A triangular transaction involves three businesses in three different EU Member States: a supplier sells to an intermediary, who resells to its end customer, and the goods travel directly from the first to the last. Without a special rule, the intermediary would have to register for VAT in the end customer’s country.

A European simplification avoids that registration when certain conditions are met. It is useful for a foreign company that buys and resells goods from France or has a French VAT number, but it leaves no room for approximation on the conditions.

In this article

The structure of a triangular transaction
What the simplification allows
The conditions to check
Invoicing and reporting
Example of the document chain
Common mistakes
How Hanoutax can help
FAQ

The structure of a triangular transaction

Take, by way of illustration, a German supplier, a French intermediary and an Italian end customer. The goods travel from Germany to Italy, but two successive sales are concluded.

Two sales, one transport.

What the simplification allows

When the conditions are met, the intermediary does not need to register in the Member State of destination. The end customer accounts for the VAT in its own country under the reverse charge, and the intermediary invoices without VAT, mentioning the applicable regime.

The simplification avoids registration in the destination State.

The conditions to check

Condition	What to check
Three taxable persons	Three businesses established or VAT-registered in three different Member States
A single chain	One chain of sales, with a single transport between the first and last Member State
Intermediary	Not established in the destination State; it uses the VAT number of its own country
End customer	Holds a valid VAT number in its own State

Watch out: if even one condition is missing, the simplification does not apply. The intermediary may then have to register in the end customer’s country and file VAT there, which is costly if discovered after the first transactions.

Invoicing and reporting

The intermediary’s invoice must state that it is a triangular transaction, show the end customer’s VAT number and refer to the end customer accounting for the VAT. A reference to Article 141 of the VAT Directive is generally used; check the exact wording to adopt.

the supplier invoices its intra-EU supply to the intermediary, using the intermediary’s VAT number;
the intermediary invoices the end customer without VAT;
the transaction is reported on the VAT recapitulative statement, flagged as a triangular transaction.

Transport evidence and checking each party’s number remain essential: see our articles on proof of delivery and on VIES.

Example of the document chain

Take again the German supplier, the French intermediary and the Italian end customer. A coherent paper trail avoids most disputes.

The Italian customer orders from the French intermediary, who orders the same goods from the German supplier.
The German supplier ships directly to Italy and invoices the intermediary without VAT, using the intermediary’s French VAT number.
The intermediary invoices the Italian customer without VAT, with the triangular-transaction wording and the customer’s Italian VAT number.
The Italian customer accounts for the VAT in its own country under the reverse charge.
The intermediary reports the sale on its VAT recapitulative statement, with the triangulation flag.

The point to watch is the consistency of VAT numbers and transport documents across the three parties: a single transport, from Germany to Italy, must be demonstrable.

Common mistakes

Treating a four-party chain as triangular: the simplification covers only three taxable persons;
Using a destination-State VAT number for the intermediary, when the rule assumes the number of its own country;
Forgetting the reverse-charge wording on the invoice;
Not flagging the transaction as triangular on the recapitulative statement.

Reviewing the chain before the first transaction costs little compared with an unplanned registration in another country.

How Hanoutax can help

Before your first transaction, Hanoutax, a French VAT agent (mandataire fiscal) for foreign companies, reviews your purchase and sales chain. Discover our VAT treatment analysis and, on where a transaction is taxed, our place of supply and tax point page. For filing obligations, see VAT registration in France and VAT returns.

FAQ

What is a triangular transaction?

It is a chain sale between three businesses in three different Member States, with a single direct transport from the first supplier to the end customer. The intermediary resells without the goods passing through its hands.

Why does this simplification exist?

Without it, the intermediary would have to register for VAT in the end customer’s country. The simplification avoids this registration: the end customer accounts for the VAT in its country and the intermediary invoices without VAT.

What happens if a condition is missing?

The simplification does not apply. The intermediary may have to register in the end customer’s country and file VAT there, which can be costly if it finds out only after the first transactions.

What must the intermediary’s invoice show?

It must state that it is a triangular transaction, show the end customer’s VAT number and record that the end customer accounts for the VAT. Check the exact wording to use for your case.

Must the transaction be reported?

Yes. It is reported on the VAT recapitulative statement, flagged as a triangular transaction, on top of the usual entries. Reviewing the chain beforehand helps avoid mistakes.