Chain and tripartite transactions in economic practice

Service-Tax

Knowing the basic principles related to the identification of triangular transactions, it is worth quoting a few examples of jurisprudence that show the proper classification of the transactions in question and assess the correctness of the findings and settlements of these transactions. The following article describes chain transactions in business practice.

Meeting the conditions for the application of the simplified method in WTT

The Polish entity carries out transactions for the purchase and sale of fish outside the country. In connection with transactions carried out as part of this activity, the Entity is an active VAT and VAT-EU taxpayer in Poland. Other entities are also VAT taxpayers and VAT-EU taxpayers.

A Polish entity that is a VAT payer receives an order from a French entity (taxpayer C). The Polish entity ships the goods directly from its own supplier in the Netherlands (taxpayer A). It should be noted that there are two deliveries here:

  1. between a Dutch entity and a Polish entity,

  2. between the Polish entity and the French entity.

- there is only one transfer of goods - from the Netherlands to France (the Polish entity issues an invoice to a French entity, and a Dutch entity - to a Polish entity).

The goods subject to the transaction are transported from the Netherlands (A) to France (C). They are issued by the supplier directly to the last taxpayer (C) and omit the second taxpayer (B). The last taxpayer (C) arranges the transport of the goods and bears its costs, acting in this regard (in accordance with the nature of the transactions in question) in the interest and approval of the Applicant or "the second taxpayer”.

It follows from the above-mentioned provisions that the simplified procedure in an intra-Community tripartite transaction consists in:

  1. making the final purchaser of the goods subject to the obligation to pay tax, i.e. the third taxpayer, for domestic delivery between the second and third taxpayer in the territory of the Member State where the goods are located at the time of completion of their shipment or transport,

  2. recognition that there has been intra-Community taxation of the acquisition of goods by the second VAT taxpayer, both in the territory of the Member State where the goods are located at the time of completion of their shipment or transport, and in the territory of the state that issued the VAT identification number to the second taxpayer .

In such a situation, when the goods are transported by the final buyer, however, acting for the first and / or second participant in the triangular transaction based on the concluded agreement / contract, it should be stated that the disposition of Art. 135 sec. 1 point 2 lit. b of the Act has been completed, and the transaction in question may be settled according to the simplified procedure in an intra-Community tripartite transaction, provided that the other conditions resulting from the provisions of the Act referred to in this interpretation are met.

Transactions under which the recipient arranges transport, acting in this respect in the interest and approval of the Applicant (taxpayer B - intermediary) and the other taxpayer - here: taxpayer A Dutch supplier (principals), meet the definition of an intra-Community triangular transaction for which VAT settlement may be made under the rules applicable to the simplified procedure provided for in Art. 135 sec. 1 point 4 of the Act.

Individual interpretation of 11/06/2014. issued by the Director of the Tax Chamber in Bydgoszcz, ref. no. ITPP3 / 443-156 / 14 / AT.

Chain transactions - identification

A capital company under German law H (hereinafter: "H" or "Applicant") with its registered office in Germany, not registered as a taxpayer of tax on goods and services in Poland (hereinafter: "VAT") receives orders, inter alia, from customers in the Balkans and customers from EU Member States for food products (in particular seafood, vegetables, fish, hereinafter: "goods"). H then transfers these orders to a Polish subcontractor (hereinafter: "the supplier") who produces and prepares the goods for shipment. The supplier prepares the transport documentation, i.e. CMR transport document and delivery confirmation, and in the case of deliveries to a third country, also the Eur.1 movement certificate, export declaration, veterinary certificate.

The supplier informs H about the shipment of the goods. H asks customers to confirm receipt of the goods, i.e. the CMR consignment note accompanying the goods. After the shipment, H receives an invoice from the supplier for the goods shipped, which H pays immediately upon receipt of the invoice. After the goods have shipped, H sends his invoice to the customer, which invoice contains the goods identical to the goods shown on the invoice issued by the supplier.

Only the supplier is the entity responsible for customs clearance (for deliveries to third countries). The export of goods is reported by the supplier at the customs office in Bydgoszcz. The supplier is indicated as the exporter on customs documents.

The goods are delivered directly between the supplier and the customer in accordance with the FCA Bydgoszcz delivery terms. The transport of goods is agreed between the supplier and the customer and is commissioned to the carrier indicated by the customer. The carrier confirms the takeover of the goods on behalf of the customer in Bydgoszcz. The transport of goods is paid for by the customer. Prices and terms of delivery are agreed on a long-term basis. Deliveries are continuous.

The applicant asked whether the described transactions would meet the conditions for recognizing them as chain transactions within the meaning of Art. 7 sec. 8 of the VAT Act?

In the case at hand, the delivery is made from the supplier to H and from H to the customer, the goods being transported directly from the supplier to the customer. Therefore, in the present case, the conditions for chain transactions described in Art. 7 sec. 8 of the VAT Act.

Chain transactions and taxation

Taking into account the above, the applicant asked another question. In the case of supplies to a third country, does the sale between the supplier and H constitute a domestic supply subject to VAT in Poland for which H is entitled to a deduction of input tax when a VAT invoice is received from the supplier?

According to the description of the facts, the goods are exported directly from Poland to the territory of a third country, and it is the supplier who fulfills all obligations related to the declaration of goods for export, the supplier appears on the export documents as the exporter, and the export is each time confirmed by the customs office in Poland. Deliveries are made on the terms of FCA, while additional arrangements between the supplier, H and the customer show that neither H nor the customer have access to the goods in Poland, i.e. in the Applicant's opinion, they do not acquire the right to dispose of the goods as the owner in Poland. H does not resell to the customer until the supplier informs H of the shipment of the goods and the customer confirms receipt of the goods.

The customer only orders and bears the costs of transport, while, in the opinion of H, it cannot be considered as an entity organizing the transport. The supplier is responsible for the organization of transport, because it is the supplier who, taking into account possible H guidelines as to the amount and type of loading, ultimately decides about loading and indicates the place of loading. The customer only specifies the time frame for delivery, while the exact time of loading is determined after additional confirmation by the supplier and the carrier. The supplier also issues shipping documents.

To sum up, because the goods are exported to the territory of a third country, the export is confirmed by the customs office in Poland, the exporter's identification field indicates the supplier, the supplier is the entity organizing the transport, and the right to dispose of the goods as owner is transferred to H and to the customer as a result of exportation. outside the territory of Poland, the sale made by the supplier to H is, in the opinion of the Applicant, direct export of goods within the meaning of Art. 2 point 8 lit. a of the VAT Act, but does not constitute a domestic supply. Such a position was confirmed in a similar factual state in the interpretation of individual reference number IPTPP2 / 443-354 / 13-4 / PR of August 8, 2013.

Export of goods in chain transactions

The applicant also pointed out whether - in the case of supplies to a third country - sales from H to a customer from a third country are subject to VAT in Poland?

Taking into account the answer to question 2, in the opinion of the Applicant, the sale from H to a customer from a third country, as a real estate supply in the territory of a third country, is not subject to VAT in Poland.

Taking into account the described facts and the Applicant's position to question 2, the second delivery in a chain transaction, i.e. a sale from H to a customer from a third country, is a stationary delivery made immediately after export from Poland, i.e. a domestic delivery in a third country.

Therefore, sales from H to a third country customer are not subject to VAT in Poland.

Individual interpretation of November 5, 2015. issued by the Director of the Tax Chamber in Warsaw, ref. no. IPPP3 / 4512-811 / 15-2 / JF.