Intra-Community supply is an important draft within the European Union (EU) that allows companies to sell goods to other EU member states. It is important for companies subject to VAT that trade inside the EU to have a good understanding of this draft in order to take advantage of the benefits it offers.
In this article, we will explain the meaning of intra-Community supply and intra-Community acquisition so that you can successfully do business within the EU!
The draft of intra-Community supply 📦
Intra-Community supply refers to the supply of goods from one EU member state to another. It is a tax-free transaction where no VAT is levied. To be considered an intra-Community supply, certain conditions must be met.
1️⃣ Both the supplier and the customer must be registered for VAT in their respective member states.
2️⃣ The goods must be actually transported from one Member State to the other.
3️⃣ The goods must be supplied to another VAT-registered trader who is also registered to VAT.
The main purpose of intra-Community supply is to facilitate and promote intra-EU trade. By removing vAT, import duties and other customs restrictions, companies are encouraged to trade goods with other EU member states.
So what does intra-EU procurement mean? 🔎
Besides intra-Community supply, there is also intra-Community acquisition, which is the opposite of intra-Community supply. Intra-Community acquisition refers to the purchase of goods from another EU member state. Unlike intra-Community supply, where the supplier supplies the goods, with intra-Community acquisition it is the customer who purchases the goods. As with intra-Community supply, there are certain conditions that must be met to be considered an intra-Community acquisition, such as registration for vAT and transportation of goods between Member States.
Tip:
Through Dexxter, you can understandably and affordably keep all the necessary documents and file tax returns easily!
Differences between intra-Community delivery and domestic delivery
In a domestic supply, goods are delivered within the same Member State, while in an intra-Community supply , goods are delivered to another EU Member State.
This affects the vAT treatment of the transaction. With intra-Community supply, vAT is usually transferred to the customer. An invoice will therefore be issued by the seller with 0% VAT. Of course, the reason why 0% VAT is charged must be stated. In this case, it is the reverse charge because it is a European transaction.
The seller charges and will reverse charge 0% VAT. The whole impact of the VAT event is shifted to the buyer’s vAT declaration. The buyer must indicate in his vAT declaration that it is an international transaction, fortunately, with software like Dexxter, this is child’s play!
Big difference with domestic, Belgian transactions, of course. Here, there will be no 0% vAT % and reverse charge. The Belgian seller will simply charge his vAT rate and the Belgian VAT liable buyer can then recover that VAT via his vAT declaration.
Tip:
Not sure what ‘reverse charge VAT’ means? Then be sure to view our article on how vAT reverse charge works!
Conclusion
Intra-Community supply is an important draft for companies trading inside the EU.
It provides easy access to European
