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HMRC internal manual

VAT Single Market

HM Revenue & Customs
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Simplifications: processing of goods: goods sourced and processed in different Member States

Use this link to view Processing different MSs diagram

Here the Principal (C) in Member State 3 (MS3) instructs supplier (A) in Member State 1 (MS1) to deliver the goods to processor (B) in Member State 2 (MS2). The finished goods will be delivered to principal C in MS3.

The supply of the goods by A to C may be zero-rated as an intra-EC supply in the normal way. C is therefore treated as making an acquisition of the goods in MS3 and will also account for VAT on the supply of processing services supplied by B as a reverse-charge. The other movements of goods will not produce further supplies and acquisitions.