Intra-Community triangular transactions – Retroactive rectification in the case of invoice correction?

This was what the tax court in Rhineland-Palatinate decided in a ruling from 28.11.2019 (case reference: 6 K 1767/17). The case in question was about a delivery by an Italian company to a German GmbH [a limited company]. Some of the goods were sold on by the GmbH to a Slovak business and some of them were taken to a warehouse in the Czech Republic. All the concerned parties used the VAT identification numbers issued to them by the member states where they were based. The goods transport was undertaken on behalf of the GmbH. This company treated the transactions with the Slovak company as deliveries within the meaning of an intra-Community triangular transaction.

In the absence of proper invoices, the local tax office did not recognise the goods deliveries to Slovakia and the Czech Republic as being intra-Community triangular transactions. In this case, the GmbH had to tax an intra-Community purchase in Slovakia and in the Czech Republic.

The case before the tax court was partially successful. The goods deliveries to the Czech Republic did constitute an intra-Community purchase by the GmbH that was subject to VAT in that country. The tax court explained that the delivery by the Italian company to the GmbH had been the active delivery. In view of the classification of this movement of goods it cannot be considered as a intra-Community triangular transaction.

The goods delivery to Slovakia was deemed to have been an intra-Community triangular transaction and already taxed in the relevant year given that the invoice had been corrected. The tax court was of the opinion that if there was an invoice that could be corrected then a proper invoice correction would have a retroactive effect to the date when the invoice was issued for the first time. Therefore, retroactive rectification would be possible and, in the view of the court, the intra-Community purchase was thus cancelled in the relevant year, too.

Please note: Permission was granted to lodge an appeal with the Federal Fiscal Court because the supreme court has not yet clarified the question of whether or not an invoice correction can result in a retroactive rectification in the event of a so-called unsuccessful triangular transaction.