Invoicing a Client in Another EU Country: VAT, the Reverse Charge and the One Stop Shop

The first question is not the country. It is whether the customer is a business

The VAT Directive splits services into two general rules that point in opposite directions, and the split is by the status of the customer, not by geography. Article 44 places a service supplied to a taxable person where that person has established his business. Article 45 places a service supplied to a non-taxable person where the supplier has established his business. Same service, same two countries, opposite answers — because one customer is a business and the other is not. A designer in Lisbon invoicing a Berlin agency and a designer in Lisbon invoicing a Berlin resident for the same work are in two different regimes from the first line of the invoice.

Establishing which side you are on is a documented step, not a guess. Article 18(1) of Implementing Regulation (EU) No 282/2011 lets a supplier treat a customer established in the Union as a taxable person where the customer has communicated an individual VAT identification number and the supplier has obtained confirmation of its validity and of the associated name and address, through the electronic verification system. That is what VIES is for, and the confirmation is worth keeping — a printout or a saved response, dated, per customer, refreshed periodically. A number that was valid in March and deregistered in June does not protect an invoice raised in September.

Business to business: no VAT on the invoice, but not no obligations

Under the general rule, a service to a business abroad is taxed in the customer's country and Article 196 makes the customer the person liable for the tax. Practically, you invoice the net amount with no VAT line, you state on the invoice that the reverse charge applies, and the customer both declares the VAT it owes and, where it has full recovery, deducts the same amount in the same return. The net cash effect on the customer is nil in the ordinary case, which is exactly why the mechanism exists: it removes the need for you to register in every country where you have a client, and it removes the need for your client to reclaim foreign VAT through a refund procedure.

What it does not remove is the reporting. Supplies on which the customer accounts for the tax under Article 196 go on a recapitulative statement — the listing every member state operates under its own name, filed monthly or quarterly depending on the country and the volume, showing each customer's VAT number and the total for the period. Getting the invoice right and forgetting the listing is the most common single failure in this area, because nothing about the invoice reminds you: there is no VAT to pay, no VAT to reclaim, and the only trace of the transaction in your VAT return is a box that is easy not to notice. Penalties for a missing listing are administrative rather than proportional to the tax, which does not make them small.

The categories that override the general rule

Article 44 is the default, not the whole story, and the exceptions are the ones that catch people out because they feel like ordinary business services. Article 47 taxes services connected with immovable property where the property is — that covers architects, on-site supervision, estate agency, accommodation, and rights to use property, and it applies whether or not the customer is a business. Article 53 taxes admission to cultural, artistic, sporting, scientific, educational and entertainment events where the event takes place: selling a conference ticket to a business in another country is taxed at the venue. Article 55 taxes restaurant and catering where physically carried out. Article 56 taxes short-term hire of a means of transport where the vehicle is actually put at the customer's disposal.

Immovable property is the exception with the widest reach, because so much consulting work touches a building without feeling like a property service. The line is whether the service has a sufficiently direct connection with a specific, identifiable property. Drawing plans for a named site is connected; general advice on construction law is not. Managing a specific building is connected; managing a portfolio company that happens to own buildings is not. When the exception applies, you may have to register for VAT in the country where the property sits, charge that country's rate, and file there — and the reverse charge under the general rule does not rescue you, because the general rule is not the one that applies.

Business to consumer: one EU-wide threshold of EUR 10 000, and what it does not cover

The default for a private customer is Article 45: the supply is taxed where you are established, at your rate, on your return, with nothing to do abroad. A translator in Madrid invoicing a private individual in Vienna charges Spanish VAT and stops there. That is still true today for the great majority of B2C services, and it is the part most guides forget to say, because they jump straight to the threshold. Two families of supply, and only two, leave that rule: intra-Community distance sales of goods, and telecommunications, broadcasting and electronically supplied services — software, hosting, streaming, downloads, online courses delivered without live human intervention.

For those two, Article 59c — inserted by Directive (EU) 2017/2455 and applicable since 1 July 2021, with the figure unchanged in 2026 — sets a single threshold, and it is worth reading its three conditions closely, because each of them is regularly misremembered. First, you must be established in one member state only — a supplier with a fixed establishment in a second member state cannot use the threshold at all. Second, the total is the combined value, excluding VAT, of all such supplies to customers in all other member states — not per country, not per product line. Third, the threshold must not have been exceeded in the current calendar year and must not have been exceeded in the preceding calendar year either; one year over the line closes the door for the following year too. Cross it mid-year and the supplies from the crossing onwards are taxed in the customer's country, at the customer's rate.

The One Stop Shop, and the import variant that stops at EUR 150

Once the threshold is behind you, VAT is due in each customer's country and the arithmetic gets ugly fast: twenty-six other member states, each with its own standard and reduced rates, its own filing calendar and its own language. The One Stop Shop is the answer to that and nothing else. You register once, in your member state of identification; you file one electronic return per quarter listing the taxable amounts and the VAT due country by country; you make one payment; and your own administration redistributes it. The scheme does not change what tax is due or at what rate — it changes only how many administrations you have to talk to.

There are three variants and they are not interchangeable. The Union scheme covers intra-EU distance sales of goods and B2C services by suppliers established in the Union. The non-Union scheme covers B2C services supplied by a business established outside the Union. The import scheme, usually called IOSS, covers distance sales of goods imported from outside the Union in consignments of an intrinsic value not exceeding EUR 150 — the same EUR 150 figure that makes an electronic interface the deemed supplier under Article 14a. Above EUR 150 intrinsic value, the import scheme is unavailable and the consignment goes through ordinary import VAT and customs formalities, which is a materially different logistics proposition and worth knowing before pricing a product at EUR 160.

Since 2025, a second threshold that answers a different question

Council Directive (EU) 2020/285 has applied since 1 January 2025 and rewrote the small-enterprise exemption. Until then a national exemption was national: a small business could use its own country's exemption and nobody else's, so the moment it sold across a border it was in the normal regime abroad however small it was. The new rules let a small enterprise established in one member state use the exemption available in another, subject to two ceilings — the national threshold of the state granting the exemption, which member states may set no higher than EUR 85 000, and a Union annual turnover of no more than EUR 100 000 measured across the whole Union. The enterprise notifies its own state in advance and receives an identification number for the purpose.

Do not let the two thresholds bleed into each other. The EUR 10 000 of Article 59c decides where a distance sale or a digital service is taxed, and it applies whatever your size. The EUR 100 000 of Directive 2020/285 decides whether you can be exempt from charging at all in a state where you are not established, and it applies only to small enterprises that opt in and register for it. A business can be over one and under the other. They also count different things, over different perimeters, and a spreadsheet that tracks one of them tells you nothing reliable about the other.

Frequently asked questions

My business customer abroad has no VAT number. Can I still apply the reverse charge?

In practice, no, and this is the case to be careful with. Article 18(1) of Implementing Regulation 282/2011 gives you a safe route to treating the customer as a taxable person: a communicated VAT identification number plus confirmation of its validity and the associated name and address. Without that, you are relying on other evidence that the customer is in business, which is a weaker position if the transaction is later reviewed. A customer who genuinely is in business but has no number — because it is below a national registration threshold, or exempt — is a real category, and the safest handling is to raise the question before invoicing rather than to assume either answer.

Is the EUR 10 000 threshold per country or in total?

In total, and this is the single most common misreading. Article 59c takes the combined value, excluding VAT, of your intra-Community distance sales of goods and your telecommunications, broadcasting and electronically supplied services to non-taxable persons in all other member states, and compares that one number to EUR 10 000. Sales of 4 000 to Germany, 4 000 to Italy and 3 000 to Poland are 11 000 in total and above the line, even though no individual country is close. Note also that the goods and the digital services share the same budget: you cannot have 10 000 of each.

I am below the threshold. Should I register for the One Stop Shop anyway?

You can opt in voluntarily, and there is a real case for it in two situations. The first is where your own country's standard rate is higher than most of your customers' — opting in means charging the customer's rate, which can be commercially better. The second is where you expect to cross the threshold during the year: opting in at the start of a year avoids the awkward mid-year switch, where one order changes the VAT treatment of everything that follows it and your checkout has to change rate mid-stream. The cost of opting in is a quarterly return you would otherwise not file, and a commitment that normally runs for a period rather than being reversible at will.

Does the reverse charge apply to a consultancy invoice sent to a UK or Swiss company?

The place-of-supply logic still moves the supply outside your country, so you invoice without your own VAT — but Article 196 is an EU mechanism and does not reach a customer outside the Union, so what happens on the customer's side is governed by that country's own law, which may or may not have an equivalent self-assessment rule. The practical consequences differ too: a supply to a customer outside the EU does not go on the recapitulative statement, and the invoice wording that names the EU reverse charge is inaccurate for it. Treat non-EU customers as a separate template rather than a variation on the EU one.

Can the new small-enterprise exemption save me from registering for the One Stop Shop?

Sometimes, but they are separate instruments and you have to check both. The cross-border exemption under Directive (EU) 2020/285, applicable since 1 January 2025, can let a small enterprise supply in a member state where it is not established without charging VAT there, provided its Union annual turnover stays under EUR 100 000 and it respects the national threshold of that state — which member states may not set above EUR 85 000. Where it applies, there is no VAT to declare in that state and therefore nothing for the One Stop Shop to collect. But it requires advance notification to your own member state and an identification number for the purpose, and the eligibility conditions are checked per state. It is a scheme to apply for, not a default.