EUROPEAN COMMISSION
DIRECTORATE-GENERAL
TAXATION AND CUSTOMS UNION
Indirect Taxation and Tax administration
Value Added Tax
7th
VAT Expert Group
meeting – 6 February 2014
taxud.c.1(2014)83538 – EN
Brussels, 13 January 2014
VAT EXPERT GROUP
VEG NO 029
Option 1B - Sub-Groups report – Chain transactions
Commission européenne, 1049 Bruxelles / Europese Commissie, 1049 Brussel – Belgium – Tel.: +32 2 299 11 11.
taxud.c.1(2014)83538 – VAT Expert Group
VEG No 029
TABLE OF CONTENT
1.
MEMBERS OF THE SUB-GROUP ...................................................................................................... 4
2.
MEETINGS OF THE SUB-GROUP...................................................................................................... 4
3.
TASK OF THE SUB-GROUP............................................................................................................... 4
4.
WORKING ASSUMPTION OF THE SUB-GROUP FOR THE TERM “CHAIN TRANSACTION” ............... 5
4.1
Scenario 1............................................................................................................................... 6
4.2
Scenario 2............................................................................................................................... 7
5.
APPROACH OF THE SUB-GROUP – FIVE STEP METHODOLOGY ...................................................... 7
6.
WORK UNDERTAKEN AND RESULTS ............................................................................................... 8
6.1
Step 1 – Field Work / Preparation ......................................................................................... 8
6.2
Step 2 – Analysis of the Responses ........................................................................................ 9
6.2.1
Scenario 1 ........................................................................................................................ 9
a)
Question 3, Scenario 1: To which of the 3 transactions is the intra-EU supply to be
assigned? ........................................................................................................................................ 9
b)
Question 4, Scenario 1: Is a registration required if the business is not established
in the Member States where the supply takes place? ................................................................... 9
c)
Question 10, Scenario 1: Does your Member State apply the simplification of the
triangular scheme of Article 141 of the VAT Directive in cases of a chain transaction
involving 4 or more parties? ......................................................................................................... 10
6.2.2
Scenario 2 ...................................................................................................................... 11
6.2.3
Validation of the excel sheet by the Member States .................................................... 11
6.3
Step 3 – Identifying Best Practises ....................................................................................... 11
6.4
Step 4 – Evaluation / Discussion of Potential Solution(s) .................................................... 12
6.4.1
Discussion of Criteria for Evaluation ............................................................................. 12
6.4.2
Evaluation of SCENARIO 1 ............................................................................................. 12
a)
Case 1: Member State attributes the intra-Community supply to the transaction
between A and B .......................................................................................................................... 13
aa)
Base case, i.e. no simplification measures at all ....................................................... 13
bb)
Simplification measure: application of Articles 141 and 197 of the VAT Directive .. 14
cc)
Simplification measure: application of Article 194 of the VAT Directive .................. 16
dd)
Proposal for further simplification ............................................................................ 16
b)
Case 2: Member State attributes the intra-Community supply to the transaction
between B and C........................................................................................................................... 18
aa)
Base case, i.e. no simplification measures at all ....................................................... 18
bb)
Simplification measure: application of Articles 141 and 197 of the VAT Directive .. 19
cc)
Simplification measure: application of Article 194 of the VAT Directive .................. 19
c)
Case 3: Member State attributes the intra-Community supply to the transaction
between C and D .......................................................................................................................... 20
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aa)
Base case, i.e. no simplification measures at all ....................................................... 20
bb)
Simplification measure: application of Articles 141 and 197 of the VAT Directive .. 21
cc)
Simplification measure: application of Article 194 of the VAT Directive .................. 21
dd)
Proposal for further simplification ............................................................................ 21
d)
Case 4: Member State attributes the intra-Community supply to either the
transaction between B and C or between C and D ...................................................................... 22
aa)
Attributing the intra-Community supply based on legally defined, but rebuttable
presumption ............................................................................................................................. 22
bb)
Attributing the intra-Community supply based on factual evidence ........................ 23
6.4.3
Evaluation of SCENARIO 2 ............................................................................................. 25
6.4.4
Overall assessment........................................................................................................ 25
7.
7.1
STEP 5 - RECOMMENDATIONS ..................................................................................................... 26
Recommendations for clarification and consistent approaches ......................................... 26
7.2
Recommendations to make better use of the options granted to the Member States by
the VAT Directive................................................................................................................................... 27
7.3
Recommendations requiring an amendment of the VAT Directive .................................... 27
7.4
Reservations......................................................................................................................... 27
8.
ANNEXES ....................................................................................................................................... 29
8.1
ANNEX 1 ............................................................................................................................... 29
8.2
ANNEX 2 ............................................................................................................................... 29
8.3
ANNEX 3 ............................................................................................................................... 29
8.4
ANNEX 4 ............................................................................................................................... 29
8.5
ANNEX 5 ............................................................................................................................... 31
8.6
ANNEX 6 ............................................................................................................................... 31
8.7
ANNEX 7 ............................................................................................................................... 33
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1.
MEMBERS OF THE SUB-GROUP
The Sub-Group on Chain Transactions – hereinafter referred to as the “Sub-Group” - is a
group which consists of members from the Group on the Future of VAT (GFV) and the
VAT Expert Group (VEG). The Sub-Group is made up of four individual members,
members from six organisations and members from seven Member States.
The participating members of the Sub-group were
2.

Jan Koerner (Rapporteur), Federations of German Industries (BDI) & Association
of German Chambers of Industry and Commerce (DIHK),

Jakob A. Kamminga (Rapporteur), the Netherlands,

Ine Lejeune (Co-Rapporteur),

Rosemin March (Co-Rapporteur), the United Kingdom,

Margarete Rosner-Liskounig, Austria,

Stamen Stamenov, Bulgaria,

Stephan Teuber, Germany,

Krisztina Magony, Hungary,

Viviane Ries, Luxembourg,

Peter Boerhof, Confederation of Netherlands Industry and Employers (VNONCW) & the Royal Dutch Organisation for small and medium sized enterprises
(MKB – Nederland),

Lena Odelberg, Confederation of Swedish Enterprise,

Pierpaolo Maspes, Confindustria,

Thierry Charon, European VAT Club,

Karl-Heinz Haydl, General Electric Company,

Odile Courjon,

Stefan Maunz/Oliver Zugmaier,

Elisabeth Ashworth.
MEETINGS OF THE SUB-GROUP
Five meetings of the Sub-Group were held at DG TAXUD’s premises on June 18,
September 12, October 15, November 19 and December 12 2013.
Four telephone conferences were held on July 31, September 9 and October 4 2013in
preparation for the meetings and on January 9 2014 for finalisation of this Report.
3.
TASK OF THE SUB-GROUP
As defined by DG TAXUD – i.e. the note to the Fiscal Attachés dated 15 April 2013
(taxud.c.1(2013)765928), the document GVF N° 034, taxud.c.1(2013)3333964 – EN and
the VEG N° 022, taxud.c.1(2013)3272924 – EN – ANNEX 1 – the sub-group has to
examine the precise problems [of chain transactions] faced by business and tax
administrations, look at practical examples and identify possible ways to address those
problems without jeopardising the fundamental principles of the current EU VAT system.
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4.
WORKING ASSUMPTION OF THE SUB-GROUP FOR THE TERM “CHAIN TRANSACTION”
The sub-group established common ground and the worked on the following assumption
regarding the term “chain transaction”, as there is no legal definition provided for in the
Council Directive 2006/112/EC on the common system of value added tax (“VAT
Directive”):

successive supplies of the same goods.
For the scope of the work of the Sub-Group, only two chain transaction scenarios were
considered:

Where the goods supplied are directly dispatched or transported from the
Member State of the first supplier to the Member State of the last acquirer of the
successive supplies (i.e. Scenario 1 hereinafter), or where

the goods supplied are neither dispatched nor transported (i.e. Scenario 2
hereinafter);
hereinafter referred to as “Chain Transaction” or “Chain Transactions”.
However, this working assumption may not correspond to the definition of the term
“chain transactions” used by some Member States.
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4.1
Scenario 1

Three transactions between four parties (A, B, C & D) established in four Member
States (1, 2, 3 & 4)

Direct shipment of goods from Member State 1 (A) to Member State 4 (D)

C organises the shipment of the goods
Visual aid
MS 1
MS 2
A
B
MS 4
MS 3
D
C
Contractual flow
Flow of the goods
X
Taxable person
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4.2
Scenario 2

Three transactions between four parties (A, B, C & D) established in three
Member States (1, 2 & 3)

C and D established in Member State 3

Goods remain in Member State 4, no shipment
Visual aid
MS 1
MS 2
A
B
MS 4
MS 3
C
Goods
D
Contractual flow
X
5.
Taxable person
APPROACH OF THE SUB-GROUP – FIVE STEP METHODOLOGY
The work of Sub-Group was comprised of a five step approach.
Step 1: Field work / preparation

Questionnaire developed and sent to Member States
Step 2: Analysis of the completed excel sheet with the responses from the Member
States

Responses from Member States transferred into an excel sheet for easier analysis
and comparison.

What are the consequences / impacts per Member State?

Are there serious problems such as double-taxation or non-taxation?
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
Is it possible to group the practises of Member States?
Step 3: Identifying best practises

Is there one best practise or a combination of Member States’ practices that can
be combined to become (a) common best practise(s)?
Step 4: Evaluation and discussion of potential solution(s)

What are the impacts?

Is there another solution to solve the problems?
Step 5: Proposal

What are the next steps to make the solution(s) work?
6.
WORK UNDERTAKEN AND RESULTS
6.1
Step 1 – Field Work / Preparation
To analyse the status quo within the European Union regarding the treatment of Chain
Transactions, the Sub-Group developed a questionnaire to be sent to the Member States
containing two scenarios as described above under 4.1 and 4.2.
Regarding Scenario 1, the Member States were inter alia requested to provide answers to
the following questions:

To which of the 3 transactions is the intra-EU supply to be assigned? (Question 3)

Is a registration required if the business is not established in the Member States
where the supply takes place? (Question 4)

Does your Member State apply the simplification of the triangular scheme of
Article 141 of the VAT Directive in cases of a chain transaction involving 4 or more
parties? (Question 10)
Regarding Scenario 2, the Member States were inter alia requested to provide answers to
the following question:

Assuming that your Member State is MS 4 – are there any simplification
measures for businesses not established in your Member State available (e.g.
fiscal warehousing, reverse charge etc.)? (Question 11)
The questionnaire was sent by DG TAXUD to the Members of the Group on the Future of
VAT, i.e. note No. (2013)2736570 of July 9, 2013 – ANNEX 2 –, with the request to
submit answers by September 2, 2013.
DG TAXUD received answers from 24 Member States. These answers are for information
purposes only and are not legally binding.
Members of the Sub-Group transferred the answers from the Member States (as they
were) into an excel sheet – ANNEX 3. This allowed the Sub-Group to analyse the answers
to this report more easily.
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6.2
Step 2 – Analysis of the Responses
Analysis of the 24 responses provided by the Member States showed that there were
several groups of approaches regarding the VAT treatment of Chain Transactions.
6.2.1
Scenario 1
a) Question 3, Scenario 1: To which of the 3 transactions is the intra-EU supply to be
assigned?
All Member States were in agreement that there can only be 1 intra-Community supply
within a Chain Transaction scenario between the parties: A, B, C and D.
However, there were 4 approaches taken in attributing the intra-Community supply to a
certain transaction:
(1)
Between A and B,
(2)
Between B and C,
(3)
Between C and D,
(4)
Between B and C or C and D, depending on circumstances.
The latter approach can be further divided into Member States who attribute the intraCommunity supply to B-C or C-D based on a legally defined, but rebuttable presumption;
and Member States who attribute the intra-Community supply to B-C or C-D based on
mere factual evidence.
The Sub-Group agreed that the difference in the approaches can lead to serious
problems such as double-taxation or non-taxation and creates legal uncertainty and
material costs for traders doing business across the EU.
b) Question 4, Scenario 1: Is a registration required if the business is not established in
the Member States where the supply takes place?
Registrations are required in the Member States who have not made use of the option
provided for under Article 1941 of the VAT Directive. Where Member States apply Article
194 of the VAT Directive, less registrations obligations are imposed on the business.
Therefore, the answers of the Member States can be grouped as follows:
(1)
Member States not applying Article 194 of the VAT Directive;
(2)
Member States applying Article 194 of the VAT Directive provided that the
customer has a local VAT registration (though is not necessarily established);
(3)
Member States applying Article 194 of the VAT Directive provided that the
customer is established (i.e. not with non-established customers, irrespectively if
such customers have a local VAT registration).
For purposes of analysis, the attribution of the intra-Community supply to one of the
three transactions in Scenario 1,(i.e. under a) above, was combined with the application
of Article 194 of the VAT Directive as an alternative, in order to establish whether the
application of Article 194 of the VAT Directive might be preferable or not.
1
Details of the text of Article 194 can be found in Annex 7
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c) Question 10, Scenario 1: Does your Member State apply the simplification of the
triangular scheme of Article 1412 of the VAT Directive in cases of a chain transaction
involving 4 or more parties?
The answers of the Member States can be divided into two groups:
(1)
Member States allowing for the triangulation simplification with only 3 parties
involved in the chain transaction, and
(2)
Member States allowing for the triangulation simplification where there are more
than 3 parties involved in a chain transaction – although the triangulation itself
requires two transactions between three parties.
Regarding the second group, clarification is needed to determine whether Member
States’ allow the application of the triangulation simplification measure irrespective of
the number of parties involved in the chain transaction. The answers provided by some
Member States suggested that they apply the triangulation only in cases of 4 parties
(which might be due to the fact that scenario 1 had only 4 parties involved).
Visual aid
Goods
Goods
Member State 1
Member State 4
A
O% i.C.supply
B
Triangulation
Art. 141, 197
C
D
OR
A
B
O% i.C.supply
C
D
Triangulation
Art. 141, 197
OR
A
B
C
O% i.C.supply
D
Triangulation Art. 141, 197 not applicable
A different attribution of the intra-Community supply to the transactions will also have
an impact on a potential application of triangulation. A common interpretation is lacking.
2
Details of the text of Article 141 can be found in Annex 7
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6.2.2
Scenario 2
With regard to Scenario 2 question 11: Are there any simplification measures for
businesses not established in your Member State available (e.g. fiscal warehousing,
reverse charge etc.)?
All Member States were in agreement that the place of supply in Scenario 2 is deemed in
each case to be in Member State 4. The Group did not identify any serious problems such
as double-taxation or non-taxation.
Generally, the answers of the Member States can be grouped as follows:
(1)
Member States having no simplification measures
(2)
Member States applying VAT warehousing schemes
(3)
Member States applying local reverse charge
(4)
Member State applying a registration threshold
The use of the VAT warehousing option provided for by Article 1603 of the VAT Directive
by Member States can be grouped as follows:
6.2.3

VAT warehousing restricted to the list of Annex V to Article 160 (2) of the VAT
Directive

VAT warehousing for an expanded list of goods

VAT warehousing without restrictions with regard to the goods
Validation of the excel sheet by the Member States
The Member States were asked to validate the excel sheet, i.e. note to Members of the
Group on the Future of VAT as of October 28, 2013, taxud.c.1 (2013)3584444. Member
States validated the excel sheet.
6.3
Step 3 – Identifying Best Practises
Members of the Sub-Group discussed the following practises:
For Scenario 1

Regarding the attribution of the intra-Community supply – a legally defined,
rebuttable presumption

The application of Article 194 of the VAT Directive

The application of the simplification measure triangulation: Article 141 of the
VAT Directive
For Scenario 2

3
VAT warehousing rules in certain Member States
Details of the text of Article 160 can be found in Annex 7
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
Bonded customs warehousing provisions “type E” (as defined in Article 525
Commission Regulation (EEC) 2454/93) in combination with the option provided
for in Article 156 (1) (c)4 of the VAT Directive.
The Sub-Group members from businesses suggested certain best practices. Given the
limited timeframe granted to the Sub-Group, the members could not carry out a detailed
analysis of those practices.
However, two members from the Member States cannot agree on the content of this
section because they do not see a value in listing some approaches under the headline
“best practices” without any further explanation. Regarding warehousing rules, the SubGroup did not discuss the different regimes in detail.
6.4
Step 4 – Evaluation / Discussion of Potential Solution(s)
6.4.1
Discussion of Criteria for Evaluation
The evaluation was made by the Sub-Group based on the following criteria:
Member States
Taxable Persons
Financial Impact
Financial Impact
Enforceability (incl. Avoidance of VAT
Fraud)
Legal Certainty (incl. Avoidance of VAT
Fraud)
Cost of Collection / Administration
Cost of Compliance
The criteria were assessed in a qualitative way, applying the assumptions and
implications as described in ANNEX 4.
6.4.2
Evaluation of SCENARIO 1
There are currently no legal definitions set out in the VAT Directive that clearly specify
which transaction is deemed to be the intra-Community supply in a chain transaction.
The rules are merely derived from CJEU case law: C-245/04 EMAG Handel Eder OHG; C430/09 Euro Tyre Holding BV and C-587/10 Vogtländische Straßen-, Tief- und
Rohrleitungsbau GmbH Rodewisch (VSTR).
Recommendation 1:
4
Details of the text of Article 156 can be found in Annex 7
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Given the fact that the Member States have reported different approaches to the rules
derived from the CJEU judgments and taking into consideration that the differences in
the approaches can lead to double-taxation or non-taxation and create legal uncertainty
and material costs for traders operating across the EU,
members of the Sub-Group agreed that it is advisable to have a common
interpretation that will consistently allow attributing the intra-Community
supply to one supply within the chain of transactions.
However, the different approaches for attributing the intra-Community supply to one
specific supply within the chain transaction will be discussed hereinafter, with a view to
the advantages and disadvantages of the different approaches (Cases 1 to 4).
a) Case 1: Member State attributes the intra-Community supply to the transaction
between A and B
Case 1: Attribution of intra-Community supply between A and B
Member State 1
A
Member State 4
O%
i.C.supply
B
C
Goods
Established
VAT payer
D
Goods
NonEstablished
VAT payer
aa) Base case, i.e. no simplification measures at all
Advantages:

The Tax Authorities of Member State 1 will only have to deal with one
established taxable person.
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
In general, Member State 4 will have a cash flow advantage, as VAT will be
charged in the transactions between B – C and C – D.
Neutral:

For Member States 2 and 3 as well as for taxable person D.
Disadvantages:

The tax authorities of Member State 4 will have to deal with two non-established
taxable persons.

Taxable persons B and C will have to obtain a foreign VAT registration. Overall, B,
C and D will have a cash-flow disadvantage, due to the charging of VAT.
bb) Simplification measure: application of Articles 141 and 197 of the VAT Directive
It is assumed that the simplification measure of Articles 141 and 197 of the VAT Directive
(“triangulation”) is applied to the transaction between B and C as supply subsequent to
an intra-community supply.
Advantages / Improvement with regard to base case:

The Tax Authorities of Member State 4 will only have to deal with one nonestablished taxable person (i.e. C)

Only one taxable person (C) has to obtain a foreign VAT registration.

From a taxable persons’ perspective: the transactions A – B and B – C are cashflow neutral.
Remark:

Compared to the base case taxable person C has still to obtain a foreign VAT
registration in Member State 4.
Recommendation 2:
A number of Member States do not apply the simplification of Article 141 of the VAT
Directive, if there are more than 3 parties involved in a chain transaction.
Some Member States require that the acquirer of the supply subsequent to the intraCommunity supply is established in the Member State of arrival of the goods supplied. In
a situation such as case 1, such Member States would not apply the simplification
scheme of Article 141, 197 of the VAT Directive to the transaction between B and C based
on the grounds that C is not established in Member State 4.
Members of the Sub-Group consider it advisable to clarify the application of
Articles 141 and 197 of the VAT Directive, especially with regard to requirements of
Article 141 d) of the VAT Directive i.e. to clarify that Article 141 d):
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
does not require that the person to whom the subsequent supply is to be
made is established in the Member State of arrival of the goods, and

only requires the person to whom the subsequent supply is to be made is
identified for VAT purposes in the Member State of arrival of the goods,
regardless of those person’s establishment;
and to check that Articles 141 and 197 of the Directive might also be applied in a
chain transaction where 3 or more parties are involved, provided that

the simplification of Article 141 is applied to a supply of goods subsequent
to an intra-Community supply, and thus only once within a chain
transaction.
This recommendation is applicable for the cases 1, 2, and 4.
Reservation:
The same two members from the Member States (as previously referred to in
6.3 above) only support the recommendation as far as there is a uniform
application of Articles 141 and 197 of the VAT Directive.
Visual aid
Recommendation 2
Member State 1
Member State 4
A
B
Triangulation
Art. 141, 197
= reverse charge
O% i.C.supply
Goods
Established
VAT payer
C
D
Domestic supply
X % VAT
Goods
NonEstablished
VAT payer
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cc) Simplification measure: application of Article 194 of the VAT Directive
It is assumed that taxable person C is VAT registered in Member State 4. It is assumed
that the simplification measure of Article 194 of the VAT Directive – reverse charge
mechanism in case of supplies by non-established taxable person – is applied to the
transaction between C and D and in addition to the application of Articles 141, 197 of the
VAT Directive to the transaction between B and C (i.e. bb) above).
Visual aid
Member State 1
Member State 4
A
B
Triangulation
Art. 141, 197
= reverse charge
O% i.C.supply
Goods
Established
VAT payer
C
Reverse charge
Art. 194
D
Goods
NonEstablished
VAT payer
Further Advantages / Improvement:

From the taxable persons’ perspective the financial impact is significantly
improved.

From the perspective of the Tax Authorities of Member State 4, the “break in the
chain” (i.e. the change from reverse charge to onward-charging VAT) is shifted
from the non-established taxable person C to the established taxable person D,
which improves the enforceability.
In such a scenario, Business members of the Sub-group would like to encourage
Member States to make use of the option provided for in Article 194 of the VAT
Directive.
dd) Proposal for further simplification
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In a situation like case 1, where the intra-Community supply is attributed to the first
transaction in a chain transaction, members of the Sub-Group feel that it is advisable to
carry out (future) work into analysing a combined application of the simplifications of
Articles 141, 197 and 194 of the VAT Directive.
One member from a the Member State (as previously referred to) does not agree that
further work should be carried out because the application of Article 194 is an option
for the Member States.
Recommendation 3:
Business Members consider that a solution should be envisaged whereby the
application of Articles 141 and 197 of the VAT Directive to the transaction
between B and C could be deemed by Member States to allow for C to appoint
a fiscal agent, as foreseen in Article 204 (1)5 of the VAT Directive.
However, the disadvantages of Recommendation 3 are:

The cost of a fiscal agent for taxable person C, which will reflect that the fiscal
agent will be liable for VAT for C in Member State 4;

The fiscal agent, if he acts for a number of non-established taxable persons, will
know the margins of the transactions in Member State 4.
Furthermore, Members of the sub-Group proposed two more far reaching approaches:
One proposal is to amend Articles 416 and 138 (1)7 of the VAT Directive in order to allow
taxable persons B and C to declare the intra-Community acquisitions and supplies in their
Member States of establishment (i.e. Member States 2 and 3), with the taxation in
Member State 4 safeguarded by the provision of Articles 408, 41 (1) and 429 of the VAT
Directive.
An alternative proposal is to apply Article 32 (2)10 of the VAT Directive by analogy to
Chain Transactions where the flow of goods is within the EU.
Three members from the Member States (including the two members previously
referred to) could not agree to such a proposal, as it would require significant changes
of the current VAT Directive. They see such proposals as not being within the remit of
the Sub-group's objective.
Members from businesses are in favour of exploring this proposal as possible solutions
for the future – probably outside the scope of the Sub-Group. Thus, those further
proposals are attached in ANNEX 5 of this report.
5
Details of the text of Article 204 can be found in Annex 7
Details of the text of Article 41 can be found in Annex 7
7
Details of the text of Article 138 can be found in Annex 7
8
Details of the text of Article 40 can be found in Annex 7
9
Details of the text of Article 42 can be found in Annex 7
10
Details of the text of Article 32 can be found in Annex 7
6
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b) Case 2: Member State attributes the intra-Community supply to the transaction
between B and C
Case 2: Attribution of intra-Community supply between B and C
Member State 1
A
Member State 4
O%
B
i.C.supply
Goods
Established
VAT payer
C
D
Goods
NonEstablished
VAT payer
aa) Base case, i.e. no simplification measures at all
Advantages:

In general, Member State 1 will have a cash flow advantage, as VAT will be
charged in the transactions between A – B and B will have an excess of input VAT
over output VAT (refund situation).
Disadvantages:

Member State 1 has to deal with one non-established taxable person.

Member State 4 faces an issue with enforceability, as taxable person C is a
foreign taxable person and has to declare an i.C. acquisition and output VAT, the
transaction between C and D could be VAT fraud sensitive.

taxable person B has to obtain a foreign VAT registration (cost of compliance).

taxable person B will have an excess of input VAT over output VAT and is thus in
a refund situation (cash flow disadvantage).

taxable person C has to obtain a foreign VAT registration (cost of compliance).
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bb) Simplification measure: application of Articles 141 and 197 of the VAT Directive
It is assumed that the simplification measure of Articles 141 and 197 of the VAT Directive
(“triangulation”) is applied to the transaction between C and D as the supply subsequent
to an intra-community supply.
Advantages / Improvement with regard to base case:

taxable person C would not need to be VAT registered in Member State 4.

Thus, the Tax Authorities of Member State 4 will not face the enforceability issue
referred to under the point (1) base case above, the case will be less fraud
sensitive under the application of the simplification measure of Article 141 of the
VAT Directive to the transaction between C and D.
Remark:

taxable person B still has to obtain a foreign VAT registration in Member State 1.

The cash-flow disadvantage for B will remain the same – i.e. a refund situation
due to an excess of input-VAT over output VAT.
cc) Simplification measure: application of Article 194 of the VAT Directive
Recommendation 4:
To mitigate the cash-flow disadvantage of a taxable person making zero-rated
supplies, members of the Sub-Group recommend that Member States review
the possibility of using the option of Article 16411 of the VAT Directive to grant
those taxable persons a license to receive the supply prior to the zero-rated
supplies (exports and intra-Community supplies) with 0% VAT, such zero-rating
limited by a threshold, e.g. the value of last year’s exports or intra-Community
supplies or the value of the projected exports or intra-Community supplies of
the current calendar year.
Reservation:
The same three members from the Member States (as previously referred to) do not
agree to the recommendation because from their point of view it is not within the task
of the Sub-Group to recommend that Member States make use of options granted by
the VAT Directive. Furthermore, one of those three members from the Member States
does not agree that the recommendation can be seen as a possible way to address
specific problems resulting from chain transactions. Another one of those three
members from the Member State points out that according to the VAT Directive
Member States have more options to choose how to mitigate the cash-flow
disadvantage in such cases, so the Member States should be given the right to choose
the most suitable way.
11
Details of the text of Article 164 can be found in Annex 7
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c) Case 3: Member State attributes the intra-Community supply to the transaction
between C and D
Case 3: Attribution of intra-Community supply between C and D
Member State 4
Member State 1
A
B
C
O%
Goods
Established
VAT payer
D
i.C.supply
Goods
NonEstablished
VAT payer
aa) Base case, i.e. no simplification measures at all
Advantages:

Member State 1 will have a cash flow advantage, as VAT will be charged in the
transactions between A – B and B – C.

The Tax Authorities of Member State 1 will only have to deal with one
established taxable person.
Neutral:

For Member States 2 and 3 as well as for taxable person A.
Disadvantages:

The tax authorities of Member State 1 will have to deal with two non-established
taxable persons.

Taxable persons B and C will have to obtain a foreign VAT registration.

Overall, A, B and C will have a cash-flow disadvantage, due to the onward-charge
of VAT.
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
Taxable person C in particular, will suffer a cash flow disadvantage due to an
excess of input VAT over output VAT and will thus be placed in a refund situation.
bb) Simplification measure: application of Articles 141 and 197 of the VAT Directive
The simplification measure of Article 141 of the VAT Directive is not applicable in case 3,
as there is no supply subsequent to an intra-Community supply, which is seen as a
disadvantage per se.
cc) Simplification measure: application of Article 194 of the VAT Directive
As Article 194 of the VAT Directive does not require that the person to whom the supply
is made has to be established in the Member State of taxation, some Member States
would in case 3 apply the reverse charge mechanism to the transaction between B and
C.
The application of Article 194 in this case would avoid B having to register in Member
State 1.
dd) Proposal for further simplification
The application of a licence to purchase zero-rated for a subsequent intra-Community
supply (i.e. Recommendation 4 above) would not provide an advantage in case 3, as the
cash flow disadvantage would just be shifted from taxable person C to taxable person B.
However, the application of VAT warehousing rules might provide a significant
improvement in a situation such as case 3. This is because the supply from A to B and
from B to C in case 3 does not involve a movement of goods, the VAT warehousing
regime might be applied for those supplies.
The VAT warehousing rules of Belgium/Netherlands or Italy (Belgium or Italy being
Member State 1 in the example of case 3) would allow B and C only to obtain a
“simplified VAT registration” (Belgium, using the VAT-ID of the warehouse keeper) or
“light VAT registration” (Italy) with reduced obligations.
Recommendation 5:
The members of the Sub-Group would like to recommend Member States to
review the possibility of using the option provided for in Article 157 (1) (b)12 of
the VAT directive i.e. to use the VAT warehousing rules.
Reservation:
12
Details of the text of Article 157 can be found in Annexe
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Two members from the Member States (as previously referred to) do not agree to the
proposal for further simplification and to recommendation 5 because from their point
of view it is not within the task of the Sub-Group to recommend that Member States
make use of options granted by the VAT Directive. Another member from a Member
State (as previously referred to) is of the view that whilst acknowledging that the use
of VAT warehousing can be of advantage for non-established taxable persons being
party to a Chain Transaction, it is still the right of the MS to decide whether or not to
make use of this option or not.
d) Case 4: Member State attributes the intra-Community supply to either the
transaction between B and C or between C and D
As discussed under 6.2.1 a) above, the approaches relating to case 4 can be divided
between Member States who attribute the intra-Community supply to B-C or C-D based
on a legally defined, but rebuttable presumption; and Member States who attribute the
intra-Community supply to B-C or C-D based on mere factual evidence.
Case 4: Attribution of intra-Community supply between B and C or between C and D
Member State 1
A
Member State 4
O%
B
i.C.supply
C
D
Goods
Goods
OR
Member State 4
Member State 1
A
B
C
Goods
O%
i.C.supply
D
Goods
aa) Attributing the intra-Community supply based on legally defined, but rebuttable
presumption
It is assumed that not only the presumption, but also the means of proof for the
prescribed conditions relating to the opposite of the presumption (i.e. the rebuttal of the
legally defined presumption) are legally defined.
Advantages:
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
Member States 1 and 4 would increase the enforceability, due to greater legal
certainty

taxable persons B, C and D would benefit from greater legal certainty.

Lower cost of compliance for taxable persons B and C, as determining the VAT
treatment of their sales can be calculated automatically, based on pre-defined
conditions (so-called “condition tables”) within an ERP system.
bb) Attributing the intra-Community supply based on factual evidence
As ruled by the judgements of the CJEU in the cases C-430/09 “Euro Tyre Holding BV”
dated December 16, 2010 and C-587/10 “Vogtländische Straßen-, Tief- und
Rohrleitungsbau GmbH Rodewisch (VSTR)” dated September 27, 2012, determining
which of the transactions the intra-Community supply is to be attributed to, is
“conducted in light of an overall assessment of all the circumstances of the case in order
to establish, which of the … supplies fulfils all the conditions relating to an intraCommunity supply.”
Disadvantages:

Lower level of enforceability for Member States 1 and 4, as the overall
assessment of all circumstances of the case does not provide legal certainty

Lower level of legal certainty and higher cost of compliance for taxable persons
B, C and D, particularly as the overall assessment of all circumstances of the case
cannot be determined via an automated VAT code (i.e. VAT treatment
determination) within an ERP-system.
Recommendation 6:
The members of the Sub-Group agreed that in case 4 it is advisable, to determine the
attribution of the intra-Community supply to either the supply TO or the supply BY the
taxable person arranging the transport/dispatch of the goods based on legally defined
but rebuttable presumptions. Furthermore, it is advisable to legally define the means of
proof for the prescribed conditions relating to the opposite of the presumption (i.e. how
the presumption can be rebutted) in order to avoid legal uncertainty.
Comparing the advantages of case 2 and case 3, the members of the Sub-Group advise
the following:
to define the presumption that the intra-Community supply is to be attributed
to the supply to the taxable person arranging the transport/dispatch of the
goods (i.e. case 2 where the intra-Community supply is attributed to the
transaction between B and C). The discussion of case 2 above has shown that
some of the disadvantages can be mitigated by applying the simplification
scheme of Articles 141 and 197 of the VAT Directive.
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Regarding the definition of the means of proof for the conditions opposite of
the presumption (i.e. how the presumption can be rebutted) it is advisable that
in cases where the taxable person arranging the transport/dispatch of the
goods provides his supplier with a VAT-Identification Number of the Member
State of departure of the goods, then the legally defined presumption is
deemed to be rebutted and the intra-Community supply is to be attributed to
the supply by that taxable person (i.e. in case of C providing B with C’s VAT-ID
of Member State 1, the intra-community supply is to be attributed to the
transaction C to D).
Reservations:
The member from a Member State (previously referred to) prefers a clear legal
framework without options and without rebuttable presumptions which would
give businesses and tax authorities greater legal certainty. One member from
another Member State (as previously referred to) does not agree to that
recommendation because the task of the Sub-Group was to identify possible
ways to address the problems regarding chain transactions but not to
recommend one approach. Furthermore, the same member from a Member
State cannot agree that the provision of a VAT Identification Number would be
a sufficient proof to rebut the presumption.
Recommendation 7:
The members of the Sub-Group held that
as a second-best alternative to Recommendation 6 above it is advisable to
provide at least a definition of the evidence to be provided by the taxable
persons in order to conduct the overall assessment of all circumstances of the
case.
It is envisaged that such evidence could be the use of a VAT-Identification number of
either the Member State of departure of the goods or another Member State (other than
the one of departure of the goods) , taking into account no. (45) of the judgment of the
CJEU in the case C-430/09 “Euro Tyre Holding BV” dated December 16, 2010.
Reservations:
Two members from the Member States (as previously referred to) cannot agree
with this recommendation.
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6.4.3
Evaluation of SCENARIO 2
Members of the Sub-Group discussed most of the warehousing regimes, which members
encountered as practises, i.e. 6.3 above.
Members of the Sub-Group felt that it would be worthwhile to have a more in-depth
analysis of such warehousing regimes.
Members from businesses are in favour of discussing warehousing regimes in more
depth as a potential solution for the future – probably outside the scope of the SubGroup. The identified warehousing regimes for future discussions are described in
ANNEX 6 of this report.
Reservations:
Two members from the Member States (as previously referred to) cannot agree upon
any recommendations relating to this. In their opinion such an analysis is not within
the remit of the Sub-group's objective.
6.4.4
Overall assessment
Regarding an overall assessment of the cases 1 to 4 as discussed above under 6.4.2, it
appears that the approaches of case 1 AND case 4 provide the most advantages, and also
offer the most options to mitigate their disadvantages.
Recommendation 8:
Business members have a preference for case 1 i.e. 6.4.2 a) above, i.e.
attributing the intra-Community supply to the first transaction within a chain
transaction (i.e. A to B) taking into account the simplification measures as
discussed by the Sub-Group in Recommendation 3 above.
Reservations:
Two members of the Member States (as previously referred to) cannot agree
upon any recommendations relating to this, as in their opinion this is not within
the remit of the Sub-group's objective. The task of the Sub-Group was to
identify possible ways to address the problems regarding chain transactions but
not to recommend one approach. Another member from a Member State (as
previously referred to) cannot agree to this recommendation as this applies to a
specific scenario but it was not further examined as to whether it leads to the
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best solution if the conditions are changing ( e.g. 2 domestic taxable persons in
the Chain Transaction).
7.
STEP 5 - RECOMMENDATIONS
7.1
Recommendations for clarification and consistent approaches
The members of the Sub-Group:

Agreed that it is advisable to have a common interpretation that will consistently
allow attributing the intra-Community supply to one supply within the chain of
transactions (Recommendation 1);
The members of the Sub-Group


Consider it advisable to clarify the application of Articles 141 and 197 of the VAT
Directive, especially with regard to requirements of Article 141 d) of the VAT
Directive i.e. to clarify that Article 141 d)
o
does not require that the person to whom the subsequent supply is to be
made is established in the Member State of arrival of the goods, and
o
requires that the person to whom the subsequent supply is to be made is
identified for VAT purposes in the Member State of arrival of the goods,
regardless of that person’s establishment;
and to check that Articles 141 and 197 of the Directive might also be applied in a
chain transaction where there are 3 or more parties involved, provided that:
o
the simplification of Article 141 is applied to a supply of goods
subsequent to an intra-Community supply, and thus only once within a
chain transaction (Recommendation 2);

members from businesses prefer that the intra-Community supply is attributed
to the first supply within the chain of transactions (Recommendation 8) as a
solution for the problems relating to the different approaches of Member States
regarding the attribution of the intra-Community supply to one supply within a
chain of transactions;

alternatively, it should be considered whether the intra-Community supply could
be attributed to the supply to the taxable person arranging the
transport/dispatch of the goods by means of a defined but rebuttable
presumption, with that taxable person providing its supplier with a VATidentification number of the Member State of departure of the goods as defined
proof to rebut the presumption (Recommendation 6); or

as second best alternative, to provide at least a definition of the evidence to be
provided by the taxable person in order to conduct the “overall assessment of all
circumstances of the case” for attributing the intra-Community supply to one of
the supplies in the Chain Transaction (Recommendation 7).
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7.2
Recommendations to make better use of the options granted to the Member States by
the VAT Directive
Considering the analysed scenarios, the members of the Sub-Group would encourage
Member States to review the possibility to use the options granted by the VAT Directive
in context with Chain Transactions, particularly:
7.3

Article 194 – domestic reverse charge for non-established taxable persons;

Article 204 (1) – which allows the non-established taxable persons liable for VAT,
pursuant to Articles 141 and 197 of the VAT Directive as the person, to whom the
goods are supplied under the conditions of Article 141; to appoint a tax
representative (Recommendation 3 – made by members from businesses only);

Article 164 – to grant taxable persons making zero-rated supplies (exports and
intra-Community supplies) a licence to receive supplies prior to those zero-rated
supplies with 0% VAT (Recommendation 4);

Article 157 (1) b.) – to use the VAT warehousing rules for Chain Transactions, in
which the taxable person withdrawing the goods from the warehouse performs
the intra-Community supply (Recommendation 5).
Recommendations requiring an amendment of the VAT Directive
Members of the Sub-Group from businesses recommend an amendment of Articles 41
and 138 (1) of the VAT Directive as simplification rule extending the current simplification
of Articles 141, 197 of the VAT Directive in Chain Transactions. An alternative proposal is
to apply Article 32 (2) of the VAT Directive by analogy to Chain Transactions where the
flow of goods is within the EU. As the respective recommendations would require more
in-depth analysis, which could not be carried out within the restrictive time-frame of the
Sub-Group, the outline of such recommendations can be found in Annex 5.
The same applies to proposals for warehousing rules, which the members of the SubGroup from businesses deem to be recommendable. As the respective recommendations
would require more in-depth analysis, which could not be made within the restrictive
time-frame of the Sub-Group, the outline of such recommendations can be found in
Annex 6.
The members of the Sub-Group note that in order to attribute the intra-Community
supply to a pre-defined supply within the chain of transactions in order to get legal
certainty, one possibility is to change the VAT Directive.
7.4
Reservations
As described above in Section 6.4, some members from the Member States have
reservations concerning parts of Recommendation 2 and Recommendations 3 to 8. Three
members from the Member States feel that the report should focus on the main problem
of chain transactions the Sub-Group examined: the differences between the Member
States’ approaches in attributing the transport of the goods to one supply in the chain
which can lead to double or non-taxation.
Two members out of those three members from the Member States have reservations
about Recommendations 6 and 8, based on their opinion that those recommendations
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are not within the remit of the Sub-Group's objectives. Based on the same grounds, those
three members from the Member States opposed any recommendation requiring an
amendment of the VAT Directive, i.e. 7.3 above.
The same three members from the Member States have reservations concerning
Recommendations 3 to 5 because from their point of view it is not within the task of the
Sub-Group to recommend that Member States make use of options granted by the VAT
Directive.
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8.
ANNEXES
8.1
ANNEX 1
Document GVF N° 034, taxud.c.1(2013)3333964 – EN
34 - Option 1B State of play.doc
Document VEG N° 022, taxud.c.1(2013)3272924 – EN
22 - B2B supplies of
goods - Taxation at destination - Option 1B - State of play.doc
8.2
ANNEX 2
Note No. (2013)2736570 of July 9, 2013
taxud.c.1(2013)273
6570 - Questionnaire[1].pdf
8.3
ANNEX 3
Excel sheet with the transfer of answers from Member States
Relpies_by_Member_
States and Grouping.xlsx
These answers are for information purposes only and are not legally binding!
8.4
ANNEX 4
Criterion
Member
States
Financial
Impact
Main Issues and Assumptions
Full right of input-VAT deduction of all
involved business, hence only cash-flow
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impacts for Member States
Local supplies with charging of VAT
(+) = advantage
Zero-rating
(-) = disadvantage
Between
Local reverse charge
(-) = disadvantage
and
(0) = neutral
Enforceability
(incl.
Avoidance of
VAT Fraud)
Dealing with Non-established taxable person
(-) = disadvantage
Legal uncertainty
(-) = disadvantage
Clear definitions / legal certainty
(+) = advantage
Reverse charge
(+) = advantage
Dealing with Non-established taxable person
(-) = disadvantage
Dealing with Resident taxable person
(+) = advantage
Cost of
Zero-rating
Collection /
Administration (burden of proof with the taxable person)
Local reverse charge
Criterion
Taxable
Persons
(0) = neutral
(+) = advantage
Refund
(-) = disadvantage
Main Issues and Assumptions
Impact
Mainly bad debt risk,
Impact on cash flow less clear, as depending
on the payment terms between supplier and
customer
Local supplies with charging of VAT
Overall
(-) = disadvantage
On average
Financial
Impact
(0) = neutral
Zero-rating
Local reverse charge
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(can be an advantage
for one party while at
the same time a
disadvantage for the
other party)
On average
(0) = neutral
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Legal Certainty
(incl.
Avoidance of
VAT Fraud)
Cost of
Compliance
Legal uncertainty
(can be an advantage
for one party while at
the same time a
disadvantage for the
other party)
(-) = disadvantage
Clear definitions / legal certainty
(+) = advantage
Reverse charge
(+) = advantage
Foreign VAT registration
(-) = disadvantage
Zero-rating
(-) = disadvantage
(due to additional filing requirements)
Reverse charge
8.5
(+) = advantage
ANNEX 5
One proposal from members of the Sub-Group from businesses is to amend Articles 4113,
and 138 (1)14 of the VAT Directive in order to allow tax persons B and C to declare the
intra-Community acquisitions and supplies in their Member States of establishment (i.e.
Member States 2 and 3.
This proposal could be structured by means of two different approaches :
(i) Extension of the existing triangulation system.
(ii) Extension of the safety provision
An alternative proposal of Members of the Sub-Group from businesses is a mid-term and
more far reaching approach to analyse the consequences of applying Article 32 2nd
paragraph of the Directive 112/2006 by analogy as well for chain transactions whose flow
of goods is within the EU. This analysis should list the challenges of such an approach and
potential solutions how they could overcome striking the balance between business
needs and the needs of tax authorities to safeguard revenues.
The proposal is based on the opinion of the Advocate General Kokott as delivered on
November 10, 2005 in paragraph 50 of the opinion in the case C-245/04 “EMAG Handel
Eder OHG.
Some members of the Sub-Group are willingly to discuss these approaches in more
detail.
8.6
ANNEX 6
VAT warehousing regimes
13
14
Details of the text of Article 41 can be found in Annex 7
Details of the text of Article 138 can be found in Annex 7
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(1)
Customs warehouse “Type E” as set forth in Article 525-2 of Implementing
Regulations of the Customs Community Code
The “Type E” customs warehouse requires prior authorisation. It is more relating to a
status of the goods than a status of warehouses, though nevertheless all places to be
included in the warehouse status have to be indicated and included in the authorisation.
Type E Customs
Warehous.docx
The members of the Sub-Group apart from 2 members found it worth to have a more indepth analysis of that customs warehouse regime, particularly as the status of “Type E”
customs warehouse can be granted to warehouses located not just on one but in a
multitude of Member States. Thus, the “Type E” customs warehouse regime transferred
into VAT can provide advantages not just for Scenario 2, but also for Scenario 1, i.e.
discussion of Case 3 above.
(2)
VAT warehousing rules for Italy
VAT warehouse
regulations in Italy.doc
The advantages of the Italian VAT warehousing rules are that non-established taxable
person might obtain a “light VAT registration” and are thus subject to a reduced number
of VAT obligations in Italy.
(3)
VAT warehousing rules for Belgium and the Netherlands
VAT warehouses
NL.docx
The advantages of the Belgium warehousing rules are that non-established taxable
person can use the VAT registration (and VAT-ID) of the VAT warehouse keeper.
However, if the VAT warehouse keeper is an independent VAT person (e.g. a logistic
service provider) there are some disadvantages: the cost of the VAT warehouse keeper
will reflect the take-over of the VAT liabilities, and most important, the VAT warehouse
keeper will know the margins of the transactions within the VAT warehouse.
The Netherlands have two types of VAT warehouses (a place-related warehouse and a
non-place related warehouse) for designated goods.
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The members of the Sub-Group apart from 2 members found it worth to have a more indepth analysis of the Italian, Belgian and Dutch VAT warehouse regimes, particularly as
those regimes can provide advantages not just for Scenario 2, but also for Scenario 1, i.e.
discussion of Case 3 above.
(4)
VAT warehousing rules Hungary
VATwarehouse_HU.d
ocx
Due to time constraints, the Sub-Group have not been able to discuss the Hungarian VAT
warehousing rules in more detail.
8.7 ANNEX 7
Details of the text of the various Articles:
Article 32
Where goods are dispatched or transported by the supplier, or by the customer, or by a
third person, the place of supply shall be deemed to be the place where the goods are
located at the time when dispatch or transport of the goods to the customer begins.
However, if dispatch or transport of the goods begins in a third territory or third country,
both the place of supply by the importer designated or recognised under Article 201 as
liable for payment of VAT and the place of any subsequent supply shall be deemed to be
within the Member State of importation of the goods.
Article 40
The place of an intra-Community acquisition of goods shall be deemed to be the place
where dispatch or transport of the goods to the person acquiring them ends.
Article 41
Without prejudice to Article 40, the place of an intra-Community acquisition of goods as
referred to in Article 2(1)(b)(i) shall be deemed to be within the territory of the Member
State which issued the VAT identification number under which the person acquiring the
goods made the acquisition, unless the person acquiring the goods establishes that VAT
has been applied to that acquisition in accordance with Article 40.
If VAT is applied to the acquisition in accordance with the first paragraph and
subsequently applied, pursuant to Article 40, to the acquisition in the Member State in
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which dispatch or transport of the goods ends, the taxable amount shall be reduced
accordingly in the Member State which issued the VAT identification number under
which the person acquiring the goods made the acquisition
Article 42
The first paragraph of Article 41 shall not apply and VAT shall be deemed to have been
applied to the intra-Community acquisition of goods in accordance with Article 40 where
the following conditions are met:
(a) the person acquiring the goods establishes that he has made the intra-Community
acquisition for the purposes of a subsequent supply, within the territory of the Member
State identified in accordance with Article 40, for which the person to whom the supply is
made has been designated in accordance with Article 197 as liable for payment of VAT;
(b) the person acquiring the goods has satisfied the obligations laid down in Article 265
relating to submission of the recapitulative statement.
Article 138
1. Member States shall exempt the supply of goods dispatched or transported to a
destination outside their respective territory but within the Community, by or on behalf
of the vendor or the
person acquiring the goods, for another taxable person, or for a non-taxable legal person
acting as such in a Member State other than that in which dispatch or transport of the
goods began.
2. In addition to the supply of goods referred to in paragraph 1, Member States shall
exempt the following transactions:
(a) the supply of new means of transport, dispatched or transported to the customer at a
destination outside their respective territory but within the Community, by or on behalf
of the vendor or the customer, for taxable persons, or non-taxable legal persons, whose
intra-Community acquisitions of goods are not subject to VAT pursuant to Article 3(1), or
for any other non-taxable person;
(b) the supply of products subject to excise duty, dispatched or transported to a
destination outside their respective territory but within the Community, to the customer,
by or on behalf of the vendor or the customer, for taxable persons, or non-taxable legal
persons, whose intra-Community acquisitions of goods other than products subject to
excise duty are not subject to VAT pursuant to Article 3(1), where those products have
been dispatched or transported in accordance with Article 7(4) and (5) or Article 16 of
Directive 92/12/EEC;
(c) the supply of goods, consisting in a transfer to another Member State, which would
have been entitled to exemption under paragraph 1 and points (a) and (b) if it had been
made on behalf of another taxable person
Article 141
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Each Member State shall take specific measures to ensure that VAT is not charged on the
intra-Community acquisition of goods within its territory, made in accordance with
Article 40, where
the following conditions are met:
(a) the acquisition of goods is made by a taxable person who is not established in the
Member State concerned but is identified for VAT purposes in another Member State;
(b) the acquisition of goods is made for the purposes of the subsequent supply of those
goods, in the Member State concerned, by the taxable person referred to in point (a);
(c) the goods thus acquired by the taxable person referred to in point (a) are directly
dispatched or transported, from a Member State other than that in which he is identified
for VAT purposes, to the person for whom he is to carry out the subsequent supply;
(d) the person to whom the subsequent supply is to be made is another taxable person,
or a non-taxable legal person, who is identified for VAT purposes in the Member State
concerned;
(e) the person referred to in point (d) has been designated in accordance with Article 197
as liable for payment of the VAT due on the supply carried out by the taxable person who
is not established in the Member State in which the tax is due.
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Article 156
1. Member States may exempt the following transactions:
(a) the supply of goods which are intended to be presented to customs and, where
applicable, placed in temporary storage;
(b) the supply of goods which are intended to be placed in a free zone or in a free
warehouse;
(c) the supply of goods which are intended to be placed under customs warehousing
arrangements or inward processing arrangements;
(d) the supply of goods which are intended to be admitted into territorial waters in order
to be incorporated into drilling or production platforms, for purposes of the construction,
repair, maintenance, alteration or fitting-out of such platforms, or to link such drilling or
production platforms to the mainland;
(e) the supply of goods which are intended to be admitted into territorial waters for the
fuelling and provisioning of drilling or production platforms.
2. The places referred to in paragraph 1 shall be those defined as such by the Community
customs provisions in force.
Article 157
1. Member States may exempt the following transactions:
(a) the importation of goods which are intended to be placed under warehousing
arrangements other than customs warehousing;
(b) the supply of goods which are intended to be placed, within their territory, under
warehousing arrangements other than customs warehousing.
2. Member States may not provide for warehousing arrangements other than customs
warehousing for goods which are not subject to excise duty where those goods are
intended to be supplied at the retail stage
Article 164
1. Member States may, after consulting the VAT Committee, exempt the following
transactions carried out by, or intended for, a taxable person up to an amount equal to
the value of the exports carried out by that person during the preceding 12 months:
(a) intra-Community acquisitions of goods made by the taxable person, and imports for
and supplies of goods to the taxable person, with a view to their exportation from the
Community as they are or after processing;
(b) supplies of services linked with the export business of the taxable person.
2. Where Member States exercise the option of exemption under paragraph 1, they shall,
after consulting the VAT Committee, apply that exemption also to transactions relating to
supplies carried out by the taxable person, in accordance with the conditions specified in
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Article 138, up to an amount equal to the value of the supplies carried out by that
person, in accordance with the same conditions, during the preceding 12 months
Article 170
All taxable persons who, within the meaning of Article 1 of Directive 79/1072/EEC ,
Article 1 of Directive 86/560/EEC and Article 171 of this Directive, are not established in
the Member State in which they purchase goods and services or import goods subject to
VAT shall be entitled to obtain a refund of that VAT in so far as the goods and services are
used for the purposes of the following:
(a) transactions referred to in Article 169;
(b) transactions for which the tax is solely payable by the customer in accordance with
Articles 194 to 197 or Article 199
Article 194
1. Where the taxable supply of goods or services is carried out by a taxable person who is
not established in the Member State in which the VAT is due, Member States may
provide that the person liable for payment of VAT is the person to whom the goods or
services are supplied.
2. Member States shall lay down the conditions for implementation of paragraph 1.
Article 197
VAT shall be payable by any person who is identified for VAT purposes in the Member
State in which the tax is due and to whom goods are supplied in the circumstances
specified in Articles 38 or 39, if the supplies are carried out by a taxable person not
established within that Member State.
Article 204
1. Where, pursuant to Articles 193 to 197 and Articles 199 and200, the person liable for
payment of VAT is a taxable person who is not established in the Member State in which
the VAT is due, Member States may allow that person to appoint a tax representative as
the person liable for payment of the VAT.
Furthermore, where the taxable transaction is carried out by a taxable person who is not
established in the Member State in which the VAT is due and no legal instrument exists,
with the country in which that taxable person is established or has his seat, relating to
mutual assistance similar in scope to that provided for in Directive 76/308/EEC and
Regulation (EC) No 1798/2003, Member States may take measures to provide that the
person liable for payment of VAT is to be a tax representative appointed by the nonestablished taxable person.
However, Member States may not apply the option referred to in the second
subparagraph to a non-established taxable person, within the meaning of point (1) of
Article 358, who has opted for the special scheme for electronically supplied services.
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2. The option under the first subparagraph of paragraph 1 shall be subject to the
conditions and procedures laid down by each Member State.
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