CYIL vol. 13 (2022)

MARCELA HRADECKÁ CYIL 13 ȍ2022Ȏ of completion of the transportation of the goods who buys goods from an intermediary in the Member State of the purchaser, is not registered for tax in the Member States of the supplier or the intermediary, and does not have an establishment in those States. (3) The intermediary is registered for value added tax in a Member State other than the Member State of the seller and other than the Member State of the purchaser. It acquires the goods from the seller in the Member State of the purchaser with a view to the subsequent supply of those goods to the purchaser in the Member State of the purchaser. An important legal document, and not only for international transactions, is the contract of purchase 5 . Another important document is the identification of the contracting parties in terms of measures against the laundering of proceeds of crime and the origin of money 6 , and last but not least, it is also necessary to examine the business partner from a tax point of view, in accordance with the Value Added Tax Act 7 , the Income Tax Act 8 and the relevant double taxation treaties 9 , or the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. Tax aspects of triangular trade The term “taxable supply” in connection with the delivery of goods shall denote, pursuant to Section 13(1) and (2), of the VAT Act 10 , the transfer of the right to disposal of the goods as their owner, and in the case of a supply of the goods to another Member State, the term “supply of goods” shall denote the supply of the goods which are actually transported to another Member State. The place of the supply for the supply of goods pursuant to Section 7(2), of the VAT Act 11 , if the goods are transported by the person who carries out 12 the supply or by the establishment is not registered in the Commercial Register, see the Act no. 304/2013 Coll. on Public Registers of Legal Entities and Natural Persons and Registration of Trusts, as amended. The concept of a branch plant has similar characteristics to a permanent establishment, but its creation is registered in the Commercial Register, which assigns an identification number to the branch plant. Neither of these identities has legal personality. 5 Section 2079, et seq. of the Act no. 89/2012 Coll., the Civil Code, as amended. 6 Act no. 253/2008 Coll. on Certain Measures against the Legalisation of the Proceeds from Crime and the Financing of Terrorism, as amended (AML). 7 Section 109 et seq. of the Act no. 235/2004 Coll. on the Value Added Tax, as amended. The intention of the amendment to the VAT Act was to prevent tax offences. A new concept of tax liability was introduced. Thus, if the recipient of the transaction, in this case the purchaser, could or should have known that the business partner would not pay the tax or would shorten the tax or extract a tax advantage, it shall bear a tax liability under Section 109. 8 Section 22, Section 36 and Section 38f of the Act no. 586/1992 Coll. on the Income Tax, as amended. The matter concerns in particular the tax regulation of income taxation, i.e., the designation of the state as the source of income and the possibility of creation of a permanent establishment. The tax regime may be corrected by double taxation treaties or by the adopted Multilateral Convention no. 32/2020 Coll. of International Treaties of the Czech Republic to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. 9 Overview of double taxation treaties in force. Available from: https://www.mfcr.cz/cs/legislativa/dvoji-zdaneni/ prehled-platnych-smluv. 10 Act no. 235/2004 Coll. on the Value Added Tax, as amended. 11 Ibid 12 Concerning the person who carries out this supply, in the case of triangular transactions it is necessary to consider the supplier who sells the goods to the intermediary. This is the first part of such an intra-Community transaction.

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