If you are a European professional having commercial relations with customers or suppliers in other countries of the European Union, the intra-community VAT (Value Added Tax) applies to you.

Intra-Community VAT is the value-added tax for commercial transactions within the European Union. It applies only to professional commercial transactions (taxable persons) and not to private individuals (non-taxable persons).

The VAT rate differs from one European country to another, which is why the intra-EU VAT was introduced to facilitate trade between member countries. The major difference brought by this intra-community concept is the change of the notions of import and export in favor of acquisition and delivery. Discover here the new regulation on intra-Community VAT for distance sales which came into force on July 1st, 2021.

An intra-Community VAT number is issued by the tax authorities to companies subject to VAT when they apply for registration in the country.

SALES TO BUSINESSES

In principle, the place of taxation is the place of residence of the buyer who will have to self-liquidate (= the seller invoices without tax, the customer being responsible for paying the VAT to the tax authorities) the intra-Community VAT, the seller is exempt from intra-Community VAT on goods and services.

On his side, the seller will have to establish a “declaration of exchange of goods” (DEB) and/or “European declaration of services” (DES) each month to the customs on the website https://pro.douane.gouv.fr , the 10th working day of the month following the due date of the VAT.

In the case of a commercial transaction between professionals from two countries of the European Union, both of which have an intra-community VAT number, the invoice will be made without tax with the mention “auto-liquidation”, it will be up to the buyer to auto-liquidate the VAT.

SALES TO INDIVIDUALS

There can be two possible situations when selling goods:

– The seller makes more than 10 000 € of annual sales without VAT in all the countries of the European Union: the applicable VAT rate is the one of the buyer’s destination country.

– The seller makes less than 10 000 € of annual sales without VAT in the whole of the European Union: the applicable VAT rate is the French VAT rate

When a service is provided between a professional (taxable person) and a private individual (non-taxable person), the principle is that the place of taxation is the place where the service provider is established. For example, if the supplier is French, he will apply a French VAT rate on his invoice.

In other cases as well, when selling television, telecommunication and radio broadcasting services, but also when providing services by electronic means, the seller will have to apply the VAT rate in force in the buyer’s country if he has exceeded the annual threshold of €10,000 excluding VAT in all the countries of the European Union, otherwise the VAT rate applicable will be the one in force in the provider’s country.

For information, there are specific cases, if you want more detailed explanations, please contact us via the email address international@akoneo.fr.