Stress with Chain Transactions

Chain Transaction Calculator Germany 2020:

Select the countries participating in the chain transaction in the sequence of the invoicing path:

Country of the 1st entrepreneur: GermanyAustriaFrancePolandSwitzerland
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No 4th CountryOld legal situation
Country of the 2nd entrepreneur:GermanyAustriaFrancePolandSwitzerland
Country of the 3rd entrepreneur:GermanyAustriaFrancePolandSwitzerland
Country of the 4th entrepreneur:GermanyAustriaFrancePolandSwitzerland
Initiator of the transport:1st entrepreneur2nd entrepreneur3rd entrepreneur4th entrepreneur2nd entrepreneur as supplier
             
 
Sample page of the Chain Transaction Calculator: The following chain transaction evaluations corresponds to the information contained in the full version. With your registration in the Chain Transaction Calculator you get access to evaluations in this form for all 5000 examples of the Chain Transaction Calculator.
 
Chain Transaction Calculator Germany / Dispatch by E2 as supplier (PL-FR-AT-DE)
 

Facts:

A German entrepreneur E4 (= last purchaser) orders a machine from his Austrian supplier E3 (=2nd purchaser). The latter in turn orders the machine from the French wholesaler E2 (=1st purchaser). Since the wholesaler E2 does not have the machine in stock, he orders it from the Polish manufacturer E1 (= first supplier). The French wholesaler E2 instructs his forwarder with the pickup of the machine from the Polish manufacturer E1 and subsequent delivery to the German entrepreneur E4. The French wholesaler E2 (=intermediary operator) acts with his Polish VAT identification number and he communicates it to the Polish manufacturer E1 at the latest until the beginning of the shipment.

Brief description of the triangular transaction:

  • Registration obligations:
    • The French entrepreneur E2 has to obtain a VAT registration in the country of departure (Poland).
    • Pursuant to 25b.1. (2) UStAE, an intra-Community triangular transaction takes place in this 4-tiered chain transaction between E2, E3 and E4. Due to the simplification rule for triangular transactions (§ 25b UStG), no registration is required for the middle entrepreneur of the triangular transaction (in this example the Austrian entrepreneur E3) in the country of arrival.

  • "Supply 1" from E1 (Poland) to E2 (France)
    • Transaction without transport/dispatch assignment (§ 3 (7) UStG)
    • Taxable supply in Poland (E1)

  • "Supply 2" from E2 (France) to E3 (Austria)
  • "Supply 3" from E3 (Austria) to E4 (Germany)
    • Transaction without transport/dispatch assignment (§ 3 (7) UStG)
    • Taxable supply in Germany (E4)
    • Triangular transaction according to § 25b UStG

  • Special feature of this triangular transaction
    • Since the French entrepreneur E2 acts with his Polish VAT identification number towards the entrepreneur E1, the provision of the § 3 (6a) UStG (Article 36a (2) of the Directive 2006/112/EC), which has been effective since 01.01.2020, applies. As a result, the tax exempt supply shifts to the supply between E2 and E3 and the French entrepreneur E2 no longer needs to register in the destination country Germany. In addition also the Austrian entrepreneur E3 no longer needs to register in the destination country Germany because the simplification rules for triangular transactions (see also www.triangular-transaction.de), which are valid under German law, can be applied in this particular case.

Detailed description from the perspective of the individual entrepreneurs:

From the perspective of the 1st supplier E1 (from Poland):

  • Outgoing Invoice:

    • Invoicing:
      This supply is taxable in Poland (E1). The invoice must therefore be issued with 23 % Polish VAT, stating the own (Polish) VAT identification number.

    • VAT Return:
      Declaration of the sales transaction as a taxable (domestic) supply.

From the perspective of the 1st purchaser E2 (from France):

  • Registration obligations:

    • The French entrepreneur E2 has to obtain a VAT registration in the country of departure (Poland) und act with his Polish VAT identification number towards E1 and E3. The entries listed below are consequently to be included in the Polish VAT return, ESL and Intrastat SD.

  • Incoming Invoice:

    • VAT return (at the Polish Tax Office):
      The Polish VAT contained in the incoming invoice can be deducted as input tax and must be included in the VAT return accordingly.

  • Outgoing Invoice:

    • Invoicing:
      Invoice without VAT with reference to the tax exemption (intra-Community supply) pursuant to § 4 (1)(b) UStG in conjunction with § 6a UStG (or alternatively with reference to Article 138 of the Directive 2006/112/EC) and specification of the own Polish VAT identification number as well as the (Austrian) VAT identification number of the Austrian entrepreneur E3.
      No indication to the triangular transaction is made on this invoice!

    • VAT Return (at the Polish Tax Office):
      Declaration of the sales transaction as an intra-Community supply.

    • EC Sales List (at the Polish Tax Office):
      Declaration as (intra-Community) supply to the (Austrian) VAT identification number of the Austrian entrepreneur E3.
      No labeling as a triangular transaction!

    • Intrastat Supplementary Declaration (at the Polish authority):
      Declaration as dispatch to Germany.

From the perspective of the 2nd purchaser E3 (from Austria):

  • Incoming Invoice:

    • VAT return:
      The incoming invoice does not include VAT. The intra-Community acquisition of the first purchaser as part of a triangular transaction is deemed to be taxed and therefore not to be included in the Austrian VAT return (from a German perspective). It is a prerequisite that the entrepreneur E3 proves that such a triangular transaction exists and that he has met his obligation to report (by inclusion of the outgoing invoice to E4 in the ESL) .
      I.e. even though the entrepreneur E2 reports an intra-Community supply, the entrepreneur E3 does not have to report an intra-Community acquisition.

    • Intrastat Supplementary Declaration (Intrastat SD):
      In triangular transactions, the middle entrepreneur of the triangular transaction (in this example the 2nd purchaser E3) has no reporting obligation.

  • Outgoing Invoice:

    • Invoicing:
      The invoice must be issued without VAT and contain the following information: "Triangular transaction according to § 25b UStG" (or alternatively with reference to Article 141 of the Directive 2006/112/EC) und "Transfer of the tax liability pursuant to § 25b (2) UStG" (or alternatively with reference to Article 197 of the Directive 2006/112/EC) (see also § 25b.1. (6) UStAE). In addition to the own (Austrian) VAT identification number, the invoice must contain the (German) VAT identification number of the German entrepreneur E4.

    • VAT Return:
      Due to the simplification rule of the triangular transaction, the tax liability transfers to the German entrepreneur E4. From a German perspective the value of the outgoing invoice must still be included in the VAT return.

    • EC Sales List (ESL / Recapitulative statement):
      Declaration of the sales transaction to the German VAT identification number of the German entrepreneur E4 and labeling as a triangular transaction.

From the perspective of the last purchaser E4 (from Germany):

  • Incoming Invoice:

    • VAT return:
      The incoming invoice contains no VAT, but the reference to the existence of a triangular transaction and the transfer of tax liability. The German entrepreneur E4 thus has to calculate the tax himself based on the German tax rates and include it on the one hand in row 63/code 69 (VAT according to § 25b (2) UStG) and on the other hand in row 53/code 66 (input VAT from intra-Community triangular transactions according to § 25b (5) UStG). This is a zero-sum game, and does not result in any payment burden.

    • Intrastat Supplementary Declaration (Intrastat SD):
      Declaration as arrival from Poland.

Notes to the triangular transaction:

  • The above detailed descriptions from the perspective of the respective entrepreneurs represent only an indication of how the tax assessment would be if the German laws were to apply in all involved countries. National deviations from the German legislation were also not taken into account in the chain transaction sketch and the brief description!

  • You can find the German version in the reihengeschaeftrechner.de.

  • The assessment of this chain transaction from the Austrian perspective (no triangular transaction) you can find in the reihengeschaeftrechner.at

  • Alternative A: If the simplification rule for triangular transactions should not or may not be applied (e.g. if the Austrian entrepreneur E3 is domiciled in Germany), then the supply from E3 to E4 is taxable in Germany (19% German VAT) and the Austrian entrepreneur E3 must register in Germany if he is not already registered. This option should also be considered if there are countries involved in the chain transaction which oppose the simplification rule for triangular transactions in the context of 4-tiered chain transactions.

 
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