What is Intra-Community VAT?
Intra-community VAT applies to business-to-business (B2B) transactions between EU member states. When goods or services cross EU borders, special VAT rules apply.
The Reverse Charge Mechanism
For B2B sales between EU countries:
- Seller issues invoice without VAT (0%)
- Buyer self-assesses VAT in their country
- Buyer reports and deducts VAT simultaneously
- Net effect: Zero VAT paid, zero VAT owed
Requirements for VAT Exemption
To apply the reverse charge:
- Both parties must be VAT registered
- Valid VAT numbers must be verified via VIES
- Goods must physically move between countries
- Invoice must include both VAT numbers
VIES VAT Number Validation
Always verify customer VAT numbers using VIES:
- European Commission VIES portal
- Validates number format and registration
- Confirms business is active
- Keep verification records
Invoice Requirements
Your invoice must include:
- "Reverse charge - Article 138 VAT Directive"
- Both VAT registration numbers
- Clear description of goods/services
- Incoterms for shipping
Reporting Requirements
Report intra-community transactions:
- EC Sales List (recapitulative statement)
- Intrastat declaration (for goods over threshold)
- VAT return with intra-community boxes
