Triangulation is a simplification measure to reduce the administrative and regulatory burden on traders and tax authorities. It is intended to reduce the administrative and compliance burden related to VAT registration and accounting. This simplification measure can only work if all three traders involved are registered for VAT in the European Union.
Triangulation involves two supplies of goods between three Value Added Tax (VAT) registered traders in three different Member States of the European Union (EU). For example, if a trader established in one Member State (MS1) sells goods to a trader established in another Member State (MS2). However, the goods are delivered to a trader in a third Member State (MS3).
Transactions involving more than three companies
The simplification measure can only work in a classic generalization situation. If more than three companies are involved (eg successive sales between companies located in Member State 2), a strictly legal position applies. In such cases registration may be requested in at least one other Member State, depending on the precise circumstances.
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