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Effects of VAT on chain and triangular transactions – Adózó

A Belgian company (B) ordered the goods from our Company (A), which is based in Hungary. An invoice for the goods ordered by Company B will be sent to Company C based in France. The goods were delivered from our company headquarters in Hungary directly to France by means of the carrier commissioned by the French company (C). Our question: 1. Is the transaction considered a serial transaction? 2. How should our company act correctly regarding VAT invoices related to the sale of goods, as well as the relevant VAT declaration? Readers’ questions have been answered by tax advisor Erica Bona.

Our experts answer:

In the above case, there is indeed a chain transaction, and even a three-way transaction inside, but its simplification cannot be applied, because the third party is doing the transfer.

The VAT law contains provisions for the place of delivery for cases where the product is the subject of several sales, where the delivery takes place directly from the first operator to the last, i.e. chain transactions.

The law arranges the rules applicable to specific serial sales transactions among the special rules that determine the place of fulfillment of the sale of the product. It is customary to call a triangular transaction a special chain transaction, which regulates the rules of the place of delivery from the point of view of the buyer, that is, the destination of the product. Similar to a chain transaction, only one sale may be tax-exempt here, i.e. a sale involving transfer, in which the person making or ordering the transfer participates, either as a seller or as a buyer. Where previous and next sales perform is determined by that consignment sale. The rules of the three-way transaction provide relief to the intermediary buyer, and only if the seller or the intermediary actor in the transaction transfers as buyer.

If the conditions of the triangle transaction are met, its application is mandatory.

In the above case, the final purchaser is transferred by a third party, i.e. this sale can be tax free, but the place of fulfillment of the sale before it is fulfilled is in the country of departure, i.e. locally.

Accordingly, you must issue a local VAT invoice for the Belgian company (for its Hungarian tax number), and you must issue an invoice for community tax-free sales of the end French customer from its Hungarian tax number.

You must include this transaction in the Domestic Sales line on your VAT return. As you can see, the Belgian intermediate buyer will need a Hungarian tax number.

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