VATPOSG3830 - Main rules: movements of goods between Northern Ireland and the EU: triangulation
What is triangulation?
Triangulation is an extension of the difficulties associated with chain supplies (see VATPOSG3820). In a classic case of triangulation A supplies B, who in turn supplies C, but the goods move directly from A to C. Where A, B and C are in different member States (or identified for the purposes of VAT in Northern Ireland). In countries X, Y and Z respectively for the purposes of this guidance.
The place of supply permutations
The supply from A to B will always be in country X from which the goods are dispatched.
The acquisition by either B or C will always be in country Z to which the goods are delivered.
The supply from B to C will depend on which supply generating the removal of the goods from X to Z.
If it were the A to B supply, this means that the goods were delivered to and acquired by B in country Z. This makes B’s supply to C a domestic supply in Z.
Alternatively, if it were the B to C supply this means that B received the goods from A in the country X. This makes A’s supply to B a domestic supply in X and B’s supply to C will also take place in country X.
As a result of this B may be required to register in either A or C’s Member State, particularly if C is located in neither Member State. Alternatively, if B is registered for VAT elsewhere within the EU (or identified for the purposes of VAT in Northern Ireland) (e.g. country Y) they are likely to be eligible to adopt a simplified procedure which avoids the need for additional VAT registrations. You can find details about this in the manual covering Northern Ireland and the EU (VATNIEU).
More complicated scenarios
The position becomes more complicated as the number of supplies increases. For example:
Goods move from France to Northern Ireland. A and B are French companies with C and D being UK companies (identified for the purposes of VAT in Northern Ireland), it is necessary to establish which of the supplies involves the movement of the goods to Northern Ireland
If it is the A to B supply, then A’s supply takes place in France and each of the subsequent supplies take place in the UK. However, if it were the C to D supply, this would mean that A, B and C’s supplies all took place in France. The likelihood in these circumstances is that A and B will be registered for VAT in France and C and D registered for VAT in the UK. In that case the pragmatic approach adopted by most Member States in these circumstances, is to accept the B to C supply as the intra-EU supply and, as a result, avoid the need for either B to have to register for VAT in the UK or C having to register for VAT in France.