32. Intra-Community acquisitions of goods

Summary

This section sets out the place of supply rules for intra-Community acquisitions (ICAs). The basic rule is that the place of supply of an ICA is the Member State where the transportation ends. However, if the customer acquiring the goods uses a VAT number issued by a different Member State, then (except in the case of triangular transactions, see next paragraph) the place of supply is the Member State that issued the number, unless the customer can prove that the VAT was paid in the Member State where the transportation ended.

A triangular transaction involves 3 Member States – for example a supplier in Member State A sells goods to a customer registered for VAT in Member State B but, at the request of the customer, delivers them to Member State C. In this case, the intra-Community acquisition is potentially liable to tax in two Member States - the place of actual delivery (C) and the place where the purchaser is registered for VAT (B). There is a special provision in this section to provide that triangular transactions are taxed once in the Community, thus avoiding possible double taxation.

Details

(1) The place where an intra-Community acquisition occurs is the Member State where the dispatch or transportation ends.

(2) Without prejudice to the core rule on ICA place of supply above, subsection (2) provides that the ICA occurs in the Member State that issued the VAT number cited by the customer for the purpose of the ICA, unless the customer can prove that VAT was paid in the Member State where the dispatch or transportation ends.

(3) The provisions in subsection (2) do not apply where:

• (3)(a) There is triangulation (i.e. Irish trader quotes his/her Irish VAT number for the purpose of the ICA and the goods are transported from one Member State to another, neither of which is Ireland).
• (3)(b) - The Irish trader supplies the goods to a VAT registered person in the destination Member State.
• (3)(c) - The Irish trader issues an invoice for that supply showing (apart from the usual details, description of goods etc.):
  • (3)(c)(i) his/her own VAT number and the VAT number of the person in receipt of the goods;
  • (3)(c)(ii) an explicit reference to EC triangulation simplification;
  • (3)(c)(iii) an indication that the person in receipt of the goods is liable to account for the VAT due on the supply.
• (3)(d) The Irish trader includes the supply on his/her VIES return as if it were an intra-Community supply, and indicates (flag “T” on the VIES return) that it is a triangulation case. (Regulations provide for this.)

Example: A (Irish trader, in Ireland) supplies to B (UK trader) but delivers the goods directly to C (French trader).

• The intra-Community supply from A to B is zero-rated.
• The supply is listed on the A to B VIES
• Trader in B makes an ICA and accounts in his/her VAT return.
• B issues invoice to C. This is a VAT-free supply. C accounts for the transaction in its VAT return as a received supply
• C is deemed to have accounted for B’s liability. If C has full deductibility, it takes a simultaneous credit for the transaction.

Relevant Date: Finance Act 2020