Intracommunity VAT: Are You Really Compliant?
The 25th of April, 2025
Doing business across borders within the European Union opens up growth opportunities — but it also comes with complex VAT rules that many companies overlook.
From verifying VAT numbers to documenting transport and applying the correct reverse charge mechanism, intracommunity transactions require precision. Even small mistakes can result in significant tax reassessments or missed deductions.
Here’s what you need to get right — every time.
✅ 1. A Valid EU VAT Number: No Room for Guesswork
Before issuing a VAT-exempt invoice for an EU sale, you must check that your client has a valid intracommunity VAT number. If not, the transaction may be reclassified as domestic — meaning VAT becomes due, and you could face penalties.
How to check:
Use the VIES (VAT Information Exchange System) to confirm the number is active and linked to the correct company.
2. Reverse Charge Mechanism: Apply It Correctly
In B2B transactions between EU member states, VAT is generally not charged on the invoice. Instead, the buyer is responsible for self-assessing the VAT in their own country (reverse charge).
But for this to be valid, two conditions must be met:
- Your invoice must mention the reverse charge mechanism
- The buyer must have a valid VAT number
Tip: If you charge VAT when you shouldn’t — or fail to apply the reverse charge correctly — both you and your client may face corrections during an audit.
3. Proof of Transport: The Missing Link in Many Audits
Even if your VAT treatment is correct, you also need to prove the goods physically left the country. Without it, the tax authorities may deny the VAT exemption and reclaim the VAT you should have charged.
Acceptable proof may include:
- Signed CMRs or transport documents
- Carrier invoices
- Tracking information or delivery confirmations
Important: The burden of proof lies with the seller — not the customer.
4. Your Quick Compliance Checklist
Here’s a simplified checklist to keep your intracommunity transactions compliant:
Before issuing an invoice:
- Client has a valid EU VAT number (checked via VIES)
- Invoice clearly states “VAT reverse charge” (or local language equivalent)
- Goods/services meet conditions for exemption
After shipping the goods:
- You’ve collected proof of transport or delivery
- Records are archived and easy to retrieve
💬 Final Thoughts
Intracommunity VAT isn’t just a technicality — it’s an area where mistakes are common and costly. Don’t wait for a tax audit to discover you’ve misapplied the rules.
Instead, set up internal controls, train your team, and make EU VAT checks part of your routine. It’s a small investment for long-term peace of mind.
Drop a comment or reach out — I’d love to hear your perspective.
✉️ Need Help?
If you need a VAT review, a team training, or help optimizing your processes, feel free to reach out. We help businesses turn VAT from a liability into a strength.
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