openaccountants EU VAT Base -- Common Rules (Directive 2006/112/EC)
General reference only. This skill is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for any specific person's facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction.
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. |
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.
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?
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.
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%
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.
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.
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.
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.
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.
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
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 |
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 |
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.
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. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, EA, tax attorney, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon.
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