Taxes
VAT on EU Business: The Guide for Cross-Border Trade
Reverse charge, VAT ID, recapitulative statement: How to master VAT on business with EU abroad - with practical checklist.
The European single market offers huge opportunities, but also brings special tax logic. Anyone who sells services or goods across borders within the EU must know the rules of intra-Community trade.
In this guide, we explain the most important principle for B2B transactions: The reverse charge procedure.
1. The Foundation: The VAT Identification Number (VAT ID)
Before you send your first invoice to the EU abroad, both sides need a valid VAT ID.
- Your own number is requested from the Federal Central Tax Office (BZSt).
- Important: You are obliged to verify your customer's VAT ID before invoicing.
Tip: Use the official MIAS verification procedure or the integrated VAT ID checker from Clever Invoice.
2. B2B Transactions: The Reverse Charge Procedure
For services to other companies in the EU, the reverse charge principle (reversal of tax liability) generally applies.
How It Works:
- Not you as the service provider, but your customer in the destination country, pays the VAT.
- You issue a net invoice (without VAT).
- Both VAT IDs must be on the invoice.
Mandatory Note on Invoice:
*"Tax liability transferred to the recipient (Reverse Charge)"*
or in English:
*"Reverse charge - VAT liability transferred to the recipient"*
3. Quick Check: Invoice to EU Abroad
| Customer Type | Show Tax? | Special Feature |
|---|---|---|
| Business (B2B) | No (Net) | State VAT IDs + reverse charge note |
| Private Persons (B2C) | Yes (Gross) | Usually German tax rate (Attention with OSS!) |
4. The Recapitulative Statement (RS)
If you provide tax-free intra-Community supplies or services, the regular VAT return is not enough. You must additionally submit the Recapitulative Statement (RS) electronically to the BZSt.
Content of the RS:
- VAT ID of each EU customer
- Sum of sales per customer in the reporting period
Submission Deadlines:
| Sales in Quarter | Reporting Obligation |
|---|---|
| Over €50,000 | Monthly |
| Under €50,000 | Quarterly |
5. Pitfall: B2C and the OSS Procedure
Do you sell digital services (e.g., e-books, software subscriptions, online courses) to private persons in the EU?
Since 2021, you must report these sales via the One-Stop-Shop (OSS) procedure if you exceed an EU-wide sales threshold of €10,000. In this case, the VAT of the country where your customer lives applies.
Example:
- German provider sells e-book to French private customer
- → 20% French VAT instead of 19% German VAT
- → Report via OSS to BZSt
Checklist: Creating EU Invoices Correctly
| Step | Done? |
|---|---|
| Customer's VAT ID verified (MIAS) | ☐ |
| Own VAT ID on invoice | ☐ |
| Customer's VAT ID on invoice | ☐ |
| Reverse charge note inserted | ☐ |
| Invoice without VAT (net amount) | ☐ |
| Sales recorded in recapitulative statement | ☐ |
Conclusion: Internationalization Made Easy
EU transactions are not rocket science in terms of tax, if the master data is correct. Proper verification of the VAT ID and the correct note on the invoice are half the battle.
Afraid of errors with EU invoices? With Clever Invoice you create international invoices in no time. The system automatically recognizes based on the VAT ID whether reverse charge must be applied and adds the appropriate legal texts in the correct language. Try it free now.
Frequently asked questions
What is the difference between tax number and VAT ID?
The tax number is your national identification with the tax office. The VAT ID (starting with "DE" in Germany) is an EU-wide identifier specifically for cross-border transactions within the EU.
Do I have to register for OSS?
If you sell digital services or goods to private persons in EU countries and exceed the €10,000 threshold, OSS is the simplest solution. Otherwise, you would have to register individually in each target country.
What happens with an incorrect or invalid VAT ID?
Then reverse charge does not apply! You would have to calculate and pay German VAT. Therefore, always verify the VAT ID in advance via the MIAS procedure and document the verification.
Does reverse charge also apply to delivery of goods?
For delivery of goods to companies, we speak of "intra-Community supplies." These are also VAT-free, but additionally require proof of shipment (CMR consignment note or confirmation of receipt).