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HMRC internal manual

VAT Place of Supply (Goods)

Main rules: intra-EC movements of goods: chain supplies

Where an intra-EC movement of goods occurs during a series or ‘chain’ of supplies, only one of those supplies can represent an intra-Community supply. This was confirmed by the ECJ in the case of EMAG Handel Eder OHG (C-245/04). It follows from this that the place of the intra-EC supply is the Member State of departure of the goods. The other supplies in the chain are treated as domestic supplies (see VATPOSG3300), in either the Member State of departure or delivery of the goods, depending on where in the chain the supply falls.

The important point is therefore to identify which of the supplies represents the intra-EC supply. In most cases this will be indicated by the actions of the parties to the transactions. In other words the customer in the chain whose VAT registration is quoted to secure zero - rating in the Member State of departure can normally be accepted as having received the intra-EC supply. However, in cases of doubt or difficulty it may be necessary to examine the contractual provisions, for example those governing delivery of the goods. But in doing this you should avoid, if possible, arriving at a position which requires one of the parties to register in the UK when the transactions could be accommodated within existing VAT registrations.

So, in a situation in which A supplies B, who in turn supplies C, let us assume that A and B are registered for VAT in France from where the goods are removed. On the other hand C, to whom the goods are delivered, is registered in the UK. Clearly it is sensible to treat the supply from B to C as the intra-EC supply as the alternative (i.e. insisting that the A to B supply involved the intra-Community movement of the goods) would result in B having to register for VAT in the UK.