VAT Chain Transactions Explained: How EU Sellers Stay Compliant in 2025

When goods move across borders and several companies are involved in the sale, VAT chain transactions can quickly become complex. Whether you’re selling through Amazon PAN-EU, using your own warehouses, or running a dropshipping model, understanding how VAT applies in these cases is essential to stay compliant and avoid double taxation.

In this article, we explain how chain transactions work, who needs to register for VAT, and how hellotax can help online sellers simplify compliance across Europe.

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1. What Are VAT Chain Transactions?

A VAT chain transaction happens when two or more businesses sell the same goods successively, but the goods are physically transported only once — from the first supplier to the final customer.

For example:

Company A in Germany sells to Company B in Italy, who sells to Company C in France.
The goods move directly from Germany to France.

Even though there are two sales, there’s only one transport. Under EU VAT law, only one sale can be linked to that transport — this one is the intra-Community supply (ICS) and is usually zero-rated (0% VAT). This exemption is laid down in Article 138 of the EU VAT Directive, which allows suppliers to apply a 0 % rate to intra-Community supplies when goods are shipped between Member States and all formal conditions (valid VAT ID, proof of transport, correct reporting) are met.
All other sales in the chain are considered domestic supplies and are subject to VAT in the country of departure or arrival.

EU Legal Background: Quick Fixes and Chain Rules

The rules for VAT chain transactions were harmonised across the EU in 2020 under the EU VAT Quick Fixes package. These rules clarify how to determine which sale in a chain is linked to the physical transport of goods (the “movable” supply) and which sales are domestic (“immovable” supplies).

If a middleman arranges the transport, the default rule is that the movement of goods is linked to the sale to that middleman.
However, if the middleman provides the VAT number of the country of dispatch, then the sale from the middleman to their customer becomes the cross-border intra-Community supply.

These rules are based on Article 36a and Article 141 of the EU VAT Directive and apply uniformly across all Member States since 2020.
Each Member State has incorporated these rules into its national VAT law (for example, § 3(6) UStG in Germany), ensuring consistent treatment of chain transactions across the EU.

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2. The Role of the Intermediary Operator

The business in the middle of the chain (often an Amazon seller or distributor) is called the intermediary operator.
By default, the transport is attributed to the sale to the intermediary (A→B).

However, if the intermediary provides the supplier with a VAT number from the country of dispatch, the transport can instead be attributed to the sale by the intermediary (B→C).
This small change determines who makes the cross-border sale and who needs VAT registration in each country.

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3. Practical Scenarios for Online Sellers

Movable vs. Immovable Supplies — Why It Matters

In every chain transaction, each sale must be classified as either movable or immovable for VAT purposes:

• The movable supply is the one linked to the physical transport and qualifies as an intra-Community supply (ICS), usually zero-rated.

• The immovable supply is treated as a domestic sale, subject to VAT in the country of departure or arrival.

Correctly identifying which transaction is which determines who must charge VAT and where. For online sellers, this distinction affects both invoicing and reporting obligations.

In practice, tax authorities distinguish between the movement transaction (the sale that triggers or accompanies the physical transport) and non-movement transactions (earlier or later sales in the chain). Only the movement transaction can qualify as the intra-Community supply.

Scenario 1: Three-party B2B chain inside the EU

• A (Germany) → B (Italy) → C (France)

• Goods move directly from Germany to France

Default case (transport linked to A→B):

• A→B = intra-Community supply (ICS), 0% VAT in Germany

• B→C = domestic sale in France, B must register for VAT in France
  → unless the triangulation simplification applies.

Triangulation simplification (Article 141 of the VAT Directive):
If all three businesses are VAT-registered in different Member States and goods move directly from A→C, B can avoid VAT registration in France. C simply self-accounts VAT under the reverse-charge mechanism.

This is a common setup for cross-border Amazon B2B sellers.

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Scenario 2: Dropshipping and B2C sales

If the final sale is B2C, the triangulation simplification does not apply.

This is because triangulation simplification under Article 141 VAT Directive applies only to B2B transactions between taxable persons — not to sales to private consumers.
The seller must charge VAT in the country where the goods are shipped or stored.

If the seller arranges and controls the cross-border transport (e.g. from Germany to France), the sale may qualify as a distance sale and can be reported through the Union OSS scheme. However, if the supplier ships the goods directly, the sale remains a non-moving delivery and requires local VAT registration instead.

If goods are stored locally (for example, in Amazon’s French FBA warehouse), the seller must have a local VAT registration in France, because OSS does not cover domestic sales from local stock.

To learn more about how OSS works for dropshippers, read our full article:
👉 Dropshipping and the OSS scheme explained

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Scenario 3: Import + EU distribution

For non-EU sellers importing goods into the EU, VAT complexity increases.
The importer of record declares VAT at customs — for instance, in the Netherlands — and the first EU sale after import determines the cross-border chain.

If the goods move from the Netherlands to other EU countries, each intra-Community supply must be properly identified and reported.
Using the Article 23 permit in the Netherlands allows sellers to defer import VAT and improve cash flow — an important benefit for high-volume Amazon sellers.

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4. How to Determine VAT Treatment (Checklist)

1. List all parties involved and their VAT registrations.

2. Identify who arranges the transport.

3. Decide which sale is linked to the transport:

   • Default → supply to the intermediary

   • Exception → supply by the intermediary (if they use the dispatch-country VAT ID)

4. Check if triangulation can apply (3 different EU countries, goods go A→C directly).

5. If the final buyer is a consumer, check if Union OSS can be used.

6. Keep proof of transport, issue correct invoices, and report all movements in your EC Sales List, Intrastat, and VAT returns.

What Tax Authorities Look At

When reviewing chain transactions, EU tax authorities focus on:

• Who arranges the transport and the agreed Incoterms (e.g. EXW, DDP).

• Which VAT number was used by each party.

• When ownership transfers (according to the sales contract).

• Supporting documentation such as invoices, delivery notes, and CMRs.

Having clear, consistent evidence helps justify your zero-rated intra-Community supply and reduces the risk of reassessment or penalties.

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5. VAT Evidence and Documentation

To apply 0% VAT for an intra-Community supply, you must keep:

• Two independent proofs of transport (for example, a CMR note and carrier invoice).

• The customer’s valid VAT number in another EU country.

• Correct reporting in your EC Sales List.

If you’re unsure which transaction is the ICS, it’s safer to seek expert guidance—mistakes can lead to double taxation or penalties.

Common Mistakes and Risks for Sellers

Many online sellers don’t realise they’re part of a chain transaction — and unintentionally misreport their sales.
Here are some of the most common errors:

• Using an OSS scheme in circumstances that don’t allow it.

• Using the wrong VAT ID for the country of dispatch or destination.

• Missing proof of transport, invalidating the zero-rated sale.

• Reporting a B2B intra-Community sale under OSS, which isn’t allowed.

• Failing to register locally for domestic supplies from stored stock.

These errors can lead to double VAT, blocked refunds, or audits. Working with a VAT specialist helps ensure each transaction is classified and reported correctly.

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6. What hellotax Does for Sellers

At hellotax, we help sellers navigate all these scenarios with:

• Automated VAT registrations and filings in all EU countries

• Chain-transaction mapping to identify which sales are cross-border

• Triangulation and OSS setup to simplify compliance if eilgible

• Centralized dashboard to manage all countries and entities in one place

• Dedicated account managers who handle local communication with tax offices

Whether you run a single Shopify store or multiple Amazon FBA accounts, we make VAT compliance seamless — from registration to return.

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7. Useful Resources

• Official EU guide on VAT chain transactions:
  European Commission — VAT Quick Fixes and Chain Transactions

• Related hellotax articles:

  • OSS Scheme Exclusion in Germany: How to Rejoin

  • Dropshipping and the OSS Scheme Explained

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Key Takeaway

Chain transactions are common for EU online sellers but often misunderstood.
Knowing which sale qualifies as the intra-Community supply and when to register locally is essential to avoid double taxation.
With automated tools and expert support from hellotax, sellers can stay compliant while scaling across Europe.

These principles follow the harmonised EU rules introduced by the 2020 VAT Quick Fixes (Articles 36a and 141 of the EU VAT Directive), which continue to apply across all Member States in 2025.

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📣 Ready to simplify multi-country VAT compliance?

Let hellotax handle your VAT registrations, filings, and chain-transaction reporting — all in one automated platform.
👉 Book your free consultation today!