VAT rules for intra-Community transactions

How intra-Community VAT works in practice

An intra-Community transaction is not just a sale to another EU customer. The VAT treatment depends on the status of the parties, the type of supply and the movement of goods or place of supply. A B2B goods sale between two VAT-registered businesses can be zero-rated in the Member State of departure and taxed as an intra-Community acquisition in the Member State of arrival.

The underlying EU logic is explained by the European Commission in its rules on taxable transactions and place of taxation.

Conditions for a zero-rated intra-Community supply of goods

A B2B intra-Community supply is usually zero-rated only when the legal and evidence conditions are met. The supplier must sell to a taxable customer identified for VAT in another Member State, the goods must be transported from one EU country to another, and the transaction must be correctly reported. The Quick Fixes 2020 tightened the evidence requirements that apply to these conditions.

• The customer gives a valid VAT number from another EU Member State.
• The supplier verifies that number through VIES before invoicing.
• The goods are dispatched or transported from one Member State to another.
• The supplier keeps transport evidence and commercial documents.
• The invoice uses the correct reverse-charge or exemption wording required locally.
• The transaction is included in the VAT return and EC Sales List.

For rate benchmarking, use the current EU VAT rates table, but do not use it as proof that a transaction is exempt or zero-rated.

VIES checks: the control before the invoice

The VIES check confirms whether an EU VAT number is valid at the time of verification. A valid number supports the B2B intra-Community treatment. An invalid number does not automatically prove the sale is taxable, but it blocks the safe invoicing route until the customer status is clarified. Use the VIES tool to verify a VAT number before invoicing.

Keep a screenshot, PDF, reference number or audit trail of the VIES result. If the customer number changes or becomes invalid later, your evidence at the invoice date matters.

Intra-Community acquisition: the buyer side

The buyer usually accounts for VAT in the country of arrival through the reverse-charge mechanism. This creates output VAT and, where deductible, input VAT in the same VAT return. Cash flow can be neutral, but the reporting is still mandatory.

EC Sales List and Intrastat are not the same obligation

The EC Sales List is a VAT control report, while Intrastat is a statistical goods report. They can use similar transaction data, but they do not have the same purpose, thresholds, deadlines or authorities. A business can have one obligation without the other.

For threshold monitoring, use the guide to EU Intrastat thresholds and then check the local rule of the dispatch or arrival country.

B2C distance sales and OSS

B2C distance sales follow a different logic from B2B intra-Community supplies. For covered intra-EU distance sales of goods and TBE services, the EU-wide threshold is EUR 10,000. Above that threshold, VAT is normally due in the customer Member State, and OSS can be used to report it centrally. A VAT calculator can help estimate the VAT due in the destination Member State.

OSS does not cover every transaction. Local stock, domestic sales, imports and some services can still require local VAT registration. See VAT OSS in the EU before choosing the reporting route.

Triangular transactions and chain sales

Triangular and chain transactions need a flow-by-flow VAT analysis. When three parties or several sales are linked to one physical movement, only one supply can usually be attached to the cross-border transport. The other supply may be local and taxable in one of the countries involved. EU-specific rules for VAT triangulation differ from general chain sale rules. Businesses processing goods for foreign principals should also review the contract manufacturing VAT obligations.

Invoice wording and evidence file

The invoice must reflect the VAT treatment and the evidence file must prove it. For an intra-Community supply, the invoice typically states that the transaction is exempt or zero-rated under the applicable local VAT rule, and it includes both VAT numbers where required.

• Validated customer VAT number.
• Purchase order and commercial invoice.
• Transport documents such as CMR, carrier invoice, delivery note or tracking proof.
• Payment evidence and customer correspondence.
• VAT return and EC Sales List reconciliation.

Common mistakes in intra-Community VAT

• Treating a sale as zero-rated without a valid customer VAT number.
• Forgetting the EC Sales List after reporting the VAT return.
• Using OSS for B2B goods movements.
• Ignoring Intrastat because the VAT return was filed correctly.
• Applying the destination country VAT rate to a B2B intra-Community supply without checking reverse charge or zero-rating conditions.
• Treating Norway, Switzerland or the United Kingdom as EU intra-Community destinations.