June 19, 2024


Tiny articles, big solutions.

What is triangulation?

vat triangulation

When a business participates in a triangulation i.e. takes part in an intra-community supply of goods together with two other Member States and all participants have an active EU VAT number, it is required to account for the transaction in a special way. The rules of accounting for triangular transactions are described in chapter 8 of the section “Special procedures” of the VAT Act. Check how the triangular transaction should be included in VAT return in case when Polish taxpayer is the first, second or last participant of the intra-community transaction! We explain in the article what VAT triangulation is.

What is a VAT triangulation?

Triangular intra-Community transaction (ABC) is a transaction that meets all of the following conditions:

  • The transaction involves three different VAT taxpayers, each of which is registered in a different member state,
  • Each of the taxpayers is registered for intra-Community transactions – they have active EU VAT numbers,
  • The supply concerns the same goods, issued by the first participant directly to the last in order, with the transaction taking place first between the first and second, and then between the second and third participant,
  • The goods are dispatched or transported by or on behalf of the first or second ranking taxable person,
  • The transport takes place from the territory of one Member State to another, within the Community.

When we can use the name vat triangulation?

If a given transaction meets the above conditions, entities participating in it will acquire the right to apply the simplified procedure referred to in Chapter 8 of the Act. In accordance with Article 135 of the VAT Act the triangulation example is:

  • Supply to the last entity (C) is immediately preceded by WNT at the second entity (B),
  • Xubject B making the supply to subject C does not have an establishment or residence in the territory of the member state in which transport or dispatch ends,
  • Taxable person B uses for both the first person involved in the transaction (A) and C the same identification number allocated to him by a Member State other than that in which the transport or dispatch ends or begins Party C uses an identification number issued by the Member State in which the transport or dispatch ends,
  • Subject B has designated subject C as liable for payment of VAT on the supply of goods under the simplified scheme.

Vat triangulation – Remember this

If the taxpayer registered in Poland is the last in line (the actual purchaser of goods), the second entity will be obliged to notify in writing the VAT information exchange office about the intention to use the simplified procedure. The VAT taxpayer is obliged to send a copy of the notice to the Polish taxpayer. With reference to the Polish taxpayer taking part in the simplified procedure, legislator imposes additional documentation obligations, and so if:

  • The Polish taxpayer is the second-ranking taxpayer, the records should additionally contain information about the amount of the margin and the name and address of the last-ranking VAT taxpayer (person obliged to settle VAT on the transaction).
  • Polish entity is the actual recipient of goods (final purchaser of the goods) in the VAT records should be shown turnover from the supply made to him in relation to which the simplified procedure for WTT was applied, the amount of tax attributable to the supply taxed in a simplified manner, name and address of the second ranking taxpayer of value added tax.