In this article we will explain the different types of transactions between goods movement inside and outside of the European Union. 

Intra-EU acquisition (IEA) of goods

• Refers to the acquisition of moveable goods by a business in one Member State from a business in another Member State of the EU

• In these transactions the purchaser has to self account for the VAT, because the supply was made be the purchaser

• Under IEA rules the purchaser is required to self account on a reverse charge basis. This means that the business customer must account for Value-Added Tax (VAT) on the purchase of goods from other Member States. The supplier instead, in the other Member State, is considered to have made an intra-EU supply (IES).

An Intra-EU acquisition (IEA) B2B works under the following rules :

• the supply is VAT exempt in the Member State of dispatch as an Intra-EU supply (IES)

• the purchaser is liable for VAT on the acquisition of the goods

• the purchaser must account for the VAT in their VAT return by adopting the reverse charge system. The rate applicable is the rate of VAT which applies in their own Member State;

• if they are entitled to an input credit  for the VAT payable on the ICA, this is reclaimed in the same VAT return;

• the purchaser must account for VAT on any subsequent supply of the goods.

Example : A company based in Germany acquires goods from a Spanish company. The Spanish seller, after confirming the correct VIES subscription of the German buyer, sells the goods without VAT. The purchaser based in Spain will adopt the reverse charge systems to account the VAT of the purchase. 

Intra-EU supply (IES) of goods

• IES refers to the supply of goods by a business in one MS to a business in another MS of the EU

• In these transactions the purchaser is required to self-account for VAT. The purchaser self-accounts for the VAT as if he or she had made the supply themselves.

An Intra-EU supply (IES) B2B works under the follow rules:

1. the customer must be registered for VAT and VIES in another Member State

2. you must obtain and retain the customer's VAT registration number (including country prefix)

3. you must quote your VAT number and your customer’s VAT number on the sales invoice

4. the goods must be dispatched or transported to another Member State

If all above five conditions are satisfied, the sale of goods can be done with VAT exemption.  

In case of a VAT exempt sale done contrary to the rules and delivered to a VAT registered person in another Member State, the supplier will become liable and must charge his domestic VAT. 

However, if the conditions for zero-rating are subsequently established then:

1. the customer is entitled to recover the VAT he or she has paid

2. the supplier can then make an adjustment in their VAT return for the period.

Example : A company based in France sells some goods to a company based in Italy. Goods are shipped from France to Italy. The French seller, after confirming the correct VIES subscription of the Italian buyer, sells the goods without VAT. 

The place taxation is determined by where the goods are supplied, how the supply was made and and the nature of the goods : 

• If the goods are not transported, they are taxed in the country where the supply takes place 

Example: A Spanish manufacturer hires a machine in Spain from a German company and decides to purchase this machine. The place of supply is Spain rather than Germany and Spanish VAT must be charged.

• If the goods are transported / dispatched by the supplier, they are taxed in the country where they are when the transport begins

Example : German VAT will have to be charged on goods transported by the supplier himself or by a transporter appointed by him, from Hamburg to a customer in Berlin (place of supply is Hamburg).

Importation of goods in the EU from non-EU countries

When goods are imported from non-EU countries or non-EU territories, the place of taxation is determined by: 

• In principle by where the goods are at the point of entry into the EU: The taxation takes place in the country, where the goods arrive. 

Example : Dutch VAT must be paid on oil from Russia when it arrives in Rotterdam where it is declared to customs.

• If goods are put under a custom procedure, the taxation will take place in the Member state where the goods leave this custom arrangement. 

Example : For consumer goods which, upon entry into the EU in Poland, are placed under the transit procedure until their final destination in the Netherlands where the goods leave the customs arrangements, Dutch VAT will be due.

Export of goods from EU to countries outside Europe 

• “Export” means sending goods to a country outside of the EU. This may be in connection with the sale of goods, but other shipments can also be considered export.

• No general permit is required to begin exporting. However, permits are required for the export of certain goods, such as agricultural products, cultural objects and endangered species of animals and plants.

• Before exporting goods, you must submit an export declaration to EU country  Customs. In the export declaration, you must enter a commodity code for your goods, selected from the common nomenclature used in the EU. Determining the proper commodity code for your goods in accordance with the customs tariff.

• For VAT purposes, exports are goods directly dispatched to a destination outside the European Union (EU) VAT area. The term EU VAT area means the EU except for territories that are part of EU Member States but are not regarded as being part of the EU for VAT purposes.

VAT exemption for export applies for:

• all supplies of goods that are transported directly by or on behalf of the supplier to a destination outside the EU VAT area

• the supply of goods that are to be dispatched or transported directly outside the EU VAT area, by or on behalf of the purchaser of the goods, where that purchaser is established outside the State.