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openaccountants/skills/eu-vat-base.md
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1---
2name: eu-vat-base
3description: Load this skill as a shared reference whenever working on VAT for any EU member state. Contains the common rules from Council Directive 2006/112/EC that apply across all 27 EU member states -- intra-community acquisitions, reverse charge mechanics, place of supply rules, OSS, distance selling thresholds, and EU country list. Always load the country-specific VAT skill alongside this one. Do NOT use this skill alone -- it must be combined with the relevant country skill (e.g. ireland-vat-return, germany-vat-return) which overrides anything country-specific.
4---
5 
6# EU VAT Base -- Common Rules (Directive 2006/112/EC)
7 
8---
9 
10## Skill Metadata
11 
12| Field | Value |
13|-------|-------|
14| Scope | All 27 EU Member States |
15| Primary Legislation | Council Directive 2006/112/EC of 28 November 2006 (consolidated to 14 April 2025) |
16| Supporting Legislation | Directive 2022/542/EU (reduced rates reform); Implementing Regulation 282/2011 |
17| Source | EUR-Lex: https://eur-lex.europa.eu/eli/dir/2006/112/oj/eng |
18| Contributor | Open Accounting Skills Registry |
19| Version | 2.0 |
20| Rates Current As Of | 1 January 2026 |
21| Status | awaiting-validation |
22| Format | Q1 Step Format |
23| Note | This skill contains ONLY rules common to all EU member states. Country-specific rules (form boxes, national rates, filing deadlines, small business thresholds) are in the country skill. The country skill overrides this one where there is any conflict. |
24 
25---
26 
27## Confidence Tier Definitions
28 
29- **[T1] Tier 1 -- Deterministic.** Derived directly from the Directive. Applies in all member states unless the country skill specifies otherwise.
30- **[T2] Tier 2 -- Reviewer Judgement Required.** Rule exists in the Directive but national implementation varies. Check the country skill.
31- **[T3] Tier 3 -- Out of Scope.** Not covered by this skill. Refer to country skill or warranted practitioner.
32 
33---
34 
35## Step 0: Jurisdiction Check [T1]
36 
37**Legislation:** Directive 2006/112/EC, Article 1
38 
39**Purpose:** Confirm which EU member state(s) are involved before proceeding.
40 
41### 0.1 Current EU Member States (27)
42 
43AT Austria | BE Belgium | BG Bulgaria | HR Croatia | CY Cyprus | CZ Czech Republic | DK Denmark | EE Estonia | FI Finland | FR France | DE Germany | GR Greece | HU Hungary | IE Ireland | IT Italy | LV Latvia | LT Lithuania | LU Luxembourg | MT Malta | NL Netherlands | PL Poland | PT Portugal | RO Romania | SK Slovakia | SI Slovenia | ES Spain | SE Sweden
44 
45### 0.2 NOT EU (treat as non-EU / third country)
46 
47- UK (left EU 31 January 2020)
48- Norway, Switzerland, Iceland (EEA but not EU)
49- USA, Canada, Australia, UAE, and all other non-EU countries
50 
51### 0.3 Jurisdiction Checklist
52 
53Before proceeding to Step 1, confirm:
54- [ ] Which member state is the supplier established in?
55- [ ] Which member state (or non-EU country) is the customer established in?
56- [ ] Is the customer VAT-registered? (Check VIES: https://ec.europa.eu/taxation_customs/vies/)
57- [ ] Is the transaction B2B or B2C?
58 
59---
60 
61## Step 1: EU VAT Fundamentals [T1]
62 
63**Legislation:** Directive 2006/112/EC, Articles 1-4, 18, 219a-237
64 
65### 1.1 Core Principle
66 
67VAT is a consumption tax borne by the final consumer. Businesses act as collection agents -- they charge VAT on sales (output VAT), deduct VAT on purchases (input VAT), and remit the difference to the tax authority.
68 
69### 1.2 VAT Number Validation
70 
71**Legislation:** Directive 2006/112/EC, Article 18
72 
73Before applying zero rate (ICA or B2B services):
74- Verify the customer's VAT number is valid using the EU VIES system: https://ec.europa.eu/taxation_customs/vies/
75- A valid VAT number is a prerequisite for zero-rating
76- If VIES validation fails, do not zero-rate -- apply local VAT rate
77 
78### 1.3 Invoicing Requirements
79 
80**Legislation:** Directive 2006/112/EC, Articles 219a-237
81 
82Mandatory invoice elements for all EU member states:
83- Date of issue
84- Sequential invoice number
85- Supplier VAT number
86- Customer VAT number (for B2B intra-community supplies)
87- Full name and address of supplier and customer
88- Description of goods or services
89- Date of supply (if different from invoice date)
90- Taxable amount per VAT rate
91- VAT rate applied
92- VAT amount in the currency of the invoice
93- For zero-rated intra-community supplies: reference to exemption (Article 138 or 44/196)
94- For reverse charge: statement "Reverse charge"
95 
96[T2] E-invoicing mandates vary by country and are being introduced progressively across the EU. Check country skill for any mandatory e-invoicing requirements.
97 
98### 1.4 Blocked Categories -- Common EU Rules
99 
100**Legislation:** Directive 2006/112/EC, Articles 176-177
101 
102The Directive permits member states to maintain restrictions on input tax deduction that existed before 1979 (standstill clause). As a result, blocked categories vary significantly by country.
103 
104Common categories blocked in most EU member states [T1]:
105- Entertainment expenses (client meals, hospitality)
106- Personal use items
107 
108Categories blocked in some but not all member states [T2]:
109- Motor vehicles (blocked in some, partially allowed in others)
110- Fuel (varies by country and vehicle type)
111- Accommodation (varies)
112 
113**Always check the country skill for the specific blocked categories for that jurisdiction.**
114 
115---
116 
117## Step 2: Rate Framework [T1]
118 
119**Legislation:** Directive 2006/112/EC, Articles 96-99; Directive 2022/542/EU
120 
121### 2.1 Rate Structure Rules (apply in all member states)
122 
123| Rule | Detail |
124|------|--------|
125| Standard rate minimum | Cannot be lower than 15% (Article 97) |
126| Reduced rates | Maximum two reduced rates, neither below 5% |
127| Super-reduced rate | Below 5% -- only permitted for specific categories under Annex III derogations |
128| Zero rate | Permitted for specific categories under acquired rights |
129| Parking rate | Minimum 12% -- applies in some member states to transitional categories |
130 
131### 2.2 2026 Rate Table -- All EU Member States
132 
133| Country | Code | Standard | Reduced 1 | Reduced 2 | Super-Reduced | Zero |
134|---------|------|----------|-----------|-----------|---------------|------|
135| Austria | AT | 20% | 10% | 13% | -- | Yes |
136| Belgium | BE | 21% | 6% | 12% | -- | Yes |
137| Bulgaria | BG | 20% | 9% | -- | -- | Yes |
138| Croatia | HR | 25% | 5% | 13% | -- | Yes |
139| Cyprus | CY | 19% | 5% | 9% | -- | Yes |
140| Czech Republic | CZ | 21% | 12% | -- | -- | Yes |
141| Denmark | DK | 25% | -- | -- | -- | Yes |
142| Estonia | EE | 24% | 9% | 13% | -- | Yes |
143| Finland | FI | 25.5% | 10% | 13.5% | -- | Yes |
144| France | FR | 20% | 5.5% | 10% | 2.1% | Yes |
145| Germany | DE | 19% | 7% | -- | -- | Yes |
146| Greece | GR | 24% | 6% | 13% | -- | Yes |
147| Hungary | HU | 27% | 5% | 18% | -- | Yes |
148| Ireland | IE | 23% | 9% | 13.5% | 4.8% | Yes |
149| Italy | IT | 22% | 5% | 10% | 4% | Yes |
150| Latvia | LV | 21% | 5% | 12% | -- | Yes |
151| Lithuania | LT | 21% | 5% | 12% | -- | Yes |
152| Luxembourg | LU | 17% | 8% | -- | 3% | Yes |
153| Malta | MT | 18% | 5% | 7% | -- | Yes |
154| Netherlands | NL | 21% | 9% | -- | -- | Yes |
155| Poland | PL | 23% | 5% | 8% | -- | Yes |
156| Portugal | PT | 23% | 6% | 13% | -- | Yes |
157| Romania | RO | 21% | 11% | -- | -- | Yes |
158| Slovakia | SK | 23% | 5% | 19% | -- | Yes |
159| Slovenia | SI | 22% | 5% | 9.5% | -- | Yes |
160| Spain | ES | 21% | 10% | -- | 4% | Yes |
161| Sweden | SE | 25% | 6% | 12% | -- | Yes |
162 
163**Note:** Rates current as of 1 January 2026. Always verify current rates against the European Commission's TEDB (Taxes in Europe Database) before filing.
164 
165**Key changes since 2024:**
166- Estonia: standard rate increased from 22% to 24% (1 July 2025); accommodation reduced rate raised from 9% to 13%
167- Finland: standard rate increased from 24% to 25.5% (1 September 2024); reduced rate lowered from 14% to 10% and 13.5% (1 January 2026)
168- Ireland: super-reduced rate corrected to 4.8% (agriculture/livestock)
169- Lithuania: reduced rates restructured to 5% (books, medicines) and 12% (accommodation, transport, culture) from 1 January 2026
170- Luxembourg: standard rate returned to 17% (temporary 16% reduction expired 31 December 2024)
171- Romania: standard rate increased from 19% to 21% (1 August 2025); reduced rates consolidated from 5%/9% to single 11% rate
172- Slovakia: standard rate increased from 20% to 23% (1 January 2025); reduced rates restructured to 5%/19%
173 
174---
175 
176## Step 3: Intra-Community Rules [T1]
177 
178**Legislation:** Directive 2006/112/EC, Articles 2(1)(b), 20, 40-42
179 
180### 3.1 Intra-Community Acquisitions (ICA) -- Definition
181 
182An ICA occurs when physical goods are dispatched or transported from one EU member state to another, between two VAT-registered businesses (B2B).
183 
184### 3.2 ICA Rules
185 
186- The place of ICA is where transport ends (Article 40)
187- The acquiring business is liable for VAT via reverse charge
188- The supplier invoices at 0% (zero-rated intra-community supply)
189- The acquirer self-assesses output VAT at their local standard rate AND claims the same amount as input VAT
190- Net cash effect = zero for a fully taxable business
191- The supplier must quote the customer's VAT number on the invoice
192- The supplier must report the sale on an EC Sales List (ESL) / Recapitulative Statement
193 
194### 3.3 Invoice Reference
195 
196Supplier invoice must state: **"VAT exempt intra-Community supply -- Article 138(1) Directive 2006/112/EC"**
197 
198### 3.4 EC Sales List / Recapitulative Statement
199 
200**Legislation:** Directive 2006/112/EC, Articles 262-265
201 
202Every VAT-registered business that makes intra-community supplies (ICA or B2B services under Article 44) must file an EC Sales List (called Recapitulative Statement in the Directive) reporting:
203- Customer VAT numbers
204- Total value supplied to each customer
205- Period covered
206 
207Filing frequency and format varies by country -- check country skill.
208 
209### 3.5 Local Consumption Exception
210 
211**Legislation:** Directive 2006/112/EC, Articles 52-54 (services); Article 32 (goods)
212 
213When a business pays for services consumed locally in another EU country (hotel, restaurant, taxi, conference admission), the VAT is charged locally by the supplier at their national rate. This is NOT reverse charge.
214 
215Examples:
216- Employee stays in a Paris hotel -- French VAT charged, not reverse charge
217- Delegate attends a Berlin conference -- German VAT charged, not reverse charge
218- Business lunch in Amsterdam -- Dutch VAT charged, not reverse charge
219 
220The foreign VAT paid is an expense (generally irrecoverable unless the business files a cross-border VAT refund claim under Directive 2008/9/EC).
221 
222[T2] Cross-border VAT refund claims: possible for EU businesses but requires separate process. Flag for reviewer if amounts are material.
223 
224---
225 
226## Step 4: Reverse Charge Framework [T1]
227 
228**Legislation:** Directive 2006/112/EC, Articles 44, 196
229 
230### 4.1 The General B2B Rule (Article 44)
231 
232For services supplied B2B across EU borders, the place of supply is where the **customer** is established.
233 
234Consequence: The supplier charges 0% VAT. The customer self-assesses output VAT at their local rate and claims the same as input VAT. Net effect = zero for a fully taxable business.
235 
236### 4.2 Mandatory for
237 
238- All B2B cross-border services where Article 44 applies
239- Services supplied by a non-EU supplier to an EU VAT-registered customer
240 
241### 4.3 Invoice Reference
242 
243Supplier invoice must state: **"VAT exempt intra-Community supply of services -- Articles 44 and 196 Directive 2006/112/EC"** or simply **"Reverse charge"**
244 
245### 4.4 Non-EU Supplier to EU Business
246 
247**Legislation:** Directive 2006/112/EC, Articles 44, 196
248 
249When a non-EU supplier (US, UK, CH, AU etc.) provides services to an EU VAT-registered business:
250- Supplier invoices at 0% (no EU VAT charged)
251- EU customer self-assesses output VAT at local rate
252- EU customer claims same amount as input VAT (if fully taxable)
253- Net effect = zero for fully taxable business
254- This applies to: software subscriptions (AWS, Google, Microsoft, Notion, Slack), consulting services, digital services, IP licences
255 
256**Common examples:** AWS, Google Workspace, Microsoft 365, Notion, Slack, Stripe fees, LinkedIn ads -- all trigger reverse charge when purchased by an EU VAT-registered business.
257 
258### 4.5 Import of Physical Goods from Non-EU [T2]
259 
260**Legislation:** Directive 2006/112/EC, Articles 70-71; national customs legislation
261 
262When physical goods are imported from outside the EU:
263- Import VAT is charged at the border by Customs, not via reverse charge on the VAT return
264- Import VAT is paid to Customs at the point of entry
265- The business recovers import VAT as input tax via the VAT return (using the Customs entry document)
266- Reverse charge on the VAT return is NOT used for physical goods imports
267 
268[T2] Process and documentation varies by country. Flag for reviewer to confirm: (a) client has the customs entry document, (b) import VAT amount is correct, (c) recovery is allowable.
269 
270---
271 
272## Step 5: Place of Supply Rules [T1/T2]
273 
274**Legislation:** Directive 2006/112/EC, Articles 31-59
275 
276### 5.1 Goods
277 
278| Scenario | Place of Supply | Article |
279|----------|----------------|---------|
280| Goods not dispatched/transported | Where goods are located at time of supply | Article 31 |
281| Goods dispatched/transported by supplier | Where dispatch/transport begins | Article 32 |
282| Intra-community acquisition | Where transport ends | Article 40 |
283| Distance sales (B2C, above threshold) | Where customer is located | Article 33 |
284 
285### 5.2 Services -- General Rules
286 
287| Scenario | Place of Supply | Article |
288|----------|----------------|---------|
289| B2B services (general rule) | Where customer is established | Article 44 |
290| B2C services (general rule) | Where supplier is established | Article 45 |
291 
292### 5.3 Services -- Exceptions to Article 44 [T2]
293 
294These services are taxed where performed, not where the customer is established:
295 
296| Service Type | Place of Supply | Directive Article |
297|-------------|----------------|-------------------|
298| Services related to immovable property | Where property is located | Article 47 |
299| Passenger transport | Distance covered | Article 48 |
300| Restaurant / catering services | Where physically carried out | Article 55 |
301| Short-term hire of transport | Where vehicle put at disposal | Article 56 |
302| Admission to cultural / sports events | Where event takes place | Article 53 |
303 
304[T2] For any of these exception categories, flag for reviewer to confirm correct place of supply treatment.
305 
306---
307 
308## Step 6: Common Thresholds [T1]
309 
310**Legislation:** Directive 2006/112/EC, Articles 33, 59c, 281-294; OSS rules
311 
312### 6.1 Distance Selling -- B2C Cross-Border (EUR 10,000 Threshold)
313 
314If a supplier's total B2C distance sales across ALL EU countries combined exceed EUR 10,000 per calendar year:
315- Must apply VAT at the rate of the **customer's** country (destination principle)
316- Must either register in each destination country OR use the OSS (One Stop Shop)
317 
318Below EUR 10,000: apply VAT at the supplier's own country rate.
319 
320### 6.2 One Stop Shop (OSS)
321 
322Allows a supplier to register in one EU member state and declare and pay VAT for all EU B2C distance sales through that single registration. Eliminates the need to register separately in every customer's country.
323 
324[T2] If client makes significant B2C sales across EU: flag for reviewer to assess OSS registration requirement.
325 
326### 6.3 SME Scheme
327 
328**Legislation:** Directive 2006/112/EC, Articles 281-294
329 
330Member states may exempt small enterprises from VAT below a national threshold. Thresholds vary significantly by country (from EUR 10,000 to EUR 85,000+). Check the country skill for the specific threshold.
331 
332From 1 January 2025, the EU SME scheme (Directive 2020/285) allows small businesses established in one EU member state to benefit from the VAT exemption scheme in other member states, subject to a EUR 100,000 EU-wide turnover cap and the host member state's domestic threshold.
333 
334---
335 
336## Step 7: Filing Obligations [T1/T2]
337 
338### 7.1 VAT Return
339 
340All VAT-registered businesses must file periodic VAT returns. Filing frequency (monthly, quarterly, annually) and deadlines vary by country -- check country skill.
341 
342### 7.2 EC Sales List (Recapitulative Statement)
343 
344Required for all intra-community supplies. See Step 3.4.
345 
346### 7.3 Intrastat
347 
348[T2] Businesses exceeding national Intrastat thresholds must file statistical declarations for intra-EU movements of goods. Thresholds and requirements vary by country -- check country skill.
349 
350### 7.4 SAF-T / Digital Reporting
351 
352[T2] Several EU member states require Standard Audit File for Tax (SAF-T) or other digital reporting formats. Requirements vary significantly -- check country skill.
353 
354---
355 
356## PROHIBITIONS
357 
358- NEVER zero-rate an intra-community supply without a valid customer VAT number verified on VIES
359- NEVER apply reverse charge to services consumed locally in another EU country (hotel, restaurant, taxi)
360- NEVER apply reverse charge to physical goods imports -- import VAT is handled via Customs
361- NEVER use this skill alone -- always load the country skill alongside it
362- NEVER override the country skill with this base skill -- the country skill takes precedence on all national specifics
363- NEVER present EU-wide rules as applying without exception -- national derogations exist and are significant
364 
365---
366 
367## Edge Case Registry
368 
369| # | Scenario | Correct Treatment | Common Mistake |
370|---|----------|-------------------|----------------|
371| 1 | EU business buys SaaS from US company | Reverse charge: self-assess output VAT + claim as input VAT | Treating as out-of-scope (no VAT entry) |
372| 2 | Employee hotel stay in another EU country | Local VAT charged by hotel; NOT reverse charge | Applying reverse charge on the VAT return |
373| 3 | Physical goods imported from China | Import VAT via Customs; recover on VAT return | Applying reverse charge instead of import VAT |
374| 4 | B2B sale of goods to EU customer without valid VAT number | Charge local VAT at standard rate; do NOT zero-rate | Zero-rating without VIES validation |
375| 5 | B2C distance sales under EUR 10,000 | Apply supplier's own country VAT rate | Applying customer's country rate below threshold |
376| 6 | B2C distance sales above EUR 10,000 | Apply customer's country VAT rate (OSS or local registration) | Continuing to apply supplier's country rate |
377| 7 | Chain transaction (A sells to B, B sells to C, goods go direct A to C) | Only one leg qualifies as intra-community supply; other is domestic | Treating both legs as intra-community |
378 
379---
380 
381## Test Suite
382 
383| # | Input | Expected Output | Step |
384|---|-------|-----------------|------|
385| T1 | Irish VAT-registered business buys consulting from German VAT-registered firm | Reverse charge: Irish business self-assesses Irish VAT (23%) as output and input | Step 4.1 |
386| T2 | German business buys goods from French business, goods shipped DE to FR | ICA in France; French business self-assesses French VAT (20%) | Step 3.2 |
387| T3 | Malta business buys AWS subscription (US supplier) | Reverse charge: Malta business self-assesses 18% output + input VAT | Step 4.4 |
388| T4 | Spanish business employee stays in Amsterdam hotel | Dutch VAT (21%) charged by hotel; no reverse charge; expense on books | Step 3.5 |
389| T5 | Polish e-commerce seller, EUR 15,000 B2C sales across EU | Must use OSS or register in each destination country; apply destination rates | Step 6.1 |
390| T6 | Slovak business supplies goods to Czech business, invalid VAT number on VIES | Do NOT zero-rate; charge Slovak standard rate (23%) | Step 1.2 |
391| T7 | Romanian business, standard rate question | 21% standard rate (increased from 19% on 1 August 2025) | Step 2.2 |
392 
393---
394 
395## Contribution Notes
396 
397| Area | Status |
398|------|--------|
399| Core Directive rules | T1 -- sourced from EUR-Lex consolidated text |
400| 2026 rate table | T1 -- verified against Tax Foundation, vatcalc.com, and multiple sources (April 2026) |
401| OSS / IOSS detail | T2 -- covered at high level only; detailed country implementation in country skills |
402| Intrastat thresholds | T3 -- not covered; varies by country; add to country skills |
403| SAF-T / e-invoicing mandates | T3 -- not covered; varies significantly by country |
404| VAT groups | T3 -- not covered; varies by country |
405| Capital goods adjustment period | T3 -- varies by country; covered in country skills |
406 
407**Practitioner review required for:** rate table accuracy (verify against EC TEDB), any T2 rules before advising clients.
408 
409---
410 
411## Disclaimer
412 
413This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, EA, tax attorney, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon.
414 
415The most up-to-date, verified version of this skill is maintained at [openaccountants.com](https://openaccountants.com). Log in to access the latest version, request a professional review from a licensed accountant, and track updates as tax law changes.
416 

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About

Load this skill as a shared reference whenever working on VAT for any EU member state. Contains the common rules from Council Directive 2006/112/EC that apply across all 27 EU member states -- intra-community acquisitions, reverse charge mechanics, place of supply rules, OSS, distance selling thresholds, and EU country list. Always load the country-specific VAT skill alongside this one. Do NOT use this skill alone -- it must be combined with the relevant country skill (e.g. ireland-vat-return, germany-vat-return) which overrides anything country-specific.

EUty-2025

1 of 2 in the EU workflow: