EU VAT Glossary

A plain-English reference guide to the key terms, acronyms, and concepts you'll encounter when dealing with EU Value Added Tax.

VIES (VAT Information Exchange System)

The European Commission's online system for verifying EU VAT numbers. VIES queries each member state's national VAT database in real time and returns a valid or invalid result. It is the authoritative tool for cross-border VAT validation within the EU.

VAT Number (VAT ID)

A unique identifier assigned to a VAT-registered business. Within the EU, each number starts with a two-letter country code (e.g. DE for Germany, FR for France) followed by up to 12 alphanumeric characters. The structure varies by country.

Intra-Community Supply

The sale of goods from a VAT-registered business in one EU member state to a VAT-registered business in another EU member state. When conditions are met — including verification of the buyer's VAT number — the supply can be zero-rated for VAT purposes in the seller's country.

Intra-Community Acquisition

The purchase of goods by a VAT-registered business in one EU member state from a VAT-registered business in another EU member state. The buyer accounts for VAT in their own country under the reverse charge mechanism.

Reverse Charge

A mechanism that shifts the responsibility for accounting for VAT from the supplier to the customer. Widely used in cross-border B2B transactions within the EU to simplify compliance and prevent tax fraud.

Zero Rate

A VAT rate of 0% applied to certain goods and services. Unlike an exemption, a zero-rated supply still counts as a taxable supply, meaning the supplier can recover input VAT on costs related to that supply.

VAT Exemption

Certain supplies are exempt from VAT entirely (e.g. financial services, healthcare, education). Unlike zero-rating, exempt supplies do not give rise to a right to recover input VAT.

Input VAT

The VAT a business pays on goods and services it purchases for use in its taxable business activities. VAT-registered businesses can generally recover input VAT by offsetting it against their output VAT liability.

Output VAT

The VAT a business charges to its customers on taxable supplies. The difference between output VAT collected and input VAT paid is remitted to the tax authority (or reclaimed if input exceeds output).

OSS (One Stop Shop)

An EU scheme introduced in July 2021 that allows businesses selling digital services and certain goods to consumers across multiple EU countries to register in a single member state and file one return covering all EU sales.

Distance Selling

The sale of goods by a business in one EU country to consumers in another EU country. Once cross-border B2C sales exceed the EU-wide €10,000 threshold, the seller must charge VAT at the buyer's country rate.

EC Sales List (ESL)

A periodic report that VAT-registered businesses must submit listing all intra-community supplies of goods and services made to VAT-registered customers in other EU member states.

Intrastat

A statistical reporting system collecting data on physical movement of goods between EU member states. Businesses exceeding national thresholds must file Intrastat returns.

Tax Point

The date on which a VAT liability arises — usually when goods are delivered or services performed, though advance payment can also create a tax point.

Fiscal Representative

A locally established business or professional appointed to handle VAT obligations on behalf of a non-EU company trading in an EU member state.