Chain transactions and VAT

In business practice, we often encounter chain transactions. A chain transaction is successive supplies of the same goods between several parties, which are subject to a single transport directly from the first supplier to the final customer. In chain transactions, at least three subjects are involved, but often there are more of them.

Transport allocation

For cross-border chain transactions, VAT registration of some transaction parties in the EU Member State of taxation could be necessary.

For the correct VAT treatment, it is necessary to determine which of the supplies should be considered as movable (i.e. connected with transportation). For supplies within the EU, this supply can be considered as a VAT exempt intra-community supply of goods. All other supplies should be considered as unmovable domestic supplies subject to local VAT, either in the Member State of dispatch or the Member State of the destination of the goods.

The determination of a movable supply is relatively straightforward where the first supplier or the last customer arrange the transportation of goods – in such cases transportation should be allocated to the first, or to the last supply in the chain.

VAT treatment of chain transactions was absent from Slovak legislation and the law of many other EU Member States prior to 2020. This made it difficult to determine which supply should be considered as movable where transportation was arranged by a middleman. When assessing which supply in a chain is movable, it was necessary to follow the relevant CJ EU case law.

The new legislation, which is part of the European package of VAT measures known as Quick Fixes, aims to remove this uncertainty. The determination of movable and unmovable supply has been significantly simplified compared to the past:

  • If transportation is arranged by a middleman, the supply of goods from the first supplier to the middleman should be considered as a movable supply; however
  • If the middleman provides its supplier with its VAT number issued in the Member State of the dispatch of the goods, the supply of goods from the middleman to its customer should be considered a movable supply.

For a correct assessment of chain transactions under the new rules, the following should be considered:

  • VAT numbers used by transaction parties;
  • Which transaction party qualifies as the middleman; 
  • Contractual terms and conditions between all parties involved in the transaction;
  • Relevant incoterms;
  • When the right to handle the goods as the owner is transferred between the participating parties, etc.

Chain transaction - triangulation


Where three parties participate in a chain transaction, the triangulation simplification may be used under certain circumstances.


If all legal requirements for the triangulation simplification are met, then:
  • The second party in the chain (the middleman) does not need to register for VAT in the EU Member State of destination; and
  • The tax liability is shifted to the third party in a chain, to which the goods are delivered.


Entrepreneurs are often not aware that they are part of a chain supply and may, therefore, incorrectly treat their transactions from the VAT perspective. As a result, they may be exposed to the risk that VAT is incorrectly claimed or deducted, or to the risk of sanctions for not having been registered for VAT purposes in another EU Member State.



New uniform rules for chain transactions in the EU, and the triangulation simplification, offer a wide range of effective VAT planning opportunities for cross-border chain transactions. If supply conditions are set correctly, businesses can avoid unwanted VAT registration in another EU Member States, or shift tax liability to another party in the chain.


How can PwC help you?


Applying our experience with chain transactions, we can perform an analysis of the VAT regime of your commercial transactions.


We will identify potential risks of your cross-border chain transactions and advise you on how to eliminate these risks.


We will suggest how to set up a business transaction from the VAT perspective, taking into consideration your firm’s individual needs.


We will assist you with drawing up documentation that meets the requirements of tax authorities.

Contact us

Dagmar  Haklová

Dagmar Haklová

Partner & TLP Leader, PwC Slovakia

Tel: +421 911 425 109

Christiana Serugová

Christiana Serugová

Partner, CEE TLP Clients & Markets Leader, PwC Slovakia

Jan Skorka

Jan Skorka

Director, PwC Slovakia

Tel: +421 918 642 128

Eva Fričová

Eva Fričová

Senior Manager, PwC Slovakia

Tel: +421 903 268 048

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