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Triangulation
is
used
to
describe
the
process
when
more
than
two
entities
are
involved
in
the
supply
of
goods
that
cross
international
borders.
The
ABC
flow
of
transactions
will
involve
three
different
parties
where
goods
are
shipped
directly
from
party
A
to
party
C
but
party
B
is
the
selling
organisation
and
never
physically
receives
the
goods
or
handles
them
during
the
shipping
process.
A
typical
example
is
when
an
international
organisation
sells
from
one
location
(B)
but
has
a
factory
or
warehouse
in
another
European
country
(A)
and
the
goods
are
being
sold
to
a
VAT
registered
entity
in
a
third
European
country
(C).
Order
placed B
Invoice
sent
Invoice sent
A C
Goods
Shipped
Intercompany
Warehouse
(France) Customer
(Germany)
1. The
process
starts
with
the
UK
entity
(B)
making
a
sale
to
the
German
customer
(C).
2. An
order
is
placed
in
the
UK
system
(B)
and
the
warehouse
in
France
(A)
is
selected
as
the
location
to
ship
the
goods
from.
eBiz Answers Ltd. Whitepaper: Triangulation tax in Oracle R12 eBTax and Oracle Fusion Tax. Copyright 2014. www.ebizanswers.net
3. Because
the
French
location
(A)
is
a
separate
legal
entity
(whether
intercompany
or
third
party
supplier)
the
UK
Oracle
system
(B)
will
automatically
trigger
a
purchase
order
to
the
French
entity
(A)
for
the
goods
but
will
have
a
delivery
address
of
the
end
customer
in
Germany
(C).
The
tax
is
based
on
the
ship
from
(A)
and
ship
to
(C)
locations
of
the
transaction.
4. The
French
entity
(A)
then
ships
the
goods
to
the
end
customer
in
Germany
(C)
but
sends
its
invoice
with
EU
sales
goods
rate
to
the
UK
entity
(B)
as
that
is
who
it
has
the
relationship
with.
5. The
UK
entity
(B)
then
sends
their
invoice
to
the
German
customer
(C)
with
the
EU
sales
triangulation
rate.
The
UK
entity
is
the
intermediary
company
with
a
relationship
with
both
the
end
customer
in
Germany
and
the
shipping
supplier
in
France.
The
French
and
German
companies
never
communicate
and
as
far
as
the
latter
is
concerned,
they
assume
the
goods
came
from
the
UK
entity.
The
UK
entity
is
the
French
suppliers
customer
so
as
far
as
the
French
supplier
is
concerned
the
UK
entity
is
the
only
customer.
Why triangulation?
Look
at
this
from
another
angle:
if
we
first
exclude
B
and
just
look
at
a
direct
sale
between
A
and
C
selling
goods
then
we
would
charge
an
intra
EU
sales
of
goods
but
if
it
was
for
a
service
then
we
would
use
something
like
intra
EU
sales
of
services.
We
need
to
split
between
goods
and
services,
primarily
for
intrastat
reporting
that
is
tied
in
with
the
European
sales
listing
report.
A
simplistic
reason
for
this
is
to
track
the
movement
of
goods
between
EU
countries.
So
when
we
split
between
goods
and
services
the
intra
EU
sales
of
goods
should
match
to
the
intrastat
report
of
the
movement
of
goods.
Lets
return
to
the
ABC
triangulation
process:
if
party
B
is
shipping
to
C
but
invoicing
A
its
no
longer
a
clear
cut
sale
of
goods
from
one
country
to
another;
the
intrastat
would
show
country
B
moving
goods
to
C
but
the
European
sales
listing
report
would
show
A
moving
goods
to
C
and
B
moving
goods
to
C
which
is
wrong
as
the
movement
of
goods
from
B
to
C
never
happened.
By
introducing
the
triangulation
tax
we
can
record
the
sale
of
goods
between
B
and
C
but
exclude
it
from
EU
sales
of
goods.
Now
we
can
easily
differentiate
between
the
actual
sale
of
goods
and
services
that
are
linked
to
the
physical
movement
of
those
goods
and
the
sales
of
goods
where
another
party
is
making
the
shipment
for
us.
Of
course
the
process
is
a
little
more
complex
than
that
but
hopefully
the
above
example
will
make
sense.
The
following
EU
VAT
Directive
explains
the
requirements
for
triangulation
tax
to
be
applied:
http://www.hmrc.gov.uk/manuals/vatsmanual/vatsm5220.htm
Below is an extract from the website with a simpler explanation shown in blue type:
(a)
the
acquisition
of
goods
is
made
by
a
taxable
person
who
is
not
established
in
the
Member
State
concerned
but
is
identified
for
VAT
purposes
in
another
Member
State;
the
selling
party
(B),
shipping
party
(A)
and
customer
(C)
must
all
be
located
in
the
EU
but
in
different
countries.
eBiz Answers Ltd. Whitepaper: Triangulation tax in Oracle R12 eBTax and Oracle Fusion Tax. Copyright 2014. www.ebizanswers.net
(b)
the
acquisition
of
goods
is
made
for
the
purposes
of
the
subsequent
supply
of
those
goods
in
the
Member
State
concerned
by
the
taxable
person
referred
to
in
point
(a);
the
goods
must
go
directly
from
shipping
party
(A)
to
customer
(C)
without
ever
going
to
selling
party
(B).
(c)
the
goods
thus
acquired
by
the
taxable
person
referred
to
in
point
(a)
are
directly
dispatched
or
transported,
from
a
Member
State
other
than
that
in
which
he
is
identified
for
VAT
purposes,
to
the
person
for
whom
he
is
to
carry
out
the
subsequent
supply;
the
customer
(C)
is
ordering
the
goods
from
the
seller
(B)
without
necessarily
knowing
that
the
goods
are
coming
from
another
EU
country
or
being
drop
shipped
by
another
party
(A).
(d)
the
person
to
whom
the
subsequent
supply
is
to
be
made
is
another
taxable
person
or
a
non-
taxable
legal
person
who
is
identified
for
VAT
purposes
in
the
Member
State
concerned;
the
customer
(C)
must
be
VAT
registered
in
the
EU
but
does
not
have
a
registration
in
the
country
of
the
selling
entity
(B).
(e)
the
person
referred
to
in
point
(d)
has
been
designated
in
accordance
with
Article
197
as
liable
for
payment
of
the
VAT
due
on
the
supply
carried
out
by
the
taxable
person
who
is
not
established
in
the
Member
State
in
which
the
tax
is
due;
the
customer
and
selling
entities
are
both
registered
for
VAT
but
in
different
EU
countries.
How
to
handle
triangulation
tax
in
Oracle
When
we
generate
an
invoice
we
should
have
all
the
determining
factors
needed
to
calculate
the
correct
tax
automatically
and
without
error.
Providing
that
we
have
a
bill
from
location
(B),
a
ship
from
location
(A)
and
ship
to
location
(C)
triangulation
tax
is
very
simple
and
straightforward
to
set
up
in
Oracle
R12
eBTax
or
Oracle
Fusion
Tax
with
just
one
tax
condition.
It
is
slightly
more
difficult
in
AP
as
the
ship
from
and
bill
from
locations
are
always
the
same
as
that
of
the
supplier
site
used.
It
is
not
really
possible
(unless
it
is
an
intercompany
drop
shipment)
to
know
where
the
supplier
ships
their
products
from
and
so
it
is
not
possible
to
build
into
the
rules
because
even
if
we
know
the
location
of
the
supply
and
create
a
site
for
that,
using
that
site
means
both
the
ship
from
and
bill
from
will
still
be
the
same
location.
So
while
we
cannot
set
up
AP
triangulation
tax
to
be
fully
automated
we
can
still
capture
90%
of
AP
triangulation
transactions
by
using
the
bill
from
location
(A),
the
ship
to
(C)
and
our
own
bill
to
(B).
Further
to
simply
calculating
the
tax
in
Oracle
we
need
to
make
it
clear
on
any
invoices
sent
to
customers
that
we
are
charging
triangulation
tax
with
the
appropriate
reference
to
the
EU
VAT
directive.
At eBiz Answers we can set up this solution for you using standard Oracle functionality.
eBiz Answers Ltd. Whitepaper: Triangulation tax in Oracle R12 eBTax and Oracle Fusion Tax. Copyright 2014. www.ebizanswers.net