Requirements for chain transactions in European VAT

Abstract: Transactions where goods are successively supplied by several businesses and transported directly from the first supplier to the last customer are defined as chain transactions. There is currently no provision in the VAT Directive which generally defines and determines the VAT treatment of chain transactions. The concept of chain transactions has been implemented by the CJEU through its case law (e.g. in EMAG / Euro Tyre / Toridas). This however leads to legal uncertainty for the parties involved, as there are questions that have not been subject to the case law of the Court. In case the case law is not interpreted uniformly in the Member States, the different VAT treatment might lead to double (non) taxation or multiple registration obligations in different Member States related to high compliance costs. There is however a special form of chain transactions which is defined in Art. 141 of the VAT Directive. The scheme for triangulation provides a simplified VAT treatment especially for the intermediary in case the requirements are fulfilled. The Council has already adopted a new provision which will enter into force with effect of 1 January 2020. The aim of the provision is to harmonize the VAT treatment of chain transactions within the European Union. It however only targets situations where the intermediary is responsible for the transport of the goods. In case the first supplier or the last customer arrange for transport, the VAT treatment has to be determined in accordance with the case law of the CJEU. It neither clarifies when the requirements for chain transactions are fulfilled, as it is only applicable where those are satisfied. The definition of chain transactions developed by the CJEU requires that the transfer of the goods gives rise to single intra-Community dispatch. It needs to be verified if that requirement is still fulfilled where the transport responsibility for the goods is shared. At least one Member State in the European Union (Germany) takes the view, that the requirements for chain transactions are not satisfied in such a situation. This might lead to double (non) taxation and a non-harmonized VAT treatment within the European Union. Further, it is not clear if goods that are processed or temporarily stored still can give rise to single intra-Community supply of those goods. Where this is not the case, the transactions have to be regarded individually for VAT purposes. In case the last customer is a private person, it needs to be verified to what extent the rules for distance sales are applicable. The thesis aims at clarifying when the requirements for chain transactions are fulfilled and will analyze different situations where it can be questioned if those are fulfilled.