My VIP Tax Team VAT question of the week: Triangulation Transaction Post Brexit

Prior to Brexit, the UK was covered by the EU rules for intra EU movements of goods.   In order to zero rate in an intra EU movement the supplier of the goods is required to hold: –

• The VAT number of their customer in another member state,
• proof that the goods moved from one Member State and went to another Member State (not necessarily the same Members State as that of the VAT no they held), and
• have reported the supply of goods on an EC Sales list

The place of supply of goods, i.e. the place where VAT is required to be brought to account, is where the goods are located at the time they are sold.   If we had a manufacturer in Germany and an ultimate business customer in France, without the triangulation simplification, the intermediate supplier would be required to VAT register in either France or Germany.

If the UK client company VAT registered in Germany, they would receive a domestic supply in Germany, recover the German VAT on their German VAT return, and make an onward zero-rated Intra EU supply from Germany to France.

If they VAT registered in France, they would receive an Intra EU supply from the German supplier in France ,  account for acquisition tax in France on their French VAT return, and make an onward domestic supply in France to the French business customer.

The triangulation simplification allows an EU VAT registered intermediate supplier to buy and sell goods from/to other VAT registered EU businesses who do not belong in their own Member State  without having to VAT register in one of the Member States in which the supply of goods takes place.

As the UK is no longer in the EU, a UK VAT number cannot be used to allow triangulation.

In addition, within EU Member States there is no VAT registration threshold for Non-Established Taxable persons, i.e. businesses with no fixed or business establishment in the Member state where a supply is deemed to take place. Therefore, the UK business will be required to VAT register in either France or Germany (in this case) on the basis of the onward taxable supply of goods.  If they buy and sell the goods in their own name as principal, they will be compulsorily required to register as previously mentioned.   Local advice will need to be sought to assist with the registration.

The goods new is that once the UK business is VAT registered in an EU Member state, they will be able to use that EU VAT registration  number to facilitate  future  triangulation supplies , where their VAT registered suppliers/customers belong in 2 separate Member States , both different to the one in which the intermediate supplier is VAT registered.

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