European VAT: how do you buy and sell within the EU?

The principle

Two regimes coexist. Between businesses, the tax follows the country of destination in principle. The Belgian seller therefore does not charge it to a VAT-registered customer elsewhere in the EU. The buyer declares it at home, under the reverse charge mechanism.

This rule sits at the heart of European VAT for businesses, since the single market opened in 1993. The Belgian Code sets it out, among other places, in Article 39bis.

Sales to private individuals follow another logic. The seller normally applies the tax of its own country, then the rate of the customer's country above an EU-wide threshold. We come back to this below with the OSS one-stop shop.

European VAT numbers and VIES checks

Everything starts with a valid number. In Belgium, the number combines the letters BE with the ten digits of the enterprise number. Your customer holds an equivalent European VAT number in its own country.

Before each first sale, check that number in VIES, the database run by the Commission. Keep a dated screenshot of the result. Without a valid number, the exemption falls away and Belgian tax becomes due.

Selling goods within the EU

Conditions for the exemption

Under European VAT rules, four cumulative conditions apply.

Proof and invoicing

European VAT rules require proof of transport. A CMR consignment note, a signed delivery note or a carrier invoice will do. The invoice shows no tax. It shows both numbers and an exemption statement, with a reference to Article 39bis of the Belgian Code.

In the periodic return, the taxable amount then goes in box 46.

Worked example

A company in Liège sells a machine worth 50,000 euros to a French business. The customer's number shows as valid in VIES. The invoice shows 50,000 euros, with no tax. The seller enters that amount in box 46 and in its EC sales list. If the number turned out to be invalid, it would have to charge 10,500 euros of Belgian tax at 21%. That is European VAT in practice.

Buying goods within the EU

The mechanism works the other way round. Your German or Dutch supplier invoices without tax. Under European VAT rules, you self-assess the Belgian tax in your own return.

• The taxable amount of the acquisition goes in box 86.
• The corresponding tax due goes in box 55.
• The same tax goes in box 59, if you can deduct it.

For a business with a full right of deduction, the transaction stays cash-neutral. It must still appear correctly. A missing box 55 distorts your figures and draws an inspector's attention.

European VAT on services

For services between taxable persons, the tax follows the customer's location. Article 21, paragraph 2, of the Code sets that rule. The Belgian provider therefore invoices its EU customer without tax. It states the reverse charge on the invoice and reports the amount in box 44.

Conversely, a Belgian business buying a service from a supplier elsewhere in the EU uses box 88. It also declares the tax in box 55 and deducts it in box 59.

Take an example. A Brussels agency pays 1,000 euros for a subscription to an Irish software publisher. It enters 1,000 euros in box 88, then 210 euros in boxes 55 and 59. The net effect remains zero.

Exceptions to know

Some services follow a different European VAT rule.

• Services connected with a building follow the location of the building.
• Passenger transport follows the distance covered.
• Admission to cultural or sporting events follows the place of the event.
• Short-term hire of a vehicle follows the place where the customer receives it.

Filings linked to European VAT

Each transaction leaves a trace in three documents.

• The periodic return, with boxes 44, 46, 55, 59, 86 and 88.
• The EC sales list, monthly or quarterly, for your supplies of goods and services to taxable customers in other member states.
• The Intrastat declaration with the National Bank, for goods, above 1,000,000 euros of dispatches or 1,500,000 euros of arrivals per year.

The EC sales list shows each customer, with its number and the amount invoiced. A gap between that list and box 46 often triggers a cross-check.

Sales to consumers and the OSS

Since 1 July 2021, European VAT has a harmonised rule for distance sales. It covers sales of goods to consumers in other member states. Below 10,000 euros a year across the whole Union, a small seller may apply Belgian tax. Above that level, it applies the rate of each customer's country.

The OSS one-stop shop then avoids a registration in every country. You declare and pay these foreign taxes each quarter, through a single Belgian portal. These sales fall outside the classic business-to-business logic of European VAT.

Common mistakes

These European VAT mistakes come up often.

• Invoicing a customer without tax when its number does not appear in VIES.
• Forgetting proof of transport when the customer collects the goods.
• Reporting an acquisition in box 86 without the tax in box 55.
• Leaving a service out of the EC sales list.
• Mixing up a distance sale to a consumer with a sale to a business.

A Belgian accountant who knows cross-border rules will save you a lot of time.

In short

European VAT rests on a clear principle: between businesses, the tax follows the destination. Check every number, keep your proof and fill in the right boxes. Official texts and forms remain available on the FPS Finance website. Just starting out? First read about getting your number activated.