First of all, before discussing the topic, let’s recall what the definition of VAT or value-added tax is. It is a tax that is generally included in the sale prices of goods or services and is paid by consumers.

The VAT number of a company, also known as the intra-community VAT number, is a number assigned to this company to facilitate the import and export of goods or services between companies located in different countries of the European Union. This individual number allows for the identification of the company at the European level to facilitate the exchange and payment of VAT according to the country.

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It is issued by the tax administration of the country of residence of the concerned company at the time of registration or declaration of activity. The structure of the intra-community VAT number is specific to each country.

  • For example, in France, it consists of the code FR and 11 digits (2-digit computer key and 9-digit SIREN number of the company).

Since 1993, it has been mandatory for companies that trade goods or services within the European Union, and the intra-community VAT is subject to certain strict rules, which vary depending on the goods exchanged, the country with which the exchange takes place, or the value of the transactions.

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A company subject to VAT must have an intra-community VAT number and its own tax identification number, which appears on invoices, declarations of exchange of goods, and VAT returns. However, it should be noted that a company that is not subject to VAT must apply for an intra-community VAT number for certain operations.

Can we be guided to think about how it works?

First of all, it concerns the purchase (acquisition) or sale (delivery) of goods or services to a company established in another EU country. Its primary goal is therefore to standardize tax regimes among all member states of the European Union.

To this end, two main principles apply to intra-community VAT:

  • If we take the case of France, intra-community deliveries of goods shipped from France are exempt in France.
  • Intra-community acquisitions of goods shipped to France are taxable in France.

These basic rules apply to all companies, regardless of their status. Micro-enterprises, exempt from VAT in France, are also covered by this intra-community system, provided that the exchanges exceed 10,000 euros.

To obtain its intra-community VAT number, the company must have its intra-community VAT number (the identification number) at the general directorate of taxation.

The application for the allocation of an intra-community VAT number must therefore be processed:

  • By registered letter with acknowledgment of receipt,
  • By a company executive,
  • To the tax authority of the company (SIE) of the place of registration of the company.

Here is a sample letter:

Name and surname of the officer.

  • Company name.
  • Company address.
  • Business tax service of (city).
  • Address of the SIE.
  • (city), on… (date).
  • Subject: Request for intra-community VAT number (company name)

By registered letter with acknowledgment of receipt

Dear Sir or Madam.

I would like to request the allocation of an intra-community VAT number to the company (company name):

  • (SARL, SAS, EURL,…) with a share capital of (amount of share capital) euros
  • Registered with the RCS of… (registration location) under the number (RCS number)
  • The registered office is located at… (registered office address)
  • And whose purpose is as follows (take the corporate purpose as stated in the statutes)

Thank you for considering my request and I ask, Madam, Mr. President, to accept the expression of my respectful sentiments.

  • Name and surname of the official
  • Company name
  • Signature

For the allocation of an intra-community VAT number, the intra-community VAT number is issued upon registration or declaration of your company with the Commercial Formalities Center (CFE) to which you belong. This number is assigned free of charge by the company’s tax administration (SIE), even after obtaining the SIREN number. It should be noted that this question is unique, national, and, above all, immutable.

Following this allocation, it is important to recall that the intra-community VAT number guarantees and facilitates commercial transactions between EU companies. To this end, it identifies the companies involved, simplifies customs procedures, verifies, and refunds VAT for deductible VAT.

The intra-community VAT number must appear on:

  • the company’s invoices regardless of the place of sale or service concerned;
  • Declarations for the trade of goods (DEB) or services (DES);
  • VAT returns of the company.

Regarding the operations in question, French VAT is subject to the entry or importation of community goods into the national territory of the Community. The VAT charged by the buyer of the goods or the buyer of the service. However, it is possible to deduct the VAT charged under certain conditions. In particular, invoicing rules must be respected. They must indicate the price excluding taxes and the intra-community identification numbers of the supplier and the buyer.

It should be noted that some companies may benefit from an intra-community VAT exemption scheme, such as those that are deductible under the debt.

In the case of intra-community deliveries, the shipment of goods from France to a country in the European Union is normally subject to French VAT. However, sales are exempt from VAT provided that the following conditions are met:

  • The seller and the buyer are subject to VAT;
  • The transaction must be taken into account;
  • You must be in possession of the buyer’s identification number;
  • You must have proof of transport of goods out of France.

The place of importation for VAT is determined by the place where the pickup took place. The corresponding acquisition is therefore subject to the applicable VAT rates in the relevant European country. To protect yourself against fraud, you can verify the validity of a business partner’s VAT number within the European Union via the European Commission’s automated VAT information exchange system (VIES).

It should be noted that companies subject to VAT exemptions must apply for the allocation of an intra-community VAT number if they intend to sell or purchase services from companies established in the European Union or if their acquisition amounts (goods, goods) exceed the threshold of 1000 euros.

Invoices with an amount less than or equal to 150 EUR, excluding taxes, cannot contain a VAT identification number. However, this exemption measure does not apply to cases of distance selling, intra-community deliveries, and exempted goods transfers, as well as intra-community deliveries of new means of transport exempted from intra-community deliveries.

However, it seems preferable to include the identification number on all invoices to avoid omitting the copy if the amount exceeds the threshold of 150 EUR.

How to calculate your intra-community VAT?

It would be best to specify that the calculation of a classic subject remains. If, in the case of conventional VAT, the calculation method remains relatively simple, concerning intra-community VAT, it can be more complicated. Indeed, VAT rates vary from country to country, so it is important to understand the basics to anticipate the future.

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So, how to do the accounting records without making a mistake in the VAT calculation?

To answer this relevant question, we will explain all the steps related to the calculation of intra-community VAT and its subtleties. The calculation of intra-community VAT is performed based on the place of residence of the selling company. When a company subject to VAT in the European Union purchases goods or goods from another company. The seller bears the intra-community VAT. The intra-community VAT number is therefore essential because everything is based on this number.

Preceded by the relevant country code, for example FR for France, it has two computer keys followed by the company’s SIREN number, consisting of nine digits.

Normally, this intra-community VAT code is provided by the tax authorities when the tax identification number is issued. It must be included in the invoice at the time of purchase or sale. To avoid problems, it is highly recommended to verify the intra-community VAT code of your business partners. The intra-community VAT number will be used to recover the VAT spent abroad, so its role in calculating the VAT due and in the VAT credit is essential.

If the company is located in France and the client is located in another country of the European Union, the French VAT rate applies to the latter. Otherwise, the VAT rate applies in the beneficiary country.

The VAT calculation is based on the VAT price to which the VAT rate is added. There are different VAT rates that vary from country to country.

  • For example, a product sold in France costs 100 euros excluding tax, the VAT is 20%, so we have 100 euros x 1.2 (20%) = 120 euros.

Like so-called traditional VAT, the calculation of intra-community VAT is based on the rates applied by the country where the goods are delivered.

See below the variable VAT rates in Europe:

  • Standard VAT: each country has a standard VAT rate, according to the applicable country. This can vary significantly depending on the country in which it is implemented, and this situation will have a significant impact on taxes and on the selling or purchasing price. It is therefore very important that you do not get it wrong.
  • Reduced VAT: the reduced rate is intended for products and services of general interest (for example: agricultural products, certain foodstuffs, personal emergency services, renewable energies, etc.)
  • Super reduced VAT: The super-reduced intra-community VAT rate mainly applies to certain treatments and medications covered by social security. In general, the more basic the product technology is, the less it is taxed on VAT.

Regarding the authenticity of a company’s DEBT number, it is necessary to verify the authenticity of an intra-community VAT number, given that intra-community deliveries of goods are exempt from VAT in the member state of departure, provided that they are delivered to another member state to a taxable person who pays VAT in the member state of origin of the destination of the goods. Otherwise, the seller will have to pay VAT personally.

The intra-community VAT number of the taxable person must also appear on the invoices issued by the taxable person.

To find the intra-community VAT number of a company, double-click on “Access Service,” then search for a company, which is indicated on the company’s identity card. It is then possible to verify the validity of this number on the official website of the European Commission (automated information exchange system on DEBT).

To declare intra-community VAT, companies must, in addition to the invoice, submit a monthly declaration of exchange of goods or exchange of services to the customs authorities of their country based on the nature of their activity. The declaration for the exchange of goods (DEB) refers to companies that sell or purchase goods from another EU country. This document replaces customs declarations and summarizes all declarations (purchase and sale) with foreign partners.

Source: gestion-entreprise.info

Intracommunity VAT: what is it for?