A-B-C supply chain transactions within the European Union
An A-B-C supply chain transaction always concerns at least 3 business operators from one or more countries. In such a transaction, business operator A sells to B and B successively sells on to C. A delivers the goods directly to C. It concerns two transactions. Who pays the VAT where it concerns an A-B-C supply chain transaction within the European Union? Business operator A,B or C?
Example A-B-C supply chain transaction
The oil company A in Hamburg sells a consignment of crude oil to the oil company B in Rotterdam, and the latter company in turn sells it to an oil merchant C in Italy. The oil company B has provided instructions to A to take the goods straight to C in Italy. The transport to Italy therefore forms part of the transaction from A to B.
1. The first supply
The first supply from A to B is a transaction with a business operator in another EU country which is an intra-Community supply as the transport forms part of this supply. A sends an invoice with 0% VAT. B must arrange for registration in Italy as a business operator registered for VAT and it is here that he files his intra-Community purchase.
2. The second supply
The second supply (from B to C) is a domestic sale in Italy (as the oil remained in Italy), between two business operators. B therefore charges C with the Italian VAT.
Simplified A-B-C supply chain transaction
To make it easier for the middleman B, it is also possible to effect an A-B-C supply chain transaction without registration in the country of C. You can find more information on this topic:
