Subsequent corrections of invoices for intra-community triangular transactions

In the present case, a German GmbH purchased goods from an Italian business. The GmbH subsequently resold the goods to a Czech business. The delivery was made directly from Italy to the Czech Republic.

In such a chain transaction, the intermediate business is normally required to register in the country of destination. However, the GmbH assumed that the conditions set out in sect. 25b German VAT Act (UStG) for simplified triangulation were met. This has the effect that the intermediate business in a chain transaction is not required to register in the country of destination. According to sect. 25 b UStG, the business at the end of the chain is deemed to be liable for the tax in its country.

One of the conditions is that the intermediate business issues a proper invoice indicating both the simplified triangulation and the tax liability of the business at the end of the chain.

Some invoices from the GmbH to the Czech business did not include these requirements. The invoices were subsequently changed. In the case Luxury Trust (C-247/21), however, the CJEU ruled that such a subsequent change constitutes the initial fulfilment of a substantive requirement and thus is not a retroactive correction.

Key takeaway

The recently published ruling of the BFH aligns with the case law of the CJEU. Consequently, the GmbH is liable for the tax. With this ruling, the BFH is harmonizing German case law in this regard.

If a business wishes to utilize simplified triangulation, it is of the utmost importance that correct invoices are issued. It is not possible to retrospectively cure “unsuccessful” triangular transactions.

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