What is triangulated VAT?, VAT triangulation and middleman in EU trades? What is a VAT triangle? How to account a 3-partner trade?
Middleman triangulation with VAT
If you are intermediary (middleman) in the triangulated VAT situation, special rules apply for your VAT return.
Triangulation means that a product is sold between three different parties, such as A to B that sells it on to C, and that the goods are transported directly from A to C. The parties are registered for VAT in their respective EU country.
As a middleman, B, you should not report the purchase as a Union acquisition if you can show that the purchase was made for a sale to C. As the middleman, you sell the goods without VAT to C, which invokes its valid VAT number.
How to report a triangular VAT trade
In the invoice to C, enter your VAT no and the buyer (C’s) VAT number and state that it is a case of triangular trade.
In the VAT return, you must report the purchase as “Middleman purchasing goods in triangulation” or similar depending on how your local Tax Authority choose to label this type of trade. The sale is reported as “Intermediary selling goods in triangulation”, “triangular trade” or something like that. In the Swedish VAT return, this is reported in boxes 36 and 37 but each country has their own version of the VAT return and you must investigate with your local tax authority exactly how to report this in your country.
You must also report this in the EC-sales list reporting.