Finally: Federal Ministry of Finance takes a position on the new regulation of chain transactions

The VAT registration of series transactions caused considerable problems in practice until 31.12.2019. Not only were there different regulations in the EU, but there was also case law that differed considerably from the administrative interpretation. A legally secure processing of series transactions was hardly possible. In order to put an end to this situation, chain transactions were codified and thus harmonized by law for the first time in the Value Added Tax Directive (VAT Directive) as of January 1, 2020. Now the BMF has taken a position on this in 17 pages.

Letter from the BMF

The BMF first presents the concept of chain transactions and the basic system of taxation of chain transactions. Subsequently, numerous cases with various variants and their recording for VAT purposes are presented.

What is to be emphasized?

Unchanged, broken transports are opposed to the assumption of a series transaction. A transport or shipment is considered to be broken if it is carried out by several entrepreneurs involved in the series transaction. The correct VAT treatment of the series transaction requires the correct determination of the so-called moving delivery. This is to be assigned to the company that is responsible for the transport. If a freight forwarder is involved, the decisive factor is who commissioned the freight forwarder. A deviating allocation is only permissible if it is proven that the transport or shipment is carried out for the account of another company, which also bears the risk of loss of the goods. There is no concrete example of this. In practice, there is likely to be plenty of room for interpretation with regard to the determination of the moving delivery, which is associated with corresponding risks.

If an intermediary transports or dispatches the goods, the delivery to him basically constitutes the moving delivery. However, the intermediary can prove that the delivery he carries out is the moving delivery. This opens up the possibility for the intermediary to influence the VAT registration. In particular, this can avoid registration in another member state. The BMF illustrates this in detail using several examples. Furthermore, the prerequisites for exercising the option are presented. These must be observed. The letter does not apply to deliveries via electronic interfaces (e.g. via Amazon), which are fictitiously deemed to be a delivery by the trader to the electronic interface as well as from the latter to the customer (Section 3a UStG).

Assessment and consequences

The BMF's comments on domestic series transactions are unlikely to be relevant in practice, as series transactions generally only cause difficulties if they take place across borders. The BMF's requirement that intermediaries use the VAT identification number (USt-IdNr.) as proof that the moving supply is attributable to their supply should also be questioned. The VAT Directive only requires notification of the VAT ID number. This should be taken into account if there are any discussions with the tax authorities.

A positive aspect is that the BMF now presents and discusses all variations arising from the allocation of the moving supply for almost every case constellation. It thus provides a good basis for examining the envisaged processing of the series transaction. However, this presupposes that the moving delivery has been correctly localized in the context of the series transaction. However, especially with regard to this question, which is elementary for the recording of the series transaction, the BMF's guidance is rather scanty. For periods prior to the publication of the letter (25.4.2023), the BMF allows deviating allocations of the transport responsibility, provided that this is done uniformly by the parties involved. Therefore, caution is advised here, at least for the future.