Intra-community supplies within a chain transaction
With its rulings from 25 February 2015, XI R 14/15 and XI R 30/13 the German Federal Fiscal Court discarded the Ministry of Finance opinion in connection with the allocation of the movable supply in large parts. The German Federal Fiscal Court decided that for allocating the movable supply within an intra-community chain transaction with three participants ((A) from Germany, (B) from the USA and (C) from Finland) including two shipments it is necessary that all objective circumstances must be examined. It is especially necessary to determine whether or not the first purchaser (B) provides the authority to dispose over the goods to the second purchaser (C) within Germany.
If, according to this, all participants of a chain transactions are third parties and are corresponding of the opinion that the goods movement has to be allocated to one particular supply, this is an indication that this handling is in line with the factual circumstances. Those classification principles are not only valid in case that the first purchaser (B) transports or dispatches the goods but as well if the second purchaser (C) collects the goods at the first seller (A) and thus, the second purchaser (C) receives the authority to dispose within Germany. Hence, the movable supply is allocated to the supply of goods between B and C.
Participants varying intentions are only possible within the review of protection of confidence and has always to be reviewed case by case.
Are there reasonable doubts that the first purchaser (B) provided the authority to dispose to the second purchaser (C) within Germany, the movable supply has to be allocated to the first supply of goods between A and B.
The German Ministry of Finance has not yet reacted to those two rulings.
It is therefore recommendable to evaluate chain transactions considering the new developments in the jurisdiction. The challenge is to implement in accordance with the rulings of the court and still taking a practical approach.
In case of any further questions in this connection or in connection with any other questions regarding VAT, please do not hesitate to contact us.
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