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STANDARD SUPPLY CHAIN

A chain transaction exists when at least three entrepreneurs complete a transaction regarding the same item and the item reaches the final buyer directly from the first buyer via handling or delivery.

If the place of the taxable delivery is in Germany it may be necessary to register for VAT in Germany, due to the different assignment of deliveries owing to the transport of the goods. In the case of a supply chain transaction only one of the deliveries is regarded as a so-called active (bewegte) delivery, the others are referred to as dormant (ruhend) deliveries. Tax exemption on an intra-community delivery to another EU country or an export delivery to a third country can only ever apply to an active delivery.

That is why the definition of the active delivery is of vital importance. It is always assigned to the delivery of the entrepreneur, who takes on the handling or shipping of the goods. If one of the middle entrepreneurs moves the goods in the supply chain, he may, under certain circumstances, exercise an assignment right. If the middle entrepreneur can be defined as the “deliverer”, the delivery is assigned to him. In this case he is the deliverer if he uses the VAT identification number of the country in which the delivery is started and if he accepts the risks and costs of handling or delivery based on the delivery conditions (Incoterms). The place of the dormant deliveries is at the beginning of the actual delivery, if the dormant delivery precedes the active delivery and at the end of the actual delivery, if the dormant delivery follows the active delivery.

Summary of the most important details

  • A supply chain transaction can imply compulsory VAT registration in Germany.
  • Each company is assigned the so-called dormant or active delivery by means of transport.
  • Possible tax exemption can only ever be assigned to the active delivery.
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