- VAT Exemption Conditions: VAT is not applicable on transactions between registered businesses in different EU countries only if both parties possess valid VAT numbers, necessitating the use of VAT numbers for compliance with the “reverse charge” mechanism.
- Documentation and Compliance: Sellers must document cross-border transactions by including VAT numbers on invoices and reporting them in VAT returns and EC Sales Lists to ensure transactions are recognized as VAT-free.
- Trust and Avoiding Tax Issues: A valid VAT number helps establish trust between trading partners, prevents transactions from being misclassified as domestic sales—which could lead to double taxation—and ensures adherence to tax authority regulations.
Source: eurofiscalis.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
