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I am VAT registered in 2 EU states and often sell to other EU states where I am not registered for VAT as I am under the distance selling threshold. One thing is still not entirely clear to me is what VAT rate I should put on the invoice? Should it be the the rate I pay to revenue or the local rate where the customer is located?

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  • This page on the UK Government's website might be helpful. It seems focused mainly on "sales of digital services", but includes "VAT is charged at the rate due in the consumer’s country" (not certain if that applies to physical goods as well). The page was last updated before the UK left the EU, so I would imagine that would be an EU-wide rule.
    – TripeHound
    Jul 14, 2020 at 11:35
  • MOSS is for services and is optional so doesn't really apply here, though the rules may turn out to be the same in the end for VAT.
    – DominicM
    Jul 14, 2020 at 12:02

1 Answer 1

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The underlying principle is taxation in the Member State of destination. The details are available under the URL below, and depend heavily on what, how and to whom you are selling.

Where to tax?

As requested by OP in the specific context of supplying goods for distance sales if the supplier's annual sales are below the threshold applied by the customer's Member State:

Supply of goods

The place of taxation is determined by where the goods are supplied. This not only depends on the nature of the goods supplied, but also on how the supply is made.

The supply of goods is taxed at the place:

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  • where the goods are located when the dispatch or transport to the customer begins for distance sales if the supplier's annual sales are below the threshold applied by the customer's Member State (except if the supplier has opted to tax in the Member State of destination) [Article 34 of the VAT Directive]

Example 4: A French company is selling CDs via the internet to private customers throughout the EU. When CDs are sold to customers in Denmark, Danish VAT must be charged when the Danish threshold is exceeded, while Dutch VAT must be charged to customers in the Netherlands when the Dutch threshold is exceeded.

Example 5: If the annual sales by the French company (see above example 4) to customers in Belgium do not exceed the Belgian threshold, the CDs will be taxed in France.

Example 6: When the French company supplies to a customer in Luxembourg and the French company has taken the option to tax at destination, the CDs will be taxed in Luxembourg.

[...]

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  • Please add bullet point 4 from "supply of goods" section as that answer the question.
    – DominicM
    Jul 15, 2020 at 13:52

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