vat-place-of-supply-master

VAT Place of Supply — Master Reference for Cross-Border Transactions

Disclaimer: This skill provides general guidance on VAT/GST place-of-supply rules. These rules are complex, jurisdiction-specific, and subject to change. Consult a qualified indirect tax advisor before taking positions on VAT obligations.

Skill Metadata

• Jurisdiction — EU (all 27 member states) + non-EU comparison
• Primary Legislation — Council Directive 2006/112/EC, Articles 31–59c
• Supporting Legislation — Council Implementing Regulation (EU) No 282/2011
• Scope — Determining the correct country for VAT on cross-border supplies of goods and services
• Contributor — OpenAccountants
• Validation Date — May 2026
• Skill Version — 1.0
• Cross-references — eu-reverse-charge.md, eu-oss-digital.md, non-eu-export-services.md, cross-border-vat-gst.md

Section 1: General Rules for Services

Legislation: VAT Directive 2006/112/EC, Articles 44 and 45.

There are two basic rules. Every service starts here before checking exceptions.

Article 44 — B2B General Rule [T1]

• Customer — Taxable person acting as such (business with VAT number) (VAT Directive 2006/112/EC, Article 44)
• Place of supply — Where the customer is established (or has a fixed establishment receiving the service) (VAT Directive 2006/112/EC, Article 44)
• VAT consequence — Supplier invoices without VAT; customer self-assesses under reverse charge (Art 196 within EU) (VAT Directive 2006/112/EC, Article 44; Article 196)
• Verify — Customer's VAT number via VIES before zero-rating (VAT Directive 2006/112/EC, Article 44)

Article 45 — B2C General Rule [T1]

• Customer — Non-taxable person (private individual) (VAT Directive 2006/112/EC, Article 45)
• Place of supply — Where the supplier is established (or has a fixed establishment from which the service is supplied) (VAT Directive 2006/112/EC, Article 45)
• VAT consequence — Supplier charges their own country's VAT rate (VAT Directive 2006/112/EC, Article 45)
• Exception — Numerous special rules override Art 45 for specific service types (see Section 2) (VAT Directive 2006/112/EC, Article 45)

Quick Reference

Quick Reference (VAT Directive 2006/112/EC, Articles 44-45)

Scenario	Place of Supply	Who Accounts for VAT
B2B general service	Customer's country	Customer (reverse charge)
B2C general service	Supplier's country	Supplier

Section 2: Special Rules for Services

These override the general rules above. Always check whether an exception applies before defaulting to Art 44/45.

2.1 Immovable Property — Article 47 [T1]

• Applies to — Valuation, estate agency, legal services related to property, construction, accommodation, property management, architect services (VAT Directive 2006/112/EC, Article 47)
• Place of supply — Where the property is located — regardless of B2B/B2C and regardless of where supplier or customer is (VAT Directive 2006/112/EC, Article 47)
• Practical impact — A German architect designing a building in Portugal must charge Portuguese VAT (or register there), even if the client is in Ireland (VAT Directive 2006/112/EC, Article 47)
• Common trap — Freelancers forget that remote design work for foreign property still follows this rule (VAT Directive 2006/112/EC, Article 47)

2.2 Passenger Transport — Article 48 [T1]

• Place of supply — Where the transport takes place, proportional to distances covered in each country (VAT Directive 2006/112/EC, Article 48)
• B2B/B2C — Same rule applies to both (VAT Directive 2006/112/EC, Article 48)
• Example — A bus journey from Belgium through Luxembourg to Germany: VAT is split proportionally across all three countries (VAT Directive 2006/112/EC, Article 48)

2.3 Goods Transport (B2C only) — Article 49 [T2]

• Place of supply — Where the transport takes place, proportional to distances (VAT Directive 2006/112/EC, Article 49)
• B2B — Art 44 applies instead (customer's country) (VAT Directive 2006/112/EC, Article 49)
• B2C intra-EU — Place where transport begins, unless transport is between two member states — then destination (VAT Directive 2006/112/EC, Article 49)

2.4 Cultural, Artistic, Sporting, Scientific, Educational, Entertainment Events — Articles 53–54 [T2]

Events table (VAT Directive 2006/112/EC, Articles 53-54)

Scenario	Article	Place of Supply
B2B — admission to an event	Art 53	Where the event physically takes place
B2C — admission and related services	Art 54	Where the event physically takes place
B2B — services other than admission (e.g., organising, production)	Art 44	Customer's country (general rule)

Key distinction: "Admission" means the right to attend. Organising or sponsoring an event for a business client follows the general B2B rule (Art 44), not the event location rule.

ECJ case C-647/17 (Srf konsulterna): A seminar involving active participation for a business client is a B2B service under Art 44, not "admission" under Art 53.

2.5 Restaurant and Catering Services — Article 55 [T1]

• Place of supply — Where the services are physically carried out (VAT Directive 2006/112/EC, Article 55)
• On board transport — See Art 57 — place of supply = point of departure within EU (VAT Directive 2006/112/EC, Article 57)
• B2B/B2C — Same rule for both (VAT Directive 2006/112/EC, Article 55)

2.6 Short-Term Hire of Transport — Article 56 [T1]

• Short-term (≤30 days; ≤90 days for vessels) — Where the means of transport is put at the customer's disposal (VAT Directive 2006/112/EC, Article 56)
• Long-term B2B — Customer's country (Art 44) (VAT Directive 2006/112/EC, Article 56)
• Long-term B2C — Supplier's country (Art 45), except pleasure boats = where put at disposal if supplier established there (VAT Directive 2006/112/EC, Article 56)

2.7 Electronically Supplied Services, Telecoms, Broadcasting (B2C) — Article 58 [T1]

• Applies to — SaaS, downloads, streaming, e-books, online courses (pre-recorded), cloud hosting, telecoms, broadcasting — B2C only (VAT Directive 2006/112/EC, Article 58)
• Place of supply — Where the customer is established / resides (VAT Directive 2006/112/EC, Article 58)
• B2B — Art 44 applies instead (customer's country, reverse charge) (VAT Directive 2006/112/EC, Article 44)
• EUR 10,000 threshold (Art 59c) — EU-established sellers below €10,000 total cross-border B2C digital sales may charge home-country VAT EUR (VAT Directive 2006/112/EC, Article 59c)
• Non-EU sellers — No threshold benefit; must always charge destination-country rate (VAT Directive 2006/112/EC, Article 59c)
• Compliance — Use OSS (One-Stop Shop) to report across all EU countries from a single registration (VAT Directive 2006/112/EC, Article 58)

2.8 "Listed Services" to Non-EU Consumers (B2C) — Article 59 [T1]

Certain services supplied B2C to a person outside the EU are taxed where the customer is — making them outside the scope of EU VAT:

• Intellectual property / copyright licensing
• Advertising
• Consulting, legal, accounting, engineering
• Data processing, information supply
• Banking, financial, insurance services
• Staff supply
• Hiring of movable tangible property (except transport)
• Telecoms, broadcasting, electronically supplied services

If the B2C service is NOT on this list (e.g., personal services, cleaning, yoga instruction): place of supply remains the supplier's country under Art 45, even if the consumer is outside the EU.

Section 3: Rules for Goods

3.1 Domestic Supply — No Transport (Article 31) [T1]

• Place of supply — Where the goods are located at the time of supply (VAT Directive 2006/112/EC, Article 31)
• Example — Goods sold in a German shop to a walk-in customer: German VAT (VAT Directive 2006/112/EC, Article 31)

3.2 Goods Dispatched or Transported (Article 32) [T1]

• Place of supply — Where the goods are located when dispatch or transport to the customer begins (VAT Directive 2006/112/EC, Article 32)
• Example — German warehouse ships goods to a German customer: place of supply = Germany (VAT Directive 2006/112/EC, Article 32)
• Exception — Distance selling rules (Art 33) and installation/assembly (Art 36) override this (VAT Directive 2006/112/EC, Article 32)

3.3 Intra-EU Distance Selling (Article 33) [T1]

• What — Goods sold to consumers (B2C) or non-VAT-registered entities in another EU country (VAT Directive 2006/112/EC, Article 33)
• Place of supply — Where dispatch or transport ends (customer's country) (VAT Directive 2006/112/EC, Article 33)
• EUR 10,000 threshold (Art 59c) — EU sellers below €10,000 total cross-border B2C goods + digital services may treat place of supply as origin country EUR (VAT Directive 2006/112/EC, Article 59c)
• Above threshold — Must charge destination-country VAT rate (VAT Directive 2006/112/EC, Article 33)
• Compliance — Use Union OSS to report all intra-EU distance sales from one registration (VAT Directive 2006/112/EC, Article 33)
• Post-2021 change — Individual country thresholds (€35,000/€100,000) replaced by single €10,000 EU-wide threshold (VAT Directive 2006/112/EC, Article 33)

3.4 Imports from Outside the EU (Article 30/60-61) [T1]

• Place of importation — The EU member state where goods enter the EU (Art 60) (VAT Directive 2006/112/EC, Article 60)
• Suspensive arrangements — If goods are placed under customs warehousing or transit, importation occurs where goods leave that arrangement (Art 61) (VAT Directive 2006/112/EC, Article 61)
• VAT due — At importation, by the importer — collected by customs (VAT Directive 2006/112/EC, Article 30/60-61)
• IOSS alternative — For goods ≤€150 sold B2C, use Import One-Stop Shop to collect VAT at point of sale (VAT Directive 2006/112/EC, Article 30/60-61)

3.5 Installation or Assembly (Article 36) [T1]

• Place of supply — Where the goods are installed or assembled (VAT Directive 2006/112/EC, Article 36)
• Example — German manufacturer ships and installs machinery in a French factory: place of supply = France (VAT Directive 2006/112/EC, Article 36)

3.6 Chain Transactions (Article 36a) [T1]

Introduced by Directive (EU) 2018/1910 to simplify chain (successive) supplies:

• Scenario — Goods supplied A → B → C, shipped directly from A to C across EU borders (VAT Directive 2006/112/EC, Article 36a)
• Transport attributed to — The supply to the intermediary operator (B) (VAT Directive 2006/112/EC, Article 36a)
• Intermediary operator — A supplier in the chain (other than the first) who dispatches or arranges transport (VAT Directive 2006/112/EC, Article 36a)
• Exception — If B communicates to A the VAT number issued by the dispatch member state, transport is attributed to B's supply to C (VAT Directive 2006/112/EC, Article 36a)
• Effect — Only one supply in the chain is the intra-EU zero-rated supply; the other is a domestic supply (VAT Directive 2006/112/EC, Article 36a)

Simplified triangulation (Art 141): In a three-party chain A (MS1) → B (MS2) → C (MS3), B can avoid registering in MS3 if all conditions of Art 141 are met. B issues an invoice with "reverse charge" and C self-assesses VAT in MS3.

Section 4: OSS / IOSS Decision Tree

When to register for One-Stop Shop

START: Do you sell goods or digital services B2C to consumers in other EU countries?
│
├─ NO → OSS not needed
│
├─ YES → Are you an EU-established business?
│   │
│   ├─ YES → Do your total cross-border B2C sales (goods + digital services)
│   │         exceed EUR 10,000/year?
│   │   │
│   │   ├─ NO → You MAY charge home-country VAT. OSS optional.
│   │   │        (But you can opt in to OSS voluntarily.)
│   │   │
│   │   └─ YES → You MUST charge destination-country VAT.
│   │             Register for UNION OSS in your home country.
│   │
│   └─ YES (established in >1 EU country) → EUR 10,000 threshold does NOT apply.
│         Register for Union OSS.
│
└─ YES → Are you a NON-EU business?
    │
    ├─ Selling digital services / telecoms / broadcasting B2C →
    │   Register for NON-UNION OSS in any EU country of choice.
    │   No threshold benefit. Always charge destination rate.
    │
    └─ Selling goods from outside EU, consignments ≤EUR 150 →
        Register for IOSS (Import One-Stop Shop).
        Collect VAT at checkout. Goods enter EU VAT-paid.
        Note: From 1 July 2026, EUR 3 flat customs duty also applies.

OSS Comparison Table

OSS Comparison Table

Scheme	Who	What	Filing
Union OSS	EU-established sellers	Intra-EU B2C distance sales of goods + B2C services in other EU states	Quarterly, home country
Non-Union OSS	Non-EU sellers	B2C digital/telecom/broadcasting services to EU consumers	Quarterly, any EU country
IOSS	Any seller (EU or non-EU)	Distance sales of imported goods ≤€150 to EU consumers	Monthly, home/chosen country

Section 5: Non-EU Rules Comparison

5.1 US Sales Tax Nexus

US Sales Tax Nexus table

Aspect	US Rule
Tax type	Sales tax (state-level, not federal)
Place of supply equivalent	"Nexus" determines which state can tax you
Physical nexus	Office, warehouse, employee, or inventory in the state
Economic nexus (South Dakota v. Wayfair, 2018)	Most states: $100,000 in sales OR 200 transactions/year
Digital services	Taxability varies by state — SaaS taxable in ~25 states, not taxable in CA, GA, MO
No equivalent of reverse charge	Seller must collect and remit; no mechanism for buyer self-assessment in most states
Key difference from EU	No single national registration; must track nexus in 45+ states individually (or use automation like Stripe Tax, TaxJar, Avalara)

5.2 Australian GST on Imports

Australian GST on Imports table

Aspect	Australian Rule
Threshold	AUD 75,000/year in supplies to Australian consumers
Digital services B2C	Non-resident must register for GST and charge 10%
Low-value goods (≤AUD 1,000)	GST applies at point of sale since July 2018
B2B	Reverse charge applies (Australian business self-assesses)

5.3 India OIDAR (Online Information and Database Access or Retrieval)

India OIDAR table

Aspect	Indian Rule
Applies to	Non-resident suppliers of OIDAR services to non-taxable Indian recipients (B2C)
Definition	Services delivered over the internet — substantially automated, minimal human intervention
Rate	18% IGST
Registration	Simplified registration under GST for non-resident OIDAR suppliers
B2B	Indian business self-assesses under reverse charge
Equalization Levy	Separate 2% levy on non-resident e-commerce operators (no global revenue threshold)

5.4 Japan Consumption Tax on Digital Services

Japan Consumption Tax table

Aspect	Japanese Rule
Rate	10% (8% reduced rate for food/beverages, not applicable to digital)
Non-resident digital services B2C	Must register and charge JCT regardless of revenue
B2B	Reverse charge applies for "specified services" received from abroad
Threshold	No de minimis for non-resident digital service providers to consumers
Invoice system	Qualified Invoice System (QIS) since October 2023 — registered invoices required for input tax credit

Comparison Summary

Comparison Summary

Feature	EU	US	Australia	India	Japan
Tax type	VAT	Sales tax	GST	GST + EL	JCT
B2B mechanism	Reverse charge	N/A	Reverse charge	Reverse charge	Reverse charge
B2C digital	Customer location	Nexus-based	Customer location	Customer location	Customer location
Single registration	OSS	No (per-state)	Single ATO reg	Single GST reg	Single NTA reg
Threshold (B2C digital)	€10,000 (EU sellers)	$100K/200 txn per state	AUD 75,000	Nil (simplified reg)	Nil

Section 6: Practical Decision Flowchart for Freelancers

"I'm in Country A, my client is in Country B, and I'm providing [service type]. What VAT applies?"

Step 1: Classify the Supply

Step 1 table

Question	If YES	If NO
Are you selling goods (physical products)?	Go to Goods Flow (below)	Continue to Step 2

Step 2: Identify the Customer

Step 2 table

Question	If YES	If NO
Is your client a business (with a VAT number)?	B2B → Go to Step 3	B2C → Go to Step 4

Step 3: B2B Service — Check Exceptions

Step 3 table

Question	If YES	If NO
Is the service related to immovable property (Art 47)?	VAT where property is located	Continue
Is the service admission to an event (Art 53)?	VAT where event takes place	Continue
Is it short-term hire of transport ≤30 days (Art 56)?	VAT where vehicle put at disposal	Continue
Is it restaurant/catering (Art 55)?	VAT where performed	Continue
Is it passenger transport (Art 48)?	VAT proportional to route	Continue
None of the above?	→ Art 44 applies. Place of supply = client's country. Invoice without VAT. Client self-assesses (reverse charge in EU; self-assessment rules outside EU).

Step 4: B2C Service — Check Exceptions

Step 4 table

Question	If YES	If NO
Is it an electronically supplied service, telecoms, or broadcasting (Art 58)?	VAT where consumer is located. Use OSS if selling into EU.	Continue
Is the service related to immovable property (Art 47)?	VAT where property is located	Continue
Is it admission to an event (Art 54)?	VAT where event takes place	Continue
Is the consumer outside the EU and is the service on the Art 59 list?	Outside scope of EU VAT	Continue
None of the above?	→ Art 45 applies. Place of supply = YOUR country. Charge your domestic VAT rate.

Goods Flow

Goods Flow table

Question	If YES	If NO
Are you shipping goods to a consumer in another EU country?	Distance selling (Art 33). Above €10,000 threshold → destination VAT. Use Union OSS.	Continue
Are you shipping goods from outside the EU to EU consumers, value ≤€150?	Use IOSS. Collect destination VAT at checkout.	Continue
Are goods installed/assembled at customer location (Art 36)?	VAT where installed	Continue
Standard domestic or B2B intra-EU supply?	Art 31/32 (origin) or intra-EU zero-rated supply + acquisition tax in destination

Common Freelancer Scenarios

Common Freelancer Scenarios table

You are in...	Client is in...	Service	Result
Germany	France	Web development (B2B)	Art 44. No German VAT. French client reverse-charges at 20%.
Germany	France	Web development (B2C)	Art 45. Charge German 19% VAT. (Not a digital service — bespoke human work.)
Germany	France	SaaS subscription (B2C)	Art 58. Charge French 20% VAT. Report via OSS.
Malta	US	Consulting (B2B)	Art 44. Place of supply = US. No Malta VAT. Outside scope.
Malta	US	Pre-recorded online course (B2C)	Art 58/59. Place of supply = US (outside EU). No Malta VAT. But check US sales tax nexus.
UK	Germany	Design services (B2B)	UK is outside EU. No UK VAT (outside scope). German client self-assesses under German domestic rules.
India	Australia	Software dev (B2B)	Zero-rated export under IGST. No IGST if LUT filed. Australian client reverse-charges GST.
US	EU consumers	SaaS product (B2C)	Must register for non-Union OSS. Charge each EU country's VAT rate. No threshold benefit.
France	Switzerland	Architecture for property in France	Art 47. Property in France → French VAT at 20%, regardless of client location.

PROHIBITIONS

• 1 — NEVER default to Art 44 or Art 45 without checking the exceptions in Section 2.
• 2 — NEVER assume that all B2C services to foreign consumers are outside the scope of VAT. Only Art 59 "listed services" shift to the consumer's country for B2C.
• 3 — NEVER ignore the immovable property rule (Art 47). It overrides everything.
• 4 — NEVER apply the €10,000 threshold to non-EU sellers — they must always charge destination-country VAT.
• 5 — NEVER confuse "zero-rated" with "exempt." Zero-rated preserves input VAT recovery; exempt does not.
• 6 — NEVER skip VIES verification before zero-rating an intra-EU B2B supply.
• 7 — NEVER assume the same place-of-supply rules apply in all countries. Non-EU jurisdictions (US, Australia, India, Japan) have fundamentally different approaches.

Edge Cases

EC1 — Bespoke software vs. SaaS (ESS classification) [T2]

Situation: A developer builds custom software for a specific B2C client. Is this an electronically supplied service (Art 58)? Resolution: Custom software development with significant human intervention is NOT an ESS. It is a standard service under Art 45 (B2C) or Art 44 (B2B). Pre-packaged SaaS delivered automatically IS an ESS. Flag for reviewer if the degree of customisation is unclear.

EC2 — Remote worker creating PE risk [T2]

Situation: A UK freelancer works from Spain for 8 months serving UK clients. Does Spain become the "establishment" for place-of-supply purposes? Resolution: If the freelancer becomes established in Spain (fixed establishment under Art 11 of Implementing Regulation 282/2011), the place of supply of their B2C services may shift to Spain. B2B services under Art 44 are unaffected (place of supply = client's country). Flag for reviewer — tax residency and PE risk should also be assessed.

EC3 — Mixed digital and live service bundle [T2]

Situation: A course provider sells a package: pre-recorded videos (ESS) + live weekly coaching calls (not ESS) to an EU consumer. Resolution: If a single composite supply, the principal element determines classification. If independent supplies, each follows its own rules. Pre-recorded = Art 58 (customer location). Live coaching = Art 45 (supplier location). Flag for reviewer to determine whether composite or independent.

EC4 — Chain transaction with unknown intermediary role [T3]

Situation: A → B → C chain where goods ship directly from Poland to Portugal, but it is unclear whether B is the intermediary operator under Art 36a. Resolution: Escalate. The attribution of transport determines which supply is zero-rated (intra-EU) and which is domestic. Incorrect attribution can cause double taxation or VAT loss. Requires review of contractual arrangements and Incoterms.

Test Suite

Test 1 — B2B consulting, Germany to France

Input: German consultant invoices French company (valid FR VAT number) EUR 5,000 for strategy consulting. Expected: Art 44. Place of supply = France. No German VAT. Reverse charge. Supplier reports on ESL.

Test 2 — B2C yoga class (non-listed service), Malta to US consumer

Input: Maltese instructor provides a private in-person yoga session in Malta to a US tourist. EUR 100. Expected: Art 45. Not a listed service under Art 59. Place of supply = Malta. Charge Maltese VAT at 18%.

Test 3 — B2C SaaS, US company to French consumer

Input: US SaaS company sells a EUR 20/month subscription to a French consumer. Expected: Art 58. ESS B2C. Place of supply = France. Non-Union OSS required. Charge 20% French VAT.

Test 4 — Architect, property in another country

Input: Italian architect designs a villa in Greece for a German client (B2B). EUR 15,000. Expected: Art 47 (immovable property). Place of supply = Greece. Reverse charge does NOT apply under Art 196. Italian architect may need to register for Greek VAT.

Test 5 — Distance selling, below threshold

Input: Spanish e-commerce seller ships EUR 8,000 of handmade goods to consumers across 5 EU countries. Prior year was EUR 7,000. Expected: Below €10,000 threshold. May treat place of supply as Spain and charge Spanish VAT. OSS optional.

Test 6 — Distance selling, above threshold

Input: Same seller now has EUR 15,000 in cross-border B2C goods sales. Expected: Above threshold. Must charge destination-country VAT. Register for Union OSS.

Official Sources

• EU VAT Directive (consolidated): https://eur-lex.europa.eu/eli/dir/2006/112
• EC Place of Taxation guidance: https://taxation-customs.ec.europa.eu/taxation/vat/vat-directive/place-taxation_en
• EU OSS portal: https://vat-one-stop-shop.ec.europa.eu
• VIES VAT number validation: https://ec.europa.eu/taxation_customs/vies/
• Implementing Regulation 282/2011: https://eur-lex.europa.eu/eli/reg_impl/2011/282
• IOSS guidance (Irish Revenue): https://www.revenue.ie (search "IOSS")

Disclaimer

This 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. VAT rates, thresholds, and place-of-supply rules are subject to change. Always verify current rules with official sources and a qualified indirect tax advisor.

Data reflects 2025–2026 rules. OpenAccountants — open-source accounting skills for AI — info@openaccountants.com

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