CYIL vol. 13 (2022)

CYIL 13 ȍ2022Ȏ CURRENT ISSUES OF CAROUSEL INTERNATIONAL TRADE IN THE EU… person 13 for whom the supply is carried out or by an authorised 14 third party, shall be the place where the goods are situated at the time where the transportation begins. Concerning the place of the supply for the supply of goods pursuant to Section 7(3) of the VAT Act, if the same goods are transported from a Member State to a Member State other than that Member State, from the first supplier directly to the last person in the chain for whom the supply is made, it shall apply that the transportation of those goods only took place when the goods were supplied to the intermediary or by the intermediary, and the intermediary communicated its tax identification number assigned to it by the Member State to both the supplier and the purchaser. Concerning the place of the supply for the supply of goods pursuant to Section 11(4) of the VAT Act, if a simplified procedure is used for the supply of the goods to another Member State in the form of a triangular transaction, the place of the supply shall be the Member State of the purchaser, i.e., the place where the goods are situated after completion of the transportation of the goods. An important aspect in this first phase of a triangular transaction is the person who orders the transportation, not the person who ultimately pays for it. If the transport to another Member State is ordered by the supplier or by the intermediary, then it is a supply of the goods to another Member State which is exempt from tax 15 with the entitlement to deduction of the VAT. 16 The VAT exemption must be understood as the fact meaning that the tax document from the supplier issued for the intermediary contains, in addition to the normal statutory details 17 , the price for the goods excluding the VAT and the addendum stating that “the tax shall be paid by the recipient of the goods”. This procedure declares the tax regime known as “reverse charge” 18 . In the tax procedure 19 , the supplier must then bear the burden of proving that the goods have been transported to another Member State, preferably by means of a “CMR” transport document. If the transport could not be attributed to this first stage of the triangular transaction, then the supplier would have carried out a domestic taxable supply and would have to indicate, in the tax document, the price of the goods burdened with the value added tax rate of the Member State concerned and to pay the value added tax to its locally competent tax administrator (tax authority). Triangular trade is very complicated in this regard because the transaction (supply) is carried out for the intermediary, but the transport is carried out to the place of destination – the place of taxable supply, which is the Member State of the purchaser, not the Member State of the intermediary. It is therefore always advisable to include all tax elements in the legal document of the contract of purchase. This includes in particular the identification of the contracting parties, 13 Concerning the person for whom the supply is made, in the case of triangular transactions it is necessary to consider the intermediary. This is the first part of such an intra-Community transaction. 14 The authorised person (third party) is the transport company most often. 15 Tax exemption means that the obligation to declare and pay the tax is on the buyer. 16 Section 64 of the Act no. 235/2004 Coll. as amended. 17 Section 26 et seq. of the Act no. 235/2004 Coll. on the Value Added Tax, as amended. 18 Reverse charge regime – the supplier of the goods declares an exempt supply in the tax return, i.e., it does not

pay the value added tax to its locally competent tax administrator (tax authority). 19 Section 92 and Section 93 of the Act no. 280/2009 Coll., the Tax Code, as amended.

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