EU VAT Base -- Common Rules (Directive 2006/112/EC)

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Skill Metadata

Field	Value
Scope	All 27 EU Member States
Primary Legislation	Council Directive 2006/112/EC of 28 November 2006 (consolidated to 14 April 2025)
Supporting Legislation	Directive 2022/542/EU (reduced rates reform); Implementing Regulation 282/2011
Source	EUR-Lex: https://eur-lex.europa.eu/eli/dir/2006/112/oj/eng
Contributor	Open Accounting Skills Registry
Version	2.0
Rates Current As Of	1 January 2026
Status	awaiting-validation
Format	Q1 Step Format
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.

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Confidence Tier Definitions

• [T1] Tier 1 -- Deterministic. Derived directly from the Directive. Applies in all member states unless the country skill specifies otherwise.
• [T2] Tier 2 -- Reviewer Judgement Required. Rule exists in the Directive but national implementation varies. Check the country skill.
• [T3] Tier 3 -- Out of Scope. Not covered by this skill. Refer to country skill or warranted practitioner.

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Step 0: Jurisdiction Check [T1]

Legislation: Directive 2006/112/EC, Article 1

Purpose: Confirm which EU member state(s) are involved before proceeding.

0.1 Current EU Member States (27)

AT 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

0.2 NOT EU (treat as non-EU / third country)

• UK (left EU 31 January 2020)
• Norway, Switzerland, Iceland (EEA but not EU)
• USA, Canada, Australia, UAE, and all other non-EU countries

0.3 Jurisdiction Checklist

Before proceeding to Step 1, confirm:

• Which member state is the supplier established in?
• Which member state (or non-EU country) is the customer established in?
• Is the customer VAT-registered? (Check VIES: https://ec.europa.eu/taxation_customs/vies/)
• Is the transaction B2B or B2C?

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Step 1: EU VAT Fundamentals [T1]

Legislation: Directive 2006/112/EC, Articles 1-4, 18, 219a-237

1.1 Core Principle

VAT 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.

1.2 VAT Number Validation

Legislation: Directive 2006/112/EC, Article 18

Before applying zero rate (ICA or B2B services):

• Verify the customer's VAT number is valid using the EU VIES system: https://ec.europa.eu/taxation_customs/vies/
• A valid VAT number is a prerequisite for zero-rating
• If VIES validation fails, do not zero-rate -- apply local VAT rate

1.3 Invoicing Requirements

Legislation: Directive 2006/112/EC, Articles 219a-237

Mandatory invoice elements for all EU member states:

• Date of issue
• Sequential invoice number
• Supplier VAT number
• Customer VAT number (for B2B intra-community supplies)
• Full name and address of supplier and customer
• Description of goods or services
• Date of supply (if different from invoice date)
• Taxable amount per VAT rate
• VAT rate applied
• VAT amount in the currency of the invoice
• For zero-rated intra-community supplies: reference to exemption (Article 138 or 44/196)
• For reverse charge: statement "Reverse charge"

[T2] E-invoicing mandates vary by country and are being introduced progressively across the EU. Check country skill for any mandatory e-invoicing requirements.

1.4 Blocked Categories -- Common EU Rules

Legislation: Directive 2006/112/EC, Articles 176-177

The 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.

Common categories blocked in most EU member states [T1]:

• Entertainment expenses (client meals, hospitality)
• Personal use items

Categories blocked in some but not all member states [T2]:

• Motor vehicles (blocked in some, partially allowed in others)
• Fuel (varies by country and vehicle type)
• Accommodation (varies)

Always check the country skill for the specific blocked categories for that jurisdiction.

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Step 2: Rate Framework [T1]

Legislation: Directive 2006/112/EC, Articles 96-99; Directive 2022/542/EU

2.1 Rate Structure Rules (apply in all member states)

Rule	Detail
Standard rate minimum	Cannot be lower than 15% (Article 97)
Reduced rates	Maximum two reduced rates, neither below 5%
Super-reduced rate	Below 5% -- only permitted for specific categories under Annex III derogations
Zero rate	Permitted for specific categories under acquired rights
Parking rate	Minimum 12% -- applies in some member states to transitional categories

2.2 2026 Rate Table -- All EU Member States

Country	Code	Standard	Reduced 1	Reduced 2	Super-Reduced	Zero
Austria	AT	20%	10%	13%	--	Yes
Belgium	BE	21%	6%	12%	--	Yes
Bulgaria	BG	20%	9%	--	--	Yes
Croatia	HR	25%	5%	13%	--	Yes
Cyprus	CY	19%	5%	9%	--	Yes
Czech Republic	CZ	21%	12%	--	--	Yes
Denmark	DK	25%	--	--	--	Yes
Estonia	EE	24%	9%	13%	--	Yes
Finland	FI	25.5%	10%	13.5%	--	Yes
France	FR	20%	5.5%	10%	2.1%	Yes
Germany	DE	19%	7%	--	--	Yes
Greece	GR	24%	6%	13%	--	Yes
Hungary	HU	27%	5%	18%	--	Yes
Ireland	IE	23%	9%	13.5%	4.8%	Yes
Italy	IT	22%	5%	10%	4%	Yes
Latvia	LV	21%	5%	12%	--	Yes
Lithuania	LT	21%	5%	12%	--	Yes
Luxembourg	LU	17%	8%	--	3%	Yes
Malta	MT	18%	5%	7%	--	Yes
Netherlands	NL	21%	9%	--	--	Yes
Poland	PL	23%	5%	8%	--	Yes
Portugal	PT	23%	6%	13%	--	Yes
Romania	RO	21%	11%	--	--	Yes
Slovakia	SK	23%	5%	19%	--	Yes
Slovenia	SI	22%	5%	9.5%	--	Yes
Spain	ES	21%	10%	--	4%	Yes
Sweden	SE	25%	6%	12%	--	Yes

Note: Rates current as of 1 January 2026. Always verify current rates against the European Commission's TEDB (Taxes in Europe Database) before filing.

Key changes since 2024:

• Estonia: standard rate increased from 22% to 24% (1 July 2025); accommodation reduced rate raised from 9% to 13%
• 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)
• Ireland: super-reduced rate corrected to 4.8% (agriculture/livestock)
• Lithuania: reduced rates restructured to 5% (books, medicines) and 12% (accommodation, transport, culture) from 1 January 2026
• Luxembourg: standard rate returned to 17% (temporary 16% reduction expired 31 December 2024)
• Romania: standard rate increased from 19% to 21% (1 August 2025); reduced rates consolidated from 5%/9% to single 11% rate
• Slovakia: standard rate increased from 20% to 23% (1 January 2025); reduced rates restructured to 5%/19%

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Step 3: Intra-Community Rules [T1]

Legislation: Directive 2006/112/EC, Articles 2(1)(b), 20, 40-42

3.1 Intra-Community Acquisitions (ICA) -- Definition

An ICA occurs when physical goods are dispatched or transported from one EU member state to another, between two VAT-registered businesses (B2B).

3.2 ICA Rules

• The place of ICA is where transport ends (Article 40)
• The acquiring business is liable for VAT via reverse charge
• The supplier invoices at 0% (zero-rated intra-community supply)
• The acquirer self-assesses output VAT at their local standard rate AND claims the same amount as input VAT
• Net cash effect = zero for a fully taxable business
• The supplier must quote the customer's VAT number on the invoice
• The supplier must report the sale on an EC Sales List (ESL) / Recapitulative Statement

3.3 Invoice Reference

Supplier invoice must state: "VAT exempt intra-Community supply -- Article 138(1) Directive 2006/112/EC"

3.4 EC Sales List / Recapitulative Statement

Legislation: Directive 2006/112/EC, Articles 262-265

Every 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:

• Customer VAT numbers
• Total value supplied to each customer
• Period covered

Filing frequency and format varies by country -- check country skill.

3.5 Local Consumption Exception

Legislation: Directive 2006/112/EC, Articles 52-54 (services); Article 32 (goods)

When 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.

Examples:

• Employee stays in a Paris hotel -- French VAT charged, not reverse charge
• Delegate attends a Berlin conference -- German VAT charged, not reverse charge
• Business lunch in Amsterdam -- Dutch VAT charged, not reverse charge

The foreign VAT paid is an expense (generally irrecoverable unless the business files a cross-border VAT refund claim under Directive 2008/9/EC).

[T2] Cross-border VAT refund claims: possible for EU businesses but requires separate process. Flag for reviewer if amounts are material.

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Step 4: Reverse Charge Framework [T1]

Legislation: Directive 2006/112/EC, Articles 44, 196

4.1 The General B2B Rule (Article 44)

For services supplied B2B across EU borders, the place of supply is where the customer is established.

Consequence: 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.

4.2 Mandatory for

• All B2B cross-border services where Article 44 applies
• Services supplied by a non-EU supplier to an EU VAT-registered customer

4.3 Invoice Reference

Supplier invoice must state: "VAT exempt intra-Community supply of services -- Articles 44 and 196 Directive 2006/112/EC" or simply "Reverse charge"

4.4 Non-EU Supplier to EU Business

Legislation: Directive 2006/112/EC, Articles 44, 196

When a non-EU supplier (US, UK, CH, AU etc.) provides services to an EU VAT-registered business:

• Supplier invoices at 0% (no EU VAT charged)
• EU customer self-assesses output VAT at local rate
• EU customer claims same amount as input VAT (if fully taxable)
• Net effect = zero for fully taxable business
• This applies to: software subscriptions (AWS, Google, Microsoft, Notion, Slack), consulting services, digital services, IP licences

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.

4.5 Import of Physical Goods from Non-EU [T2]

Legislation: Directive 2006/112/EC, Articles 70-71; national customs legislation

When physical goods are imported from outside the EU:

• Import VAT is charged at the border by Customs, not via reverse charge on the VAT return
• Import VAT is paid to Customs at the point of entry
• The business recovers import VAT as input tax via the VAT return (using the Customs entry document)
• Reverse charge on the VAT return is NOT used for physical goods imports

[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.

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Step 5: Place of Supply Rules [T1/T2]

Legislation: Directive 2006/112/EC, Articles 31-59

5.1 Goods

Scenario	Place of Supply	Article
Goods not dispatched/transported	Where goods are located at time of supply	Article 31
Goods dispatched/transported by supplier	Where dispatch/transport begins	Article 32
Intra-community acquisition	Where transport ends	Article 40
Distance sales (B2C, above threshold)	Where customer is located	Article 33

5.2 Services -- General Rules

Scenario	Place of Supply	Article
B2B services (general rule)	Where customer is established	Article 44
B2C services (general rule)	Where supplier is established	Article 45

5.3 Services -- Exceptions to Article 44 [T2]

These services are taxed where performed, not where the customer is established:

Service Type	Place of Supply	Directive Article
Services related to immovable property	Where property is located	Article 47
Passenger transport	Distance covered	Article 48
Restaurant / catering services	Where physically carried out	Article 55
Short-term hire of transport	Where vehicle put at disposal	Article 56
Admission to cultural / sports events	Where event takes place	Article 53

[T2] For any of these exception categories, flag for reviewer to confirm correct place of supply treatment.

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Step 6: Common Thresholds [T1]

Legislation: Directive 2006/112/EC, Articles 33, 59c, 281-294; OSS rules

6.1 Distance Selling -- B2C Cross-Border (EUR 10,000 Threshold)

If a supplier's total B2C distance sales across ALL EU countries combined exceed EUR 10,000 per calendar year:

• Must apply VAT at the rate of the customer's country (destination principle)
• Must either register in each destination country OR use the OSS (One Stop Shop)

Below EUR 10,000: apply VAT at the supplier's own country rate.

6.2 One Stop Shop (OSS)

Allows 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.

[T2] If client makes significant B2C sales across EU: flag for reviewer to assess OSS registration requirement.

6.3 SME Scheme

Legislation: Directive 2006/112/EC, Articles 281-294

Member 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.

From 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.

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Step 7: Filing Obligations [T1/T2]

7.1 VAT Return

All VAT-registered businesses must file periodic VAT returns. Filing frequency (monthly, quarterly, annually) and deadlines vary by country -- check country skill.

7.2 EC Sales List (Recapitulative Statement)

Required for all intra-community supplies. See Step 3.4.

7.3 Intrastat

[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.

7.4 SAF-T / Digital Reporting

[T2] Several EU member states require Standard Audit File for Tax (SAF-T) or other digital reporting formats. Requirements vary significantly -- check country skill.

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PROHIBITIONS

• NEVER zero-rate an intra-community supply without a valid customer VAT number verified on VIES
• NEVER apply reverse charge to services consumed locally in another EU country (hotel, restaurant, taxi)
• NEVER apply reverse charge to physical goods imports -- import VAT is handled via Customs
• NEVER use this skill alone -- always load the country skill alongside it
• NEVER override the country skill with this base skill -- the country skill takes precedence on all national specifics
• NEVER present EU-wide rules as applying without exception -- national derogations exist and are significant

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Edge Case Registry

#	Scenario	Correct Treatment	Common Mistake
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)
2	Employee hotel stay in another EU country	Local VAT charged by hotel; NOT reverse charge	Applying reverse charge on the VAT return
3	Physical goods imported from China	Import VAT via Customs; recover on VAT return	Applying reverse charge instead of import VAT
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
5	B2C distance sales under EUR 10,000	Apply supplier's own country VAT rate	Applying customer's country rate below threshold
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
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

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Test Suite

#	Input	Expected Output	Step
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
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
T3	Malta business buys AWS subscription (US supplier)	Reverse charge: Malta business self-assesses 18% output + input VAT	Step 4.4
T4	Spanish business employee stays in Amsterdam hotel	Dutch VAT (21%) charged by hotel; no reverse charge; expense on books	Step 3.5
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
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
T7	Romanian business, standard rate question	21% standard rate (increased from 19% on 1 August 2025)	Step 2.2

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Contribution Notes

Area	Status
Core Directive rules	T1 -- sourced from EUR-Lex consolidated text
2026 rate table	T1 -- verified against Tax Foundation, vatcalc.com, and multiple sources (April 2026)
OSS / IOSS detail	T2 -- covered at high level only; detailed country implementation in country skills
Intrastat thresholds	T3 -- not covered; varies by country; add to country skills
SAF-T / e-invoicing mandates	T3 -- not covered; varies significantly by country
VAT groups	T3 -- not covered; varies by country
Capital goods adjustment period	T3 -- varies by country; covered in country skills

Practitioner review required for: rate table accuracy (verify against EC TEDB), any T2 rules before advising clients.

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