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Where the buyer is in the same EU State as the seller, VAT is charged on all Business to Business (B2B) and Business to Consumer (B2C) sales at the rate applicable in that EU State.
Where the buyer is in a different EU State to the seller, and the sale is B2B, where the buyer can provide a valid VAT Number the transaction is currently 'zero rated' (the seller passes the responsibility for reporting the transaction to the buyer). When no valid VAT Number is provided then the VAT is charged at the rate applicable in the seller's EU State.
B2C sales, whether the buyer is in the same EU State as the seller or another, are charged at the rate applicable in the seller's EU State.
The new Place of Supply Rules will ensure that VAT is paid in the Member State of the final consumer, leading to a fairer distribution of tax revenues amongst EU Member States. This is scheduled to be introduced in 2021.
At present, non-digitally delivered goods and services are dealt with under the VAT Rules operating where the Seller is based.
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