DHandel: Tax Treatment of Supply Chains in the EU

DHandel, a German online retailer, sells goods produced in Poland to private end consumers in various EU countries. Due to the involvement of private individuals in the supply chains, it is not possible to classify the transaction as a triangulation transaction. Instead, it must be classified as a chain transaction. This has significant implications for VAT obligations within the EU.

Tax Consideration of the Supply Chains

The supply chains is structured as follows:

– A: Polish manufacturer

– B: DHandel (German intermediary)

– C: Private customer in the EU

The goods are shipped directly from the Polish manufacturer to the private end consumer via courier service. Only one of the three transactions can be treated as a VAT-exempt intra-community supply.

Scenario 1: The Polish Manufacturer Arranges the Transport

If the Polish manufacturer organizes the delivery, the following applies:

The first transaction (manufacturer to DHandel) is a VAT-exempt intra-community supply.
The second transaction (DHandel to the private customer) is subject to VAT in the destination country.
DHandel must register for a VAT identification number (VAT ID) in each destination country and remit VAT there.

Scenario 2: DHandel Arranges the Transport

If DHandel arranges the delivery and uses its VAT ID registered in another EU country, the following consequences arise:

The first transaction (manufacturer to DHandel) is subject to VAT in Germany.
The Polish manufacturer must register for a German VAT ID and pay VAT in Germany.
The second transaction (DHandel to the private customer) is also subject to VAT in the destination country.
DHandel issues an invoice to the private customer with German VAT.

Relevant Legal Basis

VAT Directive (MwSt-RL) Art. 36a: Regulates VAT obligations for supply chains transactions within the EU.
EU Regulation 282/2011, Art. 45: Defines the documentation requirements for VAT-exempt deliveries (e.g., CMR consignment note, freight forwarder invoice).
§ 3 Abs. 6a UStG: Defines the tax requirements for intermediaries.

Conclusion

The tax treatment of chain transactions within the EU requires detailed planning. Depending on who is responsible for transport, both the manufacturer and the intermediary must fulfill various VAT obligations. DHandel must always remit VAT in the country where the private end customer is located. The correct application of EU taxes and tax law is essential for compliance.

Dr. Katona Géza, LL.M. ügyvéd (Rechtsanwalt / attorney at law)

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