks to ascertain how the EU VAT rules together with the simplification measures and the case law of the Court of Justice of the European Union has impacted the intra-EU trade and especially chain transactions. Whether it created a simple and satisfactory functioning system or whether it created a complex and challenging system, without a uniform treatment by Member States, which has resulted in unsatisfactory inconsistencies. The thesis starts with a short historical overview of intra-EU trade and the main rules in the VAT Directive which are applicable for cross-border supplies of goods and chain transactions. The following part of the thesis deals with intra-Community supplies of goods and the problems with chain transactions in the light of the case law of the Court of Justice of the European Union. Problems with intra-Community simplified triangular transactions are analysed in three specific scenarios. The thesis also concerns the problematic issues related to reporting obligations in chain transactions and the right to deduct/refund input VAT. The possible solutions and improvements for the current VAT system are overviewed in the light of the recent Commission’s Green Paper on the future of VAT.