With its letter dated 7 December 2015 the German Ministry of Finance explained it´s opinion about how to handle interrupted transports for exports and intra-community supplies from a VAT point of view. The Ministry of Finance explains as well their view for two parties as for chain transaction cases.
Interrupted transports are possible as well in cases where only two parties are involved as well as in chain transaction cases.
In chain transaction cases where an interrupted transport in form of the first part of the transportation will be performed by the supplier and the second part will be performed by the receiver occurs, that is a case where the transaction cannot be considered as a chain transaction. Thus, the transaction needs to be divided into separate transactions.
Is the transport within a chain transaction only interrupted due to transport issues, the transaction can still be considered as a chain transaction if the receiver of the goods was already known before the transport was started. Additionally the supplier must proof that there was a material link and a time link between the supply and the transport of the goods as well as a continuous movement of the goods. Thus, the Mistry of Finance concretized its opinion that interrupted transportation within a chain transaction usually leads to more than one (chain) transaction but to different transactions.
An interrupted transport is also not harmful in cases of only two parties, if the receiver of the goods was already known before the transport was started. Additionally the supplier must proof that there was a material link and a time link between the supply and the transport of the goods as well as a continuous movement of the goods.
Finally, the Ministry of Finance provides its view for chain transaction cases where an interrupted transport occurs because the goods are transported from another country in the European community to Germany just in order to perform the shipment of the goods from Germany to a third county. In this event the interruption of the transport in Germany is no reason for denying a chain transaction, if the country where the transport started considers the transaction as a chain transaction and the entrepreneur who (if the transaction would not be considered as a chain transaction) would have a taxable supply in Germany proofs that.
For the above mentioned reasons it might be rewarding and necessary to review current supply structures in order to be compliant with present VAT requirements.
In case of any further questions in this regard, please do not hesitate to contact us.