Triangular transactions that have gone wrong cannot be saved – ECJ decision "Luxury Trust" of 8 December 2022, C-247/21

If the middle trader in a potential intra-Community triangular transaction fails to include a reference to the transfer of tax liability in the invoice, the triangular transaction is deemed to have failed and the middle trader must register for VAT in the destination EU Member State. Issuing a new/ corrected invoice with the respective reference cannot change this - neither retroactively nor at the time of the reissue/ correction. We reported on the opinion in this casehere.

Facts of the case

In the case in question, the Austrian company Luxury Trust Automobil purchased vehicles from a supplier in the UK and resold them to the entrepreneur M from the Czech Republic. The vehicles were transported directly from the UK to the Czech Republic and all parties were acting under the VAT ID of their respective country. Luxury Trust wanted to treat this transaction as an intra-Community triangular transaction and therefore issued an invoice without Czech VAT and with a reference to the triangulation rule. However, there was no reference to the fact that the tax liability for the local supply of Luxury Trust to entrepreneur M, which was taxable in the Czech Republic, was transferred to entrepreneur M. This reference is required according to Art. 42 in conjunction with Art. 197 para. 1 lit. c and Art. 226 No. 11a of the VAT Directive.

ECJ decision and reasoning

The ECJ argued that the intra-Community triangular transaction is optional, i.e., the legal consequences of the triangular transaction only take effect if the middle trader opts for it and actively transfers the tax liability to the final consumer in the triangular transaction. For this to take place, the invoice must include a reference to the transfer of the tax liability as this is the only way that the final customer can be certain of their tax liability. Merely referencing the triangulation rule was insufficient. Thus, the invoice reference to the transfer of the tax liability was not a mere formality, but a material requirement of triangulation. In this respect, the ECJ aligned with the Advocate General's opinion.

Whereas the Advocate General had argued that the consequences of the triangular transaction would occur as soon as the notice was made good (without retroactive effect), the ECJ apparently assumed that the notice omission cannot be rectified at all. Accordingly, the court no longer had to deal with the question of whether a corrected invoice must be sent to the final customer (a question still being considered by the Advocate General).


On the one hand, this ECJ ruling concerns the question of whether the necessary invoice reference must also explicitly refer to the transfer of the tax liability so that the mere reference to a triangular transaction is not sufficient.

Even if the tax offices often ignore this issue, the VAT Directive and the VAT Act clearly stipulate this requirement. Entrepreneurs should pay more attention to this from now on.

The question of whether an incorrect invoice can be corrected so that the legal consequences of the intra-Community triangular transaction take effect retroactively has already occupied the German tax courts. The Fiscal Court Rhineland-Palatinate (ruling of 28 November 2019, 6-K-1767/17) and the Fiscal Court Münster (ruling of 22 April 2020, 15-K-1219/17-U-AO) had affirmed this. However, the Federal Fiscal Court had suspended the appeal proceedings to await the ECJ decision in the "Luxury Trust" case. The Federal Fiscal Court will now decide these cases in accordance with the ECJ ruling.