The judgment of the EU’s General Court in case T-646/24, on December 3 2025, addresses a classic issue of VAT on intra-EU transactions: the application of the triangular transactions regime in supply chains that are more complex than the standard ‘ABC’ scheme. In particular, the case concerns a chain involving four parties.
Background to the case
A company identified for VAT purposes in Slovenia acquired certain goods from suppliers established in Germany, using its Slovenian VAT identification number. It resold those goods to three Danish companies, all of which were identified for VAT purposes in Denmark.
The transport was organised and paid for by the Slovenian company and was carried out directly from Germany to Denmark, without any physical passage through Slovenia.
The company declared these acquisitions and supplies in Slovenia, filed its recapitulative statement, and issued invoices to its Danish customers with reference to the reverse-charge mechanism, applying the simplification for triangular transactions under Slovenian law. Up to this point, everything appeared to indicate that this was a classic triangular transaction scheme.
However, the information obtained by the tax authorities revealed that the chain of supplies was, in fact, composed of four operators registered in three member states:
A German supplier;
The Slovenian company;
A Danish company acting as its customer; and
A fourth operator that was the final recipient of the goods.
The goods in question were the object of a single transport operation, from the first operator in the chain to the last one.
The Slovenian tax administration took the view that the simplification for triangular transactions could not apply because the goods were not placed at the disposal of the third operator in the chain but of the fourth. In other words, this would not be a triangular transaction but rather what could be described as a “quadrangular transaction”.
Referral for a preliminary ruling
For the above reason, three questions were referred to the court for a preliminary ruling to resolve the controversy that had arisen.
Four taxable persons identified for VAT purposes in three member states participated in the dispute. However, there was still a single dispatch of goods, from the first operator in the chain to the last.
The legal difficulty lies in the expression “to the person for whom he is to carry out the subsequent supply” in Article 141(c) of the VAT Directive.
On the basis of settled case law, the court recalled that a supply of goods is not to be identified with the formal transfer of ownership under national law but with the transfer of the power to dispose of tangible property as owner. The court added an essential qualification: this transfer of the power of disposal does not require the purchaser to have physical possession of the goods, nor that the goods be physically transported or delivered to them.
Accordingly, the court concluded that Article 141(c) and (d) does not require the recipient of the subsequent supply to have physical possession of the goods, nor, which is more important in this case, that the transport should end at that recipient’s premises.
Therefore, the fact that the single transport operation ends at the premises of the customer of the third operator (in other words, at a fourth operator) does not, in itself, prevent the condition laid down in Article 141(c) from being met.
This conclusion is clearly reflected in the answer to the first question referred, where the court states that direct transport to the customer of the third operator does not exclude the application of the simplification regime, provided that the other objective conditions are fulfilled. In this way, the court effectively endorses the use of the simplification mechanism in chains where four parties are involved in the supply of goods.
The court also stated that the fact that the operator invoking the simplification knows that the goods are not transported physically to the third operator, but to that operator’s customer, does not affect the fulfilment of the above conditions.
The court added that no one may benefit from the advantages of the VAT system (deductions, exemptions, refunds, or simplification regimes) where those advantages are used in the context of fraud. Therefore, in a case such as the present one, neither the reduction of the taxable amount of the intra-EU acquisition (Article 41 of the VAT Directive) nor the simplification for triangular transactions can be relied upon if it is established that the operator knew, or had reason to know, that it was participating in a fraudulent chain. An exceptional benefit that exists only for ‘clean’ transactions is therefore denied. It is for the authorities of the member states to verify this.
The ruling’s implications for complex supply chains
The General Court’s judgment makes the interpretation of the triangular simplification more flexible, adapting it to complex supply chains and logistics flows in which transport is directed to the final customer, who is not necessarily the third operator in the chain but may be a subsequent operator. The key element remains the power to dispose of the goods, not their physical receipt by the third operator. The case was therefore resolved on the basis of a concept that is not new but already clearly defined in the case law of the Court of Justice of the European Union.
The technique of triangular transactions can coexist with more complex chains and sophisticated logistics, provided that it does not become a shelter for organised VAT fraud structures.
