VAT Triangulation - supply in EC

VAT Triangulation - supply in EC

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We have received an invoice from a company (registered for VAT in Germany) in Germany with VAT on it at the German rate (19%), however the goods have not left Germany so we have treated it as an additional cost rather than VAT, as the goods have not entered the UK.

The invoice is for a part to be fitted to a machine by our ultimate supplier (also registered for VAT in Germany) who will then export the complete machine to us. 

Should the invoice have been zero rated?  It is only a small amount, but I'd like to get the principle correct.

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By johnjenkins
29th Aug 2012 10:41

VAT with EU

is quite wierd. If you are a UK company and you ship goods from a EU country to the same country you have to pay VAT and claim it back. If the goods go to another country within the EU then there is no VAT.

The HMRC webb page on the Triangulation explains it very well. In mainland EU it's called ABC.

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By shaun king
30th Aug 2012 16:47

The German supplier of the part is correct in charging German VAT as the place of supply is Germany regardless of the fact that the customer is in the UK. You should have arranged for the part to have been billed to yout ultimate supplier in Germany who could have recovered the VAT on the purchase of the part and would then not have charged VAT on the sale of the machine including the part as it would have been a supply for acquisition.

You can make a mutual recovery claim but it is unlikely to be cost rffective if the VAT at issue is a small amount.

Even if the final goods went to another country and could be triangulared - VAT would still be payable on the purchase of the part 

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By johnjenkins
31st Aug 2012 10:23

Confused I am

As I understand it if you are a UK comapny purchasing goods from an EU country and selling them to the same EU country so the goods go straight to your client then you would be charged VAT and claim it back on the EU bit of the VAT retun. You would not charge VAT to your client.

If you buy goods from the same EU company and ship them to a different EU country then there is no VAT at all.

Please correct me if I am wrong.

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By shaun king
31st Aug 2012 11:01

John

 

If you buy goods in Germany and the goods don't leave Germany when supplied - German VAT is charged. If you buy the goods and the supplier has evidence that the goods left Germany - then no VAT is charged. In your case the goods were despatched by a German supplier to a place of delivery in Germany therefore German VAT applies.

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By johnjenkins
03rd Sep 2012 11:47

Yes but

the poster was saying that they were treating the VAT as a cost rather than claiming it back on their VAT return. So really the answer to the posters question is no.

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By shaun king
04th Sep 2012 14:48

The answer is No but with a bit of planning they could have avoided the charging of MwsT

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