What is triangulation?

• In this case A will make an Intra-community supply (ICS) to B in MS1.
• B will make a zero rated ICS to C in MS1 since the goods are placed at the disposal of B in MS1 this time.
• C will make a taxable ICA in MS3 and will reverse charge.
• B will have to register for VAT in MS1.

2. The transport of the goods is done or contracted by A or by B

The supply between A and B is a supply with transport . It is therefore an Intra-Community Supply that satisfies two conditions namely that B has a valid identification number in Member State 2 and the goods are transported outside Member State 1. Such an Intra-Community Supply is therefore exempt in Member State1.
 
The supply by B to C is a supply without transport . However B is not registered in Member State 3. Strictly speaking in a normal situation, B would have to register in Member State 3. To avoid such registration simplification procedures may apply in such a situation. These procedures apply if C is a taxable person and the liability to pay VAT is shifted by B to C in Member State 3. If C is a not a taxable person, then B has to register in Member State 3 and charge the VAT of Member State 3. Under such simplification procedures, A issues an invoice to B without charging VAT and quoting Bs VAT identification number - A should report this supply on its Recapitulative Statement as an Intra-Community Supply. B issues an invoice to C without charging VAT endorsing it with the words “ VAT Simplification Invoice ” - B should report the supply to C on its Recapitulative Statement quoting C ’ s identification number and the code (T) to denote a triangulation operation. C should account for the purchase from B in his VAT return by the Reverse Charge Rule.
 
In such cases Simplification Procedure is only applicable if transport is made in the relation between A and B.

See also full article about triangulation