EU VAT Determinator
This skill helps a finance or tax professional reason through the EU VAT treatment of a single transaction (or a small batch) and produce a clear preliminary determination memo. It walks the place-of-supply rules of Council Directive 2006/112/EC (the "VAT Directive") in the correct order, distinguishes B2B from B2C and goods from services, flags the main service exceptions, and identifies whether reverse charge, an intra-Community supply, an export, or an OSS/IOSS scheme applies. It is written for in-house tax teams, controllers, and advisory staff who need a defensible first-pass analysis to review with a qualified VAT advisor.
When to use this
- A new cross-border sale or purchase needs a VAT treatment before invoicing.
- You are reviewing whether a supplier or customer invoice applied VAT correctly.
- You need to decide whether to charge local VAT, apply reverse charge, or zero-rate.
- You are scoping VAT registration or OSS/IOSS obligations for distance sales.
- You are documenting the rationale for a treatment in an audit or tax file.
Inputs
Provide one transaction per row (or describe a single transaction in prose). Use the bundled sample samples/transactions_sample.csv as the template. Useful fields:
- Supplier country and VAT status (registered? country of establishment).
- Customer country, status (business or private individual), and VAT number if any.
- Supply type: goods or services; if services, the nature (consultancy, land-related, transport, admission to events, electronically supplied, etc.).
- Where goods physically start and end; for services, where the customer belongs.
- Whether the customer provided a valid VAT identification number.
- Net amount and currency; Incoterms if goods cross a border.
- Any installation, assembly, or transport included.
If a field is missing, do not guess silently. State the assumption explicitly in the memo and flag it for confirmation.
How to do it
Work the decision tree in this order. Do not skip steps; place of supply governs everything else.
1. Confirm taxable person and status (B2B vs B2C)
- A supply is B2B if the customer is a taxable person acting as such (Art. 9). The practical evidence is a valid VAT identification number, verifiable via the customer's national registry or the EU VIES system.
- If the customer is a private individual or a non-taxable legal person, treat as B2C unless evidence shows otherwise.
- Record the VAT number and the date it was checked. An invalid or unverified number means you cannot rely on B2B treatment.
2. Classify the supply: goods or services
- Goods = tangible property whose ownership transfers (Art. 14). Services = anything that is not a supply of goods (Art. 24). Software, data, and digital content delivered electronically are services, not goods.
- Mixed supplies: identify the principal element and any ancillary elements that follow the principal supply's treatment.
3a. Place of supply of GOODS
- Goods without transport: supplied where the goods are when the supply takes place (Art. 31).
- Goods with transport: supplied where transport to the customer begins (Art. 32).
- Then determine the cross-border character:
- Intra-EU B2B dispatch from one Member State to a VAT-registered customer in another: the supply can be zero-rated (exempt with credit) as an intra-Community supply where the substantive conditions are met (Arts. 138-139): the customer's valid VAT number in another Member State, evidence the goods physically left the country of departure, and correct reporting (recapitulative statement / EC Sales List). The customer self-accounts via an intra-Community acquisition.
- B2C distance sales of goods within the EU: place of supply moves to the Member State of arrival once the EU-wide threshold of EUR 10,000 (combined with TBE services, Art. 59c) is exceeded; below it, the supplier's domestic VAT applies. Above it, charge destination-country VAT, typically reported through the One Stop Shop (OSS) Union scheme.
- Exports out of the EU: zero-rated where evidence of export is held (Arts. 146-147).
- Imports into the EU: import VAT arises at the border; consignments of intrinsic value up to EUR 150 may use the Import One Stop Shop (IOSS).
- Installed or assembled goods: place of supply is where installation/assembly occurs (Art. 36).
3b. Place of supply of SERVICES
Apply the general rules first, then check the exceptions, which override the general rule.
- General rule B2B: place of supply is where the customer is established (Art. 44). The supplier does not charge its own VAT; the customer applies the reverse charge under Art. 196.
- General rule B2C: place of supply is where the supplier is established (Art. 45).
Main exceptions (apply regardless of B2B/B2C unless noted):
- Services connected with immovable property (land, buildings, construction, hotel accommodation, on-site work): taxed where the property is located (Art. 47).
- Passenger transport: taxed by distance covered (Art. 48). Intra-EU goods transport B2C: where transport begins (Art. 50).
- Admission to cultural, artistic, sporting, scientific, educational, and similar events: B2B taxed where the event takes place for the right of admission (Art. 53); B2C related services taxed where physically carried out (Art. 54).
- Restaurant and catering: where physically performed (Art. 55); on board ships/aircraft/trains, special rules (Art. 57).
- Short-term hiring of means of transport: where the vehicle is put at the customer's disposal (Art. 56).
- Telecommunications, broadcasting, and electronically supplied (TBE) services to B2C customers: taxed where the customer belongs (Art. 58); below the EUR 10,000 combined threshold, the supplier's domestic VAT may still apply (Art. 59c). TBE B2C is commonly reported through OSS.
- Certain Art. 59 services (consultancy, advertising, data processing, licensing, etc.) supplied B2C to a customer outside the EU: taxed where that customer belongs (outside scope of EU VAT).
4. Determine who accounts for the VAT
- Domestic supply: supplier charges local VAT at the applicable rate.
- B2B intra-EU services under Art. 44: customer reverse charges (Art. 196); supplier invoices without VAT and notes "reverse charge".
- Domestic reverse charge sectors (e.g., construction, certain electronics, emission allowances) where the Member State has opted in (Arts. 199-199a): customer accounts for VAT.
- Intra-Community supply of goods: zero-rated to the supplier; customer accounts for the acquisition.
- Export: zero-rated with evidence.
5. Reporting and registration consequences
- Note whether an EC Sales List / recapitulative statement is required (intra-EU B2B supplies of goods and Art. 44 services).
- Note whether OSS (Union or non-Union) or IOSS could replace multiple local registrations.
- Note whether a foreign VAT registration is otherwise triggered (e.g., holding stock in another Member State, B2C local supplies).
6. Document assumptions and rate
- Identify the applicable rate as standard / reduced / zero / exempt, but treat the exact percentage as country-specific and to be confirmed; do not assert a numeric rate as final.
- List every assumption made where input was missing.
Output
Produce a Markdown determination memo per transaction (or a summary table plus per-row memos for a batch). Structure:
- Header - transaction reference, date of analysis, parties and their VAT status.
- Facts - the relevant facts relied on, including VAT numbers and where goods/customer are located.
- Assumptions - explicit list of every gap filled or fact assumed.
- Analysis - the decision-tree path taken, citing the specific Articles applied (e.g., Art. 44, Art. 196).
- Preliminary determination - place of supply, who accounts for VAT, treatment (charge local VAT / reverse charge / zero-rate ICS / export / OSS / IOSS), and reporting consequences.
- Open points and caveats - what must be confirmed and the verify-with-advisor caveat.
For batches, also emit a CSV with columns: transaction_id, supply_type, b2b_b2c, place_of_supply_country, who_accounts_vat, treatment, article_basis, assumptions_flag, requires_confirmation.
Quality checks
- Did you classify B2B vs B2C from evidence (a checked VAT number), not assumption? An unverified number cannot support zero-rating an intra-Community supply.
- Did you apply service exceptions before the general rule? The general rule never overrides Arts. 47-59.
- For intra-Community supplies of goods, did you confirm the substantive conditions (valid customer VAT number, evidence goods left the country, recapitulative reporting)?
- Did you avoid asserting a final numeric VAT rate? Rates are country-specific and change.
- Did you separate domestic reverse charge (Member State option) from the cross-border Art. 196 reverse charge?
- Common errors to avoid: treating digital products as goods; forgetting the EUR 10,000 distance-selling/TBE threshold; assuming exports are automatically zero-rated without holding evidence; mixing up where transport begins versus ends.
Worked example
Using samples/transactions_sample.csv, take row T-001: Aurora Components Ltd (established in Ireland, VAT registered) sells machinery to Northwind Trading BV (established in the Netherlands, valid NL VAT number) with the goods dispatched from Ireland to the Netherlands.
- Step 1: customer is a taxable person with a verified VAT number -> B2B.
- Step 2: tangible machinery -> goods.
- Step 3a: goods with transport, dispatched Ireland to Netherlands -> intra-Community movement; with a valid customer VAT number and evidence the goods left Ireland, this is a zero-rated intra-Community supply (Arts. 138-139). Northwind accounts for the intra-Community acquisition.
- Step 4: supplier invoices without VAT, noted as an intra-Community supply.
- Step 5: report on the recapitulative statement / EC Sales List.
Preliminary determination: place of supply in Ireland (transport origin, Art. 32) but exempt as an intra-Community supply; customer self-accounts in the Netherlands. Assumption flagged: evidence of physical dispatch must be on file. Then contrast with row T-003 (consultancy to a Dutch business): B2B service under Art. 44, place of supply in the Netherlands, customer applies reverse charge under Art. 196.
Disclaimer
Disclaimer: This skill is a drafting and analysis aid, not professional advice. It does not provide accounting, audit, tax, investment, or legal advice. All output must be reviewed and approved by a qualified professional before use or reliance.
Because this is a tax skill: every generated determination or position is a preliminary analysis - verify with a qualified tax advisor. It must never be presented as a definitive VAT position. VAT rates, thresholds, registration rules, and domestic reverse charge options vary by Member State and change over time; confirm current local rules before invoicing or filing.
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