Insights
INTERNATIONAL TAX
Simplification rule for triangular transactions
The Administrative Court (VwGH) has referred to the Court of Justice of the European Union (CJEU) on the question of whether the simplification rule for triangular transactions can be applied “from now on” following the subsequent issuance of a correct invoice.
The starting point for the request for a preliminary ruling to the CJEU was a trading entrepreneur who, between 2011 and 2014, ordered goods from entrepreneurs based in Sweden and Denmark using her Austrian VAT identification number (UID), and who then shipped the goods directly to business customers in other Member States. This constituted a so‑called triangular transaction. A triangular transaction exists when three entrepreneurs in three different Member States conclude supply transactions concerning the same goods, and those goods pass directly from the first supplier to the final customer.
“Failed triangular transactions”
The tax office qualified the trading entrepreneur’s triangular transactions with the companies in Sweden and Denmark as “failed triangular transactions” for various reasons, which meant that the entrepreneur had to account for an intra‑Community acquisition both in Austria and in the respective destination country, but she could not claim a corresponding input tax deduction in Austria.
The entrepreneur then corrected the invoices and summary reports for the period 2011 to 2014 in 2015 and wanted to apply the simplification rules also to the corrected period. The tax office did not accept this. The Federal Fiscal Court (Bundesfinanzgericht) upheld the appeal and argued that, although the invoices issued in 2015 could not have retroactive effect on the years 2011 to 2014 under CJEU case law, the effects would therefore arise “from now on”, i.e. not “from the outset”.
Waiting for the CJEU
With this question the VwGH turned to the CJEU, seeking to know whether the VAT Directive should be interpreted such that an invoice that meets all the conditions for the applicability of the triangular‑transaction simplification, but is issued several years after the supply has taken place, triggers the legal consequences of this administrative simplification “from now on”. The CJEU’s answer is still pending.
“Failed triangular transactions”
The tax office qualified the trading entrepreneur’s triangular transactions with the companies in Sweden and Denmark as “failed triangular transactions” for various reasons, which meant that the entrepreneur had to account for an intra‑Community acquisition both in Austria and in the respective destination country, but she could not claim a corresponding input tax deduction in Austria.
The entrepreneur then corrected the invoices and summary reports for the period 2011 to 2014 in 2015 and wanted to apply the simplification rules also to the corrected period. The tax office did not accept this. The Federal Fiscal Court (Bundesfinanzgericht) upheld the appeal and argued that, although the invoices issued in 2015 could not have retroactive effect on the years 2011 to 2014 under CJEU case law, the effects would therefore arise “from now on”, i.e. not “from the outset”.
Waiting for the CJEU
With this question the VwGH turned to the CJEU, seeking to know whether the VAT Directive should be interpreted such that an invoice that meets all the conditions for the applicability of the triangular‑transaction simplification, but is issued several years after the supply has taken place, triggers the legal consequences of this administrative simplification “from now on”. The CJEU’s answer is still pending.