EU VAT compliance

Companies providing taxable supplies in the EU must register for VAT to obtain a valid, unique EU VAT number from their home country. It’s an essential part of the VAT compliance process. If companies are also buying and selling goods in another EU country, they may also have to register for VAT there. This will give them a valid VAT number which they can record all transactions against. Businesses can also provide this number to their EU customers to ensure they’re correctly charged nil VAT on intra-community supplies of goods or services.

Once a business establishes an obligation to register for VAT, they must submit a local VAT registration form with any requested supporting documentation. This will typically include: 

• Company registration number
• Business’s bank account details
• Unique Taxpayer Reference (UTR), for U.K. businesses 
• Details of annual turnover
• An original copy of the certificate of incorporation of the company
• A copy of the company’s articles of association
• An extract from the national company registrar as proof of existence
• If the company is appointing a local tax agent or fiscal representative, then a letter of authority or power of attorney

The requested documentation can vary by country. The registration process may also be in the local language. Once submitted, it can take approximately 2-8 weeks to receive a VAT number. 

Depending on the tax authority, they may also request further information as a measure of prevention against VAT fraud.

Companies are obliged to produce VAT invoices for any transaction liable for VAT. This includes supplies made to both other VAT-registered companies, as well as to consumers (there are exemptions). The EU VAT Directive stipulates the basic information that should be provided on a standard invoice. This includes:

• Invoice date
• Name and address of the supplier and their VAT number
• Name and address of the customer
• Unique and sequential invoice number
• Description, including quantity if applicable, of the goods or services
• VAT rate applied
• VAT charged
• Net, VAT due and gross value of the supply
• Details of any discounts
• A clear indication if the transaction is an intra-community supply with nil VAT

Some countries have additional requirements, such as the seller listing their company registration number and address. 

EU countries require many businesses to store hard copies of invoices for a set period of time. This typically is 5-10 years.

Businesses will be required to maintain full accounting records for tax authorities to support their VAT payments and transactions. For the most part, companies’ local accounting records will be sufficient. However, some countries’ VAT accounting demands can prove challenging.

Businesses are required to submit periodic VAT returns to report taxable transactions to the relevant authorities to be fully compliant. A VAT return includes totals for intra-community supplies. All EU member states have different return forms, and set their own reporting calendar. Most countries pick either monthly or quarterly reporting depending on the volume of trade. 

Many countries now permit or oblige companies to file online. Some countries will also require an annual return, e.g. Germany and Italy.

Intrastat is the EU system for collecting trade data within the EU. The EU requires countries to impose a monthly or quarterly Intrastat reporting obligation on VAT-registered companies which separately lists all B2B intra-community supplies of goods and services. This includes sales (dispatches) and purchases (arrivals) of goods across EU borders, as well as supplies to the company itself.

Sales direct to consumers — B2C —  are not required to be listed. EU countries have varying Intrastat reporting thresholds for both dispatches and arrivals.