Intra-Community VAT concerns transactions between businesses located in different European Union countries.
This article explains how to identify an intra-Community transaction and why these rules do not apply to a sale between two French businesses.
1. What is intra-Community VAT?
Intra-Community VAT refers to the tax rules used for transactions involving goods or services between businesses located in different European Union countries.
VAT-registered businesses can be identified using an Intra-Community VAT number, also known as an EU VAT identification number.
⚠️ The term intra-Community means that the transaction takes place between two different EU countries.
For example:
a French business sells to a German business
a Spanish business sells to an Italian business
a Belgian business invoices a French business
Depending on the circumstances, specific VAT rules may apply based on the customer type, the countries involved, and the nature of the transaction.
2. Why does it not apply between two French businesses?
Intra-Community VAT does not apply when a French business sells to another French business because the transaction does not involve two different EU countries.
It remains a domestic sale.
In this case:
the seller applies the usual French VAT
the customer pays the VAT shown on the invoice
French invoicing rules apply
Example
A business based in Lyon provides a service to another business based in Bordeaux.
Even when both businesses have an EU VAT identification number, the transaction remains a French domestic sale.
The invoice must therefore include the applicable French VAT.
3. How can you tell whether a sale is intra-Community?
For a sale to be considered intra-Community, several criteria generally need to be met:
the seller and customer are located in different EU countries
the transaction takes place between those two countries
in certain B2B cases, the customer has a valid EU VAT identification number
When both the seller and customer are located in France, the sale is not intra-Community.
FAQ
Is an EU VAT identification number enough to remove VAT from an invoice?
Is an EU VAT identification number enough to remove VAT from an invoice?
No. The fact that a business has an EU VAT identification number is not sufficient on its own.
The transaction must also involve two different EU countries, and the relevant VAT conditions must be met.
Should I charge French VAT when my business customer is located in France?
Should I charge French VAT when my business customer is located in France?
Yes. When your customer is a French business, you generally apply the usual French VAT.
Is a sale between France and a non-EU country an intra-Community transaction?
Is a sale between France and a non-EU country an intra-Community transaction?
No. Intra-Community VAT applies only to transactions within the European Union.
Are the rules the same for goods and services?
Are the rules the same for goods and services?
Not always. Some tax rules vary depending on the nature of the transaction and the countries involved.
When in doubt, consult your accountant or tax adviser.
How can I check whether an EU VAT identification number is valid?
How can I check whether an EU VAT identification number is valid?
You can verify it using the European Commission’s VAT Information Exchange System (VIES)