The General Court clarifies triangular transactions rules in supply chains with more than three parties

Long-awaited clarification on triangular transaction rules in intra-EU supply chains involving more than three parties from the EU’s General Court.

On 3 December 2025, the EU’s General Court issued its ruling in case T‑646/24, tackling a recurring VAT challenge in cross-border EU trade: how triangular transaction rules apply when supply chains involve more than three parties.

Case Background

The case before the General Court concerned a supply chain involving four taxable persons rather than the usual three-party triangular transaction. A German supplier sold goods to a Slovenian company (“Company“), which then resold them to a Danish company and finally to another Danish operator. The goods were transported directly from Germany to Denmark in a single shipment organised and paid for by the Company.

The Slovenian tax authority concluded that the Company could not benefit from the simplification because the transaction involved more than three parties and the goods were not placed at the disposal of the third operator in the chain. Consequently, it assessed VAT at the Company and denied any reduction of the taxable amount under the Slovenian VAT regulation, arguing that the Company knew or should have known it was participating in VAT fraud. The Company challenged this decision before the Slovenian Administrative Court, claiming that the conditions of Article 141 VAT Directive were met even if the goods were delivered to the customer of the third operator.

Referred questions for a preliminary ruling

The Company brought proceedings before the referring court in Slovenia seeking annulment of the decision of the Slovenian tax authority. The Slovenian court referred the following questions for a preliminary ruling:

• Does the triangular simplification still apply when a single transport ends with the goods being made available directly to the customer’s customer in the same country as the intermediate trader’s customer, rather than to that customer itself?
• When deciding if the triangular simplification applies, does it matter that the intermediate trader knew the goods would be resold onward?
• If the simplification does not apply, can the tax authority charge VAT in Slovenia (where the intermediate trader holds a VAT ID) under Article 41(1) and deny any reduction under Article 41(2) when the trader knew or should have known the transactions were part of VAT fraud?

Key takeaways of the case

The General Court clarified that the triangular transaction simplification under Article 141 of the EU VAT Directive can apply even in chain transactions involving more than three parties, provided all objective conditions are met. The fact that the goods are transported directly to the customer of a later operator (e.g., the fourth party) identified for VAT purposes in the same Member State as the third party does not necessarily exclude the application of the simplification regime. The General Court also confirmed that the application of the simplification does not depend on whether the intermediate trader is aware that the goods concerned are not physically transported to its customer (i.e., the third party in the chain), but to the customer of that third party.

However, the Court emphasised that VAT advantages (deductions, exemptions, refunds or simplifications) cannot be claimed in cases of fraud. If it is established that the taxable person knew or should have known that the transaction was part of a fraudulent chain, neither the simplification for triangular transactions nor any related benefits apply. Member State authorities and courts are responsible for verifying this.

Wolf Theiss’ Tax team is pleased to assist companies with any questions related to this ruling and the VAT treatment of complex supply chains.