Toon Hasselman
by Toon Hasselman
The European Court of Justice’s decision in the Luxury Automobile Trust case (C-247/21) has clarified the application of the simplified ABC regulations (also known as triangulation). This simplification can be applied when Business A sells goods to Business B, which it in turn sells them to Business C, when A, B and C are established in different EU member states and the goods are transported directly from A to C.
As only one of these transactions can be an intracommunity transaction (“ICT”), without the simplification B must either register for VAT in member state A (to claim VAT back on the purchase and to report an intracommunity supply to C), or member state C (to report an acquisition from B and a local supply).
“Quick fix” rules are laid down to determine to which transaction the ICT must be attributed. If transportation of the goods is organised by A or B, their transaction qualifies as the ICT unless B provides a valid VAT ID issued by member state A, in which case the A-B supply is a local supply. When C arranges the transportation, the ICT takes place between B and C.
This simplification avoids the registration of B in member state C, i.e. the ICT takes place between A and B. B is not deemed to acquire the goods in member state C and the VAT due on the local supply in member state C is levied from C by way of the reverse charge.
Before the Luxury Automobile Trust decision, it was broadly accepted that the invoice between B and C should mention something about the use of the simplified ABC arrangement. However, the ECJ has now ruled that only the remark “reverse charge” or an EU equivalent suffices and nothing else.
When we look at the Dutch regulations, the above rules are not implemented properly. Neither the invoice regulations (what to mention on the invoice) nor the quick fixes (use of VAT ID by B) is correct. And we can safely assume that only few of the current 27 member states are implementing these rules correctly.
GGI member firm EJP Financial Astronauts ‘s-Hertogenbosch, The NetherlandsT: +31 73 850 72 80
Auditing & Accounting, Corporate Finance, Tax
EJP Financial Astronauts are auditors, advisers, and challengers. Their team of 55 consists of auditors, accountants and international tax lawyers who have a wide range of expertise. Their main fields of expertise are Dutch corporate and personal income tax, international taxation, Dutch royalties, interest and dividend withholding tax, estate planning, and wage tax. They have an AFM licence to perform audits for larger mid-sized companies.
Toon Hasselman is an experienced (30 years) high level VAT and customs specialist to both national and international companies. He provides simple and practical solutions, quick “outside the box” alternatives if necessary, and promotes a no-nonsense approach with conclusive solutions at a fair cost. Toon is also the Global Vice-Chairperson of the GGI Indirect Taxes Practice Group. Contact Toon.
