- The author would like to thank Professor Tina Ehrke-Rabel, head of the Institute of Fiscal Law, for discussing this paper and for valuable hints.
- Cf recital 4 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, OJ L347/1 (2006) (‘VAT Directive’).
- See, inter alia, Liam P Ebrill, Michael Keen, Jean-Paul Bodin and Victoria P Summers, The Modern VAT (IMF, 2001) 177; Thomas Ecker, A VAT/GST Model Convention (IBFD, 2013) 131.
- OECD, ‘International VAT/GST Guidelines' (2014), chapter 1 section C.
- See Ebrill et al (n 2) 177.
- Paul Farmer and Richard Lyal, EC Tax Law (Oxford University Press, 1994) 137; Case C-245/04 EMAG Handel Eder [2006] ECR I-3227, para 31.
- For an older example see eg ‘Begründung zum Umsatzsteuergesetz’ (Official Commentary on the German VAT Code) (Reichsteuerbla tt, issue 1934) 1551.
- Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, OJ L347/1 (2006), last amended by Council Directive 2010/88/EU of 7 December 2010 amending Directive 2006/112/EC on the common system of value added tax, with regard to the duration of the obligation to respect a minimum standard rate, OJ L326/1 (2010).
- Michel Aujean, ‘Value Added Tax in the Internal Market, a First Assessment' [1995] EC Tax Review 14, 38.
- See Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the Future of VAT, COM(2011) 851 final: the Commission reached the conclusion that there are no longer any valid reasons to keep the initial objective of taxation in the country of origin; moreover, it should be considered that numerous ‘new’ Member States made great efforts in adopting the transitional regime, probably having little interest in performing a paradigm shift any time soon
- The simplification measures can only be applied if the intra-Community supply is carried out by the first party towards the second one of the trio, but not when by the second party towards the third (see Art 141(b)).
- Peter Hughes, EU VAT Aspects of Longer Chains of Triangular Transactions' [2012] International VAT Monitor 230, 232; as Hughes points out, the simplification measures—contrary to popular belief—are not limited to triangular transactions involving three parties established in three different Member States, but can extend to transactions involving more than three parties, as long as the intra-Community supply can be ascribed to the supply of the last but two to the last but one participant in a particular chain transaction.
- For a case-by-case overview of the ECJ's rulings see Joep JP Swinkels, ‘Zero Rating Cross-Border Supplies of Goods under EU VAT' [2012] International VAT Monitor 400.
- Cf Case C-245/04 EMAG Handel Eder [2006] ECR I-3227, para 39.
- Cf Ibid, paras 36–37.
- Cf Ibid, paras 40, 44.
- Cf Ibid, para 38.
- Cf Ibid, para 50.
- Cf Case C-409/04 Teleos [2007] ECR I-7797, para 70; Case C-587/10 VSTR [2012] ECR I-0000, paras 30, 55; Art 138(1) VAT Directive.
- Cf Case C-430/09 Euro Tyre Holding [2010] ECR I-13335, para 44; VSTR (n 18) para 32.
- Cf Euro Tyre Holding (n 19) paras 33, 45.
- VSTR (n 18) para 32.
- Case C-320/88 Shipping and Forwarding Enterprise Safe [1990] ECR I-285, para 7; Case C-185/01 Auto Lease Holland [2003] ECR I-1317, para 32; Case C-63/04 Centralan Property [2005] ECR I-11106, para 62; Case C-111/05 Aktiebolaget NN [2007] ECR I-2697, para 32; Case C-118/11 Eon Aset Menidjmunt [2012] ECR I-0000, para 39.
- Eon Aset (n 22) para 38; in this decision the ECJ dealt with the differentiation between operating leasing and financial leasing, the former constituting a ‘supply of services', the latter a ‘supply of goods' in terms of EU VAT law.
- See Farmer and Lyal (n 5) 94, 141.
- Shipping and Forwarding Enterprise Safe (n 22) para 13; Case C-63/04 Centralan Property [2005] ECR I-11106, para 63.
- By definition, chain transactions consist of several transfers of the power to dispose as owner.
- Redmar Wolf, ‘VAT-Pitfalls in Intra-EU Commodity Trade’ [2012] EC Tax Review 33, 34; obviously referring to Art 32 VAT Directive: a supply (in terms of VAT) may well be located in a different country from the country where the ‘right to dispose’ is transferred.
- Euro Tyre Holding (n 19) paras 15, 40–41: the second (where this is also the last) person acquiring the goods in the Euro Tyre case had provided lorries and drivers for the transport, yet this form of ‘involvement’ was not a factor supporting the conclusion that the transport had to be ascribed to the supply received by this person.
- Cf Case C-184/05 Twoh [2007] ECR I-7910, para 25; Case C-146/05 Collée [2007] ECR I-7861, para 24; Case C-273/11 Mecsek-Gabona [2012] ECR I-0000, para 36. According to Art 273 VAT Directive, Member States may impose obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, subject to the requirement of equal treatment as between domestic transactions and transactions carried out between Member States by taxable persons and provided that such obligations do not, in trade between Member States, give rise to formalities connected with the crossing of frontiers.
- para 17c(1) of the German Umsatzsteuer-Durchführungsverordnung (Regulation implementing the German VAT Code): the supplier must, generally, provide evidence in the accounts that the requirements for exemption from tax have been complied with, which in particular includes the VAT identification number of the acquirer.
- Cf VSTR (n 18) para 55.
- Cf ibid, paras 49–51.
- Cf Ibid, para 58.
- Cf Euro Tyre Holding (n 19) para 38.
- Stefan Maunz and Hendrik Marchal, ‘Zero Rating Cross-Border Triangular Transactions under EU VAT’ [2012] International VAT Monitor 307, 309; see, similarly, Michel Aujean and Peter Vis, ‘VAT in the Single Market: The Transitional Arrangements Explained' [1992] EC Tax Review 117, 121.
- Cf Euro Tyre Holding (n 19) para 38; Teleos (n 18) para 67; Case C-273/11 Mecsek-Gabona [2012] ECR I-0000, para 43.
- In Germany and Austria the ECJ's judgment in Euro Tyre has been interpreted as if the Court had ascribed the intra-Community supply to the supply of the first seller in the transaction; just recently, the German Bundesfinanzhof (Federal Fiscal Court) has clarified this misconception, which had been shared in German (and Austrian) literature and jurisdictions; see Richard Kettisch, ‘Reihengeschäfte—Rechtsrahmen, Vertrauensschutz und die Tragweite des Zivilrechts' [2012] Umsatzsteuer-Rundschau 593, 597, 605.
- Cf Teleos (n 18) para 35.
- Ibid, paras 24–35, 45.
- See Cases C-354/03, C-355/03 and C-484/03 Optigen et al [2006] ECR I-483, para 44; Cases C-439/04 and C-440/04 Kittel and Recolta [2006] ECR I-6161, para 41; Teleos (n 18) para 38; Case C-285/09 R [2009] ECR I-12605, para 39; Teleos (n 18) para 28; Case C-587/10 VSTR (n 18) para 30.
- For a differing opinion, see eg Wolf (n 27) 37: B had it in its power to ascribe the transport to either the first or the second supply by informing or not informing party A of the subsequent sale to party C; see also Maunz and Marchal (n 35) 311.
- For instance the first acquirer in the Euro Tyre case used a Belgian VAT ID number; were the competent national court to have come to the conclusion that he was actually not effecting an intra-Community acquisition from an objective point of view (which remained unsolved in the ECJ's ruling), then he would (without prejudice to his liability for the VAT in the Netherlands) be making a safety net intra-Community acquisition in Belgium.
- See Euro Tyre Holding (n 19)paras 40, 44; with the proviso that the circumstance that transport is effected by the owner of the goods or on his behalf might nonetheless play a role in the decision whether to ascribe that transport to the first or second supply.
- When the first party in a chain supply holds the right to dispose of the goods as owner during the dispatch or transport, that party is effecting the intra-Community supply, and has to invoice a zero-rated supply; when the last party holds the right to dispose, it is receiving an intra-Community supply, and must file a corresponding tax return.
- Cf Euro Tyre Holding (n 19) para 40; note that this statement conversely implies that if not an intermediary but the first seller or last acquirer is owner of the goods during their transport, that circumstance must be decisive, implying that that party and its direct counterparty are carrying out the intra-Community transaction.
- VSTR (n 18) para 32.
- Euro Tyre Holding (n 19) para 45.
- Cf VSTR (n 18) para 32: ‘could no longer be ascribed to the first supply to the first person acquiring the goods'.
- ie, when the first party involved in the intra-Community supply is also the first party in the chain transaction
- Comparable to the abovementioned Euro Tyre case—see 3.8.
- According to the ECJ's case law regarding the protection of good faith in intra-Community supplies; see eg Teleos (n 18) paras 66–67 as well as Art 7(4) Austrian VAT Code.
World Journal of VAT/GST Law
Volume 3, 2014 - Issue 2
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