In accordance with earlier cases relative to A-B-C transactions, the ECJ ruled that the first sale (by A) may not be zero-rated where C may dispose of the goods in the Member State of departure before the intra-Community transport takes place.
The Court even goes a step further: where C may dispose of the goods in the Member State of departure, the supply by A may not be zero-rated even if B presents itself with a VAT number issued by the country of destination and A has not been informed that the goods would be resold by B to C.
That case-law again shows that the allocation of transport to a well-defined supply in the chain is crucial. The ECJ proves to be even stricter than in a previous case-law where A was given conclusive information (shipment and VAT registration number) allowing to treat first supply as a zero-rated one under certain circumstances (see ECJ C-430/09). The businesses involved in intra-Community trade should be very careful, especially where they are not in charge of the transport. In the latter situation, they do indeed not necessarily have all the information allowing to determine in which commercial relationship the transport is deemed to take place and the risk is therefore high that the VAT exemption is erroneously applied.
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