Lombardo Larosi

With Revenue Agency Ruling No. 111 of 29 May 2026, the Italian tax authorities have provided an important clarification on the VAT treatment in chain transactions, a topic that directly concerns all businesses — Italian and foreign alike — that operate in purchase-and-resale scenarios involving intermediate parties within the European Union. Understanding how this regime works is essential to avoid errors that can trigger an unexpected VAT registration obligation in a Member State, with resulting penalties and retroactive compliance requirements.

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What are chain transactions for VAT purposes

A chain transaction occurs when the same goods are sold several times in succession — from a first supplier to an intermediary, and from that intermediary to a final buyer — but the physical transport takes place in a single movement, directly from the first seller to the final recipient. This is not a series of separate shipments, but a single logistical flow that serves to fulfil the entire chain of sales.

This structure is very common in international trade between EU countries, where intermediary operators act as trading companies without ever taking physical possession of the goods. The central VAT question is one: to which supply should the transport be allocated? The answer determines which transaction is intra-Community — and therefore VAT-exempt — and which is instead a domestic supply, subject to VAT in the country of destination.

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VAT treatment in chain transactions: the legal framework

The VAT treatment in chain transactions is governed at European level by Art. 36-bis of Directive 2006/112/EC (the VAT Directive), transposed into Italian law by Art. 41-ter of Legislative Decree No. 331/1993. The provision establishes a clear rule for determining to which supply in the chain the intra-Community transport of goods must be attributed.

The default rule is as follows: transport is allocated to the supply made to the intermediary operator. An intermediary operator is the party within the chain who is neither the first seller nor the final buyer, but an intermediate entity that arranges or causes the transport of the goods to be arranged.

The exception: when the intermediary provides its VAT number from the country of departure

The rule provides for an important exception: if the intermediary operator provides the first supplier with a VAT identification number issued by the Member State of departure of the goods, the transport is no longer allocated to the supply made to the intermediary, but to the supply made by the intermediary to the final buyer. In this case it is the second supply that is intra-Community, not the first.

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The concrete case: German company, Polish suppliers and Italian buyers

The ruling examined by the Revenue Agency with Response No. 111/2026 concerns a company resident in Germany for VAT purposes, with no permanent establishment or VAT registration in Italy, which purchases goods from suppliers established in Poland and resells them to buyers in various EU countries, including Italy.

The operational structure is as follows:

1. The Polish supplier sells goods to the German company
2. The German company resells the goods to an Italian buyer
3. The goods are physically transported from Poland directly to Italy, in a single movement
4. Transport is arranged by the German company, which therefore acts as the intermediary operator
5. The German company provided its German VAT number (not Polish) to the Polish supplier

The applicant believed it was operating under the EU triangulation simplification scheme as defined by Art. 141 of the VAT Directive, which would have allowed it to avoid VAT registration in Italy. The Revenue Agency, however, reclassified the transaction as a chain transaction, with very different consequences.

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Intermediary operator and transport allocation

The pivotal issue in this case concerns the identification of the intermediary operator and the VAT number communicated. In the transaction described, the German company provided its German VAT number — not its Polish one — to the Polish supplier. This choice has decisive consequences.

Here is how transport allocation changes depending on the VAT number communicated by the intermediary operator:

VAT number communicated	Supply to which transport is allocated	Intra-Community transaction
VAT of the country of departure (e.g. Poland)	Second supply (intermediary → final buyer)	The second supply (intermediary to final buyer)
VAT of another EU country (e.g. Germany)	First supply (supplier → intermediary operator)	The first supply (Polish supplier to German company)

In the case at hand, since the German company provided a German VAT number (different from the country of departure), transport is allocated to the first supply: from Poland to Germany. The second supply — from the German company to the Italian buyer — is therefore a domestic supply with the place of taxation in Italy, where the goods are physically located at the end of transport.

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VAT treatment in chain transactions: difference from EU triangulation

The German company had assumed it was operating under the simplified EU triangulation scheme, governed by Art. 141 of the VAT Directive. This is a simplification measure that allows the intermediary party to avoid VAT registration in the country of destination, provided certain specific conditions are met.

The Revenue Agency, however, ruled out the applicability of the simplified regime, reclassifying the transaction under the chain transaction rules of Art. 36-bis of the VAT Directive. The two regimes have different preconditions and very different fiscal consequences:

Aspect	EU Triangulation (Art. 141)	Chain Transaction (Art. 36-bis)
Number of parties	Exactly 3, in 3 different EU countries	2 or more, not necessarily in different countries
Intermediary party	Does not register for VAT in the destination country	May be required to register for VAT on arrival
VAT mechanism	Reverse charge on the final buyer	Domestic VAT in the country of destination
Transport	From first seller to final recipient	From first seller to final recipient (same)
VAT number used	Not from country of departure or destination	Decisive for transport allocation

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Practical consequences: when does the VAT registration obligation in Italy arise

The VAT treatment in chain transactions, as clarified by the Revenue Agency, leads to this conclusion: when transport is allocated to the first supply and the goods end their journey in Italy, the second supply — between the foreign company and the Italian buyer — is a domestic sale subject to Italian VAT.

It follows that the German company, having no establishment or VAT registration in Italy, was required to:

• Register for VAT in Italy — directly or through a fiscal representative
• Apply Italian VAT to the supply to the Italian buyer
• Issue invoices with Italian VAT and remit it to the Italian tax authority
• File periodic and annual VAT returns in Italy

Failing to register for VAT in a Member State where a domestic supply is made exposes the operator to challenge by the local tax authority, with penalties, interest, and recovery of unpaid tax.

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What a foreign company supplying goods to Italian buyers must do

In light of the clarification provided by Ruling No. 111/2026, foreign companies operating in purchase-and-resale schemes with goods moving into Italy must carefully review their position. In particular, it is essential to analyse:

1. Who arranges transport — if the intermediary organises or causes transport to be organised, it qualifies as an intermediary operator under Art. 36-bis
2. Which VAT number is provided to the first supplier — the country of issuance of the VAT number is decisive for transport allocation
3. Where the goods physically end up — the country of final destination determines where the domestic supply takes place
4. Whether the conditions for the simplified EU triangulation apply — which has very precise requirements and is not automatically available whenever three parties are involved

A preventive review of the operational structure, before commencing or continuing supplies to Italy, can avoid significant tax disputes. The VAT treatment in chain transactions is not something to address after the fact, but a variable to manage when structuring contracts and logistics flows.

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Frequently asked questions (FAQ) — VAT Treatment in Chain Transactions

📌 Can a chain transaction always be treated as an EU triangulation?
➡️ No. The simplified EU triangulation is a specific measure with precise requirements: exactly three parties must be involved, each established in a different EU country, and certain formal conditions must be met. If the prerequisites are not satisfied, the transaction is governed by the general chain transaction rules under Art. 36-bis of the VAT Directive.

📌 Why is the VAT number communicated to the supplier so important?
➡️ Because it determines to which supply the transport is allocated. If the intermediary provides a VAT number from the country of departure of the goods, transport shifts to the second supply. If it provides a VAT number from another country, transport remains with the first supply — and the second becomes a domestic supply subject to VAT in the country of destination.

📌 Can a foreign company with no permanent establishment in Italy be required to register for VAT there?
➡️ Yes. The VAT registration obligation in Italy arises whenever a foreign entity carries out taxable transactions on Italian territory — regardless of whether it has a registered office or permanent establishment in Italy. Registration can be done directly or through a fiscal representative.

📌 What does a company risk by failing to register for VAT in Italy when required to do so?
➡️ It risks administrative penalties, recovery of unpaid VAT plus interest, and potentially criminal tax liability if the amounts are significant. The Italian tax authority can reclassify transactions and recover tax for prior years, with a potentially very costly retroactive effect.

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