New legal situation for chain transactions as of 01.01.2020:

On the way to a new definitive EU VAT system, which will take some time, European finance ministers agreed in October 2018 on a short-term package of measures (Quick Fixes). This package of measures has already been incorporated into the VAT Directive 2006/112/EC and the Implementing Regulation 282/2011 in December 2018 and has been valid since 01.01.2020.

For the first time, the new Article 36a introduced regulations on chain transactions in the VAT Directive-2006/112/EC. This article now bindingly regulates the assignment of transport or dispatch in intra-Community chain transactions for all member states. The previous legal uncertainty that different rules for assigning of transport or dispatch could apply in other member states is therefore be removed since 01.01.2020. However, the VAT Directive only applies to intra-Community chain transactions, i. e. in the case of chain transactions involving third countries (import/export), the respective national legislation and the legal provisions of the third country must still be observed. Detailed information on chain transactions with third country reference under German law can be found at www.chain-transaction.de.

The new basic rule (Article 36a (1) VAT Directive states that the dispatch or transport shall be ascribed only to the supply of goods by the intermediary operator. The definition in paragraph 3 clarifies that "intermediary operator" means the entrepreneur who dispatches or transports the items. This assignment rule corresponds with the basic assignment rule of the VAT Application Decree (3.14, Section 7 UStAE) and has now also been incorporated into the German VAT Act in § 3 para. 6a sentence 4 - 1. Half sentence. As a result, nothing fundamentally changes with intra-community chain transactions and the problem that the ECJ case law deviates from the administrative concept is thereby resolved.

The second rule (Article 36a (2)) represents an absolute novelty from the point of view of most Member States. From the German point of view, however, there is a striking similarity to the option to choose in accordance with § 3 para. 6 sentence 6 UStG. This new rule causes a shift of the supply to which the shipment or dispatch is assigned if the intermediary operator has communicated to his supplier the VAT identification number issued to him by the Member State from which the goods are dispatched or transported. As a result, this creates an option to choose for the entrepreneur who initiates the transport, who can choose between acting with a VAT ID number of the country of departure or with a VAT ID number of the destination country. Depending on the VAT ID number used, either the supply to this intermediary operator or the supply by this intermediary operator will be exempt from VAT if all legal requirements fulfilled (IC supply). This assignment rule thus largely coincides with the old option to choose according to § 3 para. 6 sentence 6 UStG (acting as "supplier"), however, this supplier must no longer prove in intra-Community chain transactions that he has taken over risk and cost of transport or dispatch.

The great advantage from the German point of view is therefore that the right to choose, which was valid until 31. 12. 2019 according to § 3 para. 6 sentence 6 UStG was simplified and at the same time it is ensured that from 01.01.2020 all member states have to recognize this option to choose. (In the past, the old option to choose could only be used to a very limited extent because it has not been recognized by most of the Member States).

The new rules will often simplify matters for entrepreneurs involved in chain transactions and save them the trouble of one registration or another. However, this makes it all the more important to consider which VAT identification number the intermediary operator should use in a potential chain transaction. If you register in the chain transaction calculator, you have the advantage that you can see several possible variants at a glance (at the end of each example, up to 2 alternatives are shown graphically as sketches).

In order that you too can benefit from this additional information, please register using the following link:

Further changes due to the quick fixes:

Please note that the Quick fixes, in addition to the changes in the chain transactions, also has effects on the following areas:

• EC-Sales List (Article 138 (1) to (1a) and Article 262 VAT Directive 2006/112/EC)
• Proofs of transport for intra-Community supplies (Implementing Regulation 282/2011)