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How is VAT charged to buyers in the EU?
How is VAT charged to buyers in the EU?
Oleksandr Storozhuk avatar
Written by Oleksandr Storozhuk
Updated over a week ago

VAT is payable by buyers in the EU who do not have a valid VAT registration number for the following types of transactions:

  • Payment for information/advertising services.

  • Order processing fees.

If a buyer is an individual (B2C), we apply to him/her the local VAT rate applicable in his/her home country, according to the MOSS system. For example, in Estonia, the rate is 20%, but for a client in Greece, where the local rate is 24%, a tax rate of 24% will be applied.

If a buyer is a legal entity (B2B) with a valid VAT number, a 0% VAT rate will be applied and you must use the VAT reverse-charge mechanism for transactions in the EU according to Act 196 (Council Directive 2006/112/EC). The reverse-charge procedure is administered by local tax authorities. They or your accountant should provide more information about how you should account for VAT in your country.

For customers in Estonia, regardless of whether they are legal entities (B2B) or individuals (B2C), and regardless of whether they have a tax number, a local VAT rate of 20% will be applied.

Validation of VAT Registration Number

VAT Registration Numbers (EU VAT) are verified via a third-party service provided by the VIES European Commission. If you have specified a valid VAT number and received an error message “Number is invalid”, please contact support. Sometimes local tax department registries falter and it takes time to restore them.

What if you don’t have a VAT number (an exception applies in some countries)?

In some EU member states, a business does not need a VAT number to use the VAT reverse-charge mechanism for transactions in the EU. PRNEWS.IO currently works only on the basis of the necessary valid VAT registration numbers.

Can I specify another country while traveling?

Regardless of which country you are currently traveling in, you must make sure that the country you have chosen for payment purposes is your tax residence country.

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