It is questionable whether the simplification also applies to situations involving more than three traders. In section 25b.1 para. 2, the German tax authorities assume that an intra-Community triangular transaction only applies to the "last triangle" in the case of a chain transaction with four parties. This means that the simplification rule does not apply to traders who are not in the centre of the "last triangle". Other member states of the European Union take a different view and also apply the simplification of the intra-Community triangular transaction for medium-sized traders in four-party scenarios. If the application of an intra-Community triangular transaction is denied, the penalty acquisition tax that arises from the fact that the middle entrepreneur - inevitably - uses the wrong VAT identification number (declaration of the intra-Community acquisition of goods without input tax deduction of the country whose VAT identification number was used) must also be taken into account.
Against the background of this inconsistent handling, the judgement of the General Court of the European Union of 3 December 2025 (Case T-646/24) is significant. The judgement concerned a four-party chain transaction in which the supply chain was formed between a German (UDE), a Slovenian (USI) and two Danish traders (UDK1, UDK2) and in which the goods were delivered directly from UDE in Germany to UDK2 in Denmark. The EGC had to clarify whether UDK1 actually had to physically receive the goods in order to apply the simplification of the intra-Community triangular transaction. The court ruled that the simplification of the intra-Community triangular transaction can also be applied in the case of four parties, provided that the conditions of the intra-Community triangular transaction are met. UDK1 does not have to physically receive the goods, but merely have legal power of disposal over the goods. The latter was the case, as UDK1 resold the goods to UDK2. In addition, the ECJ held that the simplification could not be applied if USI knew or should have known that it was participating in VAT evasion.
The German tax authorities' view of the 4-party intra-Community triangular transaction is therefore contrary to the ECJ judgement. It remains to be seen what the German tax authorities will say about the judgement. The VAT Circular should be amended.
Entrepreneurs who carry out corresponding four-party chain transactions are advised to review their supply chains in order to take advantage of any simplification options or to defend themselves against any existing claims arising from the penalty acquisition tax.