VAT: Triangular transaction despite registration of intermediary in Member State of destination
The Austrian Supreme Administrative Court (VwGH) has decided that the triangular transaction rule also applies in the event that the intermediary is identified in the Member State of destination, but does not have a fixed establishment in that Member State. The decisive factor for the applicability of the triangular transaction rule is the VAT ID number used by the intermediary for the acquisition in question.
VwGH case of 15 December 2021, Ro 2020/15/0003
In this case, a company resident in Switzerland (acquirer) purchased crude oil from a supplier in Italy and sold it to a Slovenian taxable person (recipient). Transportation took place directly from Italy to Slovenia. The supplier and the recipient both used VAT ID numbers of their state of residence. The acquirer (intermediary) used an Austrian VAT ID number. In addition, the acquirer was in possession of a VAT ID number of the destination state (Slovenia). The Austrian tax authority denied application of the triangular transaction rule because the acquirer was identified for VAT purposes in the destination state.
With reference to the Hans Bühler case and the provisions of Art. 141 point (a) and point (c) VAT Directive, the VwGH decided that the fact that an acquirer has a VAT ID number in the destination state is not detrimental to application of the triangular transaction rule. The decisive factor is which VAT ID number the acquirer uses during the triangular transaction. This view is in line with the objectives of the triangular transaction rule. The objectives of the triangular transaction rule are that tax revenues should be accrued in the Member State of final consumption, and the triangular transaction should free the acquirer from tax registration obligations and obligations to submit tax returns in the destination state.
Impact of the decision
Under no circumstances will the tax authority be able to maintain its strict view in item 4294 of the Austrian VAT Guidelines (UStR) that the registration of the acquirer in the destination state is detrimental to the application of the triangular transaction rule. Nevertheless, according to the wording, tax residency of the acquirer in the destination state (legal seat or fixed establishment) continues to preclude application of the triangular transaction rule.
As the VwGH has, practically speaking, extended the scope of application of the triangular transaction rule, affected companies should check whether they are able to make use of the triangular transaction rule in comparable cases and thus simplify processes.
