Updated Belgian Circular highlights "Reverse Charge" necessity in simplified triangular transaction invoices

The European Court of Justice recently ruled in case C-247/21 Luxury Trust Automobil GmbH that an explicit mention of "reverse charge" is essential for the application of simplified triangulation.

The Court also ruled that invoice adjustments cannot be made retroactively. As a result, the Belgian administration has published an updated circular confirming these principles (Circular 2023/C/51).

Simplified triangular transactions are an exception to the normal VAT rules for cross-border (intra-community) supplies. Normally, a seller must declare an exempt supply in the Member State of departure, while the buyer must report a taxable acquisition in the Member State of arrival.

In simplified triangular transactions, however, three parties (A, B, and C) are involved in a chain sale, where goods are shipped directly from Member State 1 (Party A) to Member State 3 (Party C). This simplification allows Party B to handle the acquisition under its own VAT number in Member State 2 and leave the VAT for the supply in Member State 3 to Party C.

Conditions for triangular transactions

The EU VAT legislation (combined Articles 141 and 197 of the VAT Directive 2006/112/EC) imposes some conditions for using this simplification:
• Party B is not established in Member State 3 but is liable for VAT in another EU Member State (Member State 2).
• Party B acquires the goods in Member State 1 with a view to making a supply in Member State 3.
• The goods are transported directly from an EU Member State other than where Party B is liable for VAT to Party C in Member State 3.
• Party C is liable for VAT in Member State 3.
• Parties A, B, and C are different persons (no branches or VAT registrations of the same legal entity).
• Party C is designated as the person responsible for the payment of VAT for the supply of Party B.

Case C-247/21 Luxury Trust Automobil GmbH

In the Luxury Trust judgment, the European Court of Justice ruled that an invoice must explicitly refer to the "reverse charge" procedure as a condition for the application of the simplified triangulation. In addition, the Court ruled that invoice adjustments may not be made retroactively.

Remarkably, the European Court found that the mention "VAT-exempt intra-Community triangular transaction" on the invoices of Luxury Trust Automobil GmbH was insufficient for the application of the simplification.

If the "reverse charge" indication is missing, the simplified triangular transaction scheme cannot be applied. This means that Party B must register in the EU country of destination to declare an intra-Community acquisition and subsequent domestic supply. If Party B does not do this, it is still obliged to declare (non-deductible) VAT in its own country. This has to do with the so-called safety net (Article 41 of the EU VAT Directive). According to the safety net, the VAT on an intra-Community acquisition is due in the Member State in which the VAT number is used, unless the buyer can prove that the VAT on this acquisition has been levied according to the normal rules. VAT levied under the safety net is not deductible based on established European case law (ECJ 22 April 2010, Nos. C-536/08 and C-539/08, X and fiscal unit Facet BV / Facet Trading BV).

Administrative response

As a result of this case law, the Belgian administration has updated its previous guidelines on intra-Community transactions (Circular 2020/C/50) and supplemented it with these principles. The recently published circular (Circular 2023/C/51) is a response to the aforementioned European case law and consequently tightens the rules for taxpayers involved in triangular transactions. In addition to confirming the "reverse charge" requirement and the prohibition of retroactive invoice adjustments, the updated Circular also contains mainly some technical adjustments, such as changing references to specific legislation and adapting examples and wording.


The updated circular emphasizes the importance of clearly stating "reverse charge" on invoices and correctly complying with invoice requirements for the application of the simplified triangular system. Taxpayers involved in such transactions should ensure that their invoices comply with these requirements to avoid unnecessary problems or disputes.