Intra-Community Supply and Acquisition: EU Cross-Border VAT Basics
How goods move between EU member states without VAT, the four conditions for zero-rating, the acquisition entries on the buyer's side, and the evidence that protects the exemption.
When goods move from a business in one EU member state to a business in another, there is no import and no export — the internal market has no customs frontier. Instead the transaction is split into two halves that must mirror each other:
- Intra-Community supply (ICS) — the seller's side, zero-rated.
- Intra-Community acquisition (ICA) — the buyer's side, taxed in the destination country by self-assessment.
The tax ends up where the goods end up. The seller charges nothing; the buyer accounts for their own VAT.
The seller's four conditions
Zero-rating is not automatic — it is an exemption you must earn, and the burden of proof sits with the seller. Four conditions:
- The goods physically leave the member state of departure for another member state.
- The customer is a taxable person in another member state, identified by a valid VAT number — checked at the time of supply.
- The customer's VAT number is quoted on the invoice, and the invoice carries a reference to the exemption.
- The supply is reported in the recapitulative statement (EC Sales List).
Since the 2020 "quick fixes", conditions 2 and 4 are substantive rather than formal: a valid VAT number and correct EC Sales List reporting are conditions of the exemption itself, not paperwork you can fix later. Get them wrong and the supply is taxable at your domestic rate — payable by you, out of your own margin, because the customer will not accept a retrospective VAT charge.
Evidence of transport is the practical weak point. You must be able to prove the goods left. CMR consignment notes, carrier invoices, signed delivery confirmations, insurance documents. Ex-works sales where the customer collects are the hardest to defend, because you never touched the transport — a written collection confirmation from the customer is the minimum.
The entries
Seller (Lithuania → Germany, 5,000 € of goods):
| Account | Debit | Credit |
|---|---|---|
| 2410 Trade receivables | 5,000 | |
| 5000 Goods revenue | 5,000 |
No VAT. The invoice shows the customer's German VAT number and an exemption reference.
Buyer (in Germany) records the purchase and self-assesses acquisition VAT at the German rate:
| Account | Debit | Credit |
|---|---|---|
| Goods / inventory | 5,000 | |
| Trade payables | 5,000 |
| Account | Debit | Credit |
|---|---|---|
| Input VAT | 950 | |
| Output VAT (acquisition) | 950 |
Net cash effect zero for a fully recovering buyer — the same self-assessment logic as reverse charge, and with the same caveat: a buyer who cannot fully recover input VAT bears a real cost.
Goods versus services, B2B versus B2C
The terms intra-Community supply and acquisition apply to goods. Cross-border services between businesses are handled by the general place-of-supply rule and reverse charge — same economic outcome, different legal machinery and different boxes on the VAT return.
And all of this is B2B only. Selling goods to a private consumer in another member state is a distance sale: you charge the destination country's VAT once you exceed the EU-wide €10,000 threshold for cross-border B2C sales of goods and digital services, and report it through the One Stop Shop rather than registering in each country. Below the threshold you may keep charging your domestic rate.
That threshold is a single annual total across all member states, not a per-country allowance — one of the most common misreadings.
The reporting obligations
An intra-Community supply generates up to three separate filings:
- VAT return — the zero-rated supply in its own box.
- Recapitulative statement (EC Sales List) — per-customer totals by VAT number, so the tax authorities can cross-match your declared supply against the buyer's declared acquisition. This cross-matching is the entire control mechanism of the system.
- Intrastat — statistical reporting of physical goods movements, once you exceed national thresholds. Statistical, not fiscal, and separate from both of the above.
ViDA abolishes recapitulative statements from 1 July 2030, replacing them with digital reporting drawn from e-invoices — the same cross-matching, done transaction by transaction and in near real time.
How Nordlet handles it
The VAT engine resolves intra_eu_b2b when a company supplies goods to a VAT-registered business in another member state, producing a zero-rated line, the customer's VAT number and an exemption reference on the invoice.
Condition 2 is enforced rather than assumed: partner VAT numbers are validated against VIES, the full response is stored, stale results are re-checked before an invoice is issued, and failures open a review queue instead of blocking the sale. Each issued invoice freezes a VAT evidence snapshot containing that VIES response and its timestamp — which is precisely the evidence you need years later if the exemption is questioned.
The supply flows into the VAT return box for zero-rated intra-Community supplies (field 18 in Lithuania's FR0600, Kz 41 in the German UStVA, P_21 in Poland's JPK_V7M), and Intrastat reporting is implemented for Lithuania with obligation tracking against the national thresholds.
Two honest gaps. The recapitulative statement (EC Sales List) is not generated — the underlying data is all present, but the national form is not produced, so it remains a manual filing. And transport evidence is not managed: the CMRs and delivery confirmations that defend the zero rate live in your document storage, not in a structured evidence register.
FAQ
What is an intra-Community supply?
A sale of goods from a VAT-registered business in one EU member state to a VAT-registered business in another, with the goods physically moving between them. It is zero-rated for the seller, and the buyer accounts for VAT in the destination country.
Why is my intra-Community supply zero-rated?
Because the tax belongs in the country where the goods are consumed. The seller charges nothing and the buyer self-assesses at their own rate, which keeps the tax with the destination without requiring the seller to register there.
What happens if the customer's VAT number is invalid?
The exemption fails. Since the 2020 quick fixes a valid VAT number is a substantive condition, so the supply becomes taxable at your domestic rate — and you owe that VAT even though you never charged it. Validate before invoicing.
Do I need to report intra-Community supplies separately?
Yes — in a dedicated box on your VAT return and in the recapitulative statement (EC Sales List), which tax authorities use to cross-match your declared supply against the buyer's declared acquisition. Intrastat may apply on top once thresholds are exceeded.
Does this apply to services and to consumers?
No. Services between businesses use the general place-of-supply rule with reverse charge, and sales to consumers are distance sales, taxed at the destination rate above the €10,000 EU-wide threshold and usually reported through OSS.