Chain transactions: Münster Fiscal Court on documentation requirements and tax exemption

In a chain transaction (Reihengeschäft, also called a "serial transaction"), several companies sell the same goods in succession while the goods are transported only once directly from the initial supplier to the final customer. Whether a supply is regarded as a tax-exempt intra-Community supply depends on how the movement of goods is assigned and the evidence provided to support this. In its judgment of 25 February 2026 (5 K 2060/24 U), Münster Fiscal Court confirmed the high standards required for such evidence. Unclear movements of goods, contradictory records and gaps in documentation may result in the tax exemption being refused. Companies should therefore carefully document the entire supply chain and not rely on the protection of legitimate expectations at a later stage.

In the case heard before Münster Fiscal Court, the claimant had sold a machine to a Polish customer and had relied on various documents to prove that the transaction was tax-exempt. These included in particular a confirmation of receipt from the alleged purchaser, delivery notes, CMR consignment notes and other transport documents. Furthermore, the supply was declared in the recapitulative statement (EU sales list) and, according to the claimant, the purchase was recorded for value added tax purposes by the Polish business partner.

However, during the field audit, the tax authorities questioned the usefulness of the supporting documents provided. In the tax office's view, the confirmation of receipt contained significant omissions, particularly with regard to the specific description of the goods, the place of destination and the date of issue. Furthermore, official investigations in Poland revealed that other companies were involved in the transport and supply chain and that it was not possible to trace the actual route of the goods with absolute certainty on the basis of the documents provided. The Fiscal Court had to assess whether the evidence submitted as a whole provided a sufficient degree of certainty that the goods supplied had in fact entered the rest of the Community territory.

Chain transactions: Which supply is the physical supply?

The decision is consistent with the established case law of the Court of Justice of the European Union (CJEU) and the German Federal Fiscal Court (BFH) regarding the definition of the "physical supply" ("bewegte Lieferung") in chain transactions. This refers to the specific delivery within the supply chain to which the actual transport of goods is assigned. According to this definition, the cross-border movement of goods can only ever be linked to a single delivery within the supply chain. Which delivery this is is determined based on all the circumstances of the individual case, in particular the contractual arrangements and their actual performance.

It is precisely this case-by-case approach that often leads to uncertainty in practice. However, correctly assigning the movement of goods determines whether the conditions for a tax-exempt intra-Community supply are met.

Münster Regional Court: Who is responsible for proving tax exemption in a chain transaction?

The main focus of the decision lies not so much on the legal conditions for tax exemption as on the question of who is responsible for proving the relevant facts.

Münster Fiscal Court has clarified that any trader claiming tax exemption must provide evidence that they meet the relevant criteria. If key facts remain unclear, this is to the detriment of the trader. In legal terms, this is referred to as "Feststellungslast" or "the burden of proof". This basic principle is set out in section 6a (3) German Value Added Tax Act (UStG). According to this principle, the trader must provide evidence that the conditions for an intra-Community supply have been met.

These particularly include:

• documentary evidence of the transport or dispatch of the goods to the rest of the area of the European Union,
• maintenance of the necessary accounting records and
• altogether conclusive and comprehensible documentation of the facts.

It is true that the German Federal Fiscal Court has already emphasised on several occasions that the documentation requirements set out in the Value Added Tax Implementation Regulation (UStDV) are guidelines in principle and that evidence may also be provided in other ways. Nevertheless, the conditions for tax exemption must be clear and easily verifiable.

Verification requirements for chain transactions: Why documents alone are not always enough

Of particular practical relevance is the court's finding that it is not necessarily sufficient merely for individual supporting documents to exist.

What is decisive, rather, is whether the facts relevant to the tax exemption can in fact be inferred from the documents. If the documents contain inconsistencies or if key questions remain unanswered, the evidence may be regarded as insufficient even though the documents exist.

In the court's view, any such uncertainties are consequently to the detriment of the taxpayer. This also applies where the outstanding issues relate to matters that lie beyond the trader's immediate sphere of influence and concern other parties involved in the supply chain.

Particularly in the case of chain transactions, the required documentation may therefore cover the entire supply chain.

Protection of legitimate expectations under section 6a German VAT Act (UStG): When does the tax exemption apply?

The judgment also addresses protection of legitimate expectations under section 6a (4) German Value Added Tax Act (UStG).

According to this principle, a supply may be treated in exceptional cases as tax-exempt even if it subsequently transpires that the substantive conditions for the tax exemption were not met. A key condition for this, however, is that the trader relied on incorrect information provided by the customer and could not have recognised it as inaccurate even had they exercised the diligence of a prudent businessman.

Münster Fiscal Court emphasises the narrow scope of this provision. In particular, the principle of protection of legitimate expectations does not apply where the incorrect tax assessment is based on the trader's own misconception and not on incorrect information provided by the customer.

Furthermore, the trader must be able to demonstrate that they have exercised the due diligence required of a prudent businessman. The measures required for this purpose are in line with the circumstances of the individual case. Key circumstances include the nature of the transaction, identifiable risks and any anomalies in the course of the transaction.

Münster Regional Court: Why protection of legitimate expectations failed in this particular case

In this specific case, the court considered that the conditions for the protection of legitimate expectations had not been met.

In particular, the claimant was unable to demonstrate that they had made enquiries as to when and by whom the machine in question had been collected in Germany. Furthermore, they had apparently failed to notice any inconsistencies in the CMR consignment notes that had been submitted.

In the court's view, it was precisely these circumstances that should have given rise to further investigations. As it was not possible to provide evidence of such measures, the invocation of protection of legitimate expectations was also unsuccessful.

Chain transactions and value added tax: What companies should document

The decision once again highlights the crucial importance of careful documentation in the context of intra-Community supplies and chain transactions.

In particular, companies should:

• clearly document the roles of all parties involved in the supply chain,
• record transport responsibilities in a way that allows for traceability,
• carefully agree on the terms of the contract and Incoterms,
• document the transfer of power of disposal and
• actively check for and document any anomalies and inconsistencies.

Although proof of transport and receipt remain important components of the verification framework, they are not necessarily sufficient if the assignment of the movement of goods within the supply chain remains unclear.

Chain transactions and value added tax: What companies should consider 

Münster Finance Court has confirmed the already stringent requirements for providing evidence of tax-exempt intra-Community supplies. The decision clearly demonstrates that gaps in documentation and ambiguities in chain transactions entail significant tax risks. Companies therefore should ensure at the time of the transaction that the documentation covering the entire supply chain is complete and consistent and not rely on protection of legitimate expectations at a later stage.