From Dispatch to Destination: The VAT Journey of Intra Community Goods

January 15, 2026 EU VAT Update

If you are VAT registered in an EU Member State and are selling goods to business customers (B2B) you may not be required to charge VAT on the sale of the goods, if you meet certain conditions.

When Goods Can Be Sold Without VAT Within the EU

Within the European Union, goods can be sold between EU Member States without VAT (often called zero rating) in specific situations established by EU VAT rules. This Intra Community Supply (ICS) of goods, between VAT registered businesses in different EU Member States, can be supplied without VAT, with the responsibility to account for the VAT on the sale passing to the customer.

 Zero Rated Intra Community Supplies (B2B)

A sale of goods from one EU Member State to a business in another EU Member State can be made without charging VAT if all the following conditions are met:

  • The supplier is VAT registered in the EU Member State of dispatch.
  • The business customer is registered for VAT in another EU Member State other than the country of dispatch.
  • The supplier obtains and keeps the customer’s VAT number.
  • Both VAT numbers (supplier and customer) appear on the sales invoice.
  • The goods are transported from one EU Member State to another.
  • The supplier properly reports the sale in the VIES (EU VAT information exchange) system via submission of an EC Sales List.
  • A clear VAT‑exemption phrase on the invoice to explicitly state that the supply is VAT‑exempt under intra‑Community rules.
  • The supplier holds transport documents showing the goods moving from the EU member state of departure of the goods to the EU Member State of arrival.

If any of these conditions are not satisfied, the supplier must charge VAT.

What happens if the VAT free sale is incorrectly applied?

From a VAT perspective, in order not to charge VAT it is essential that the seller ensures that all conditions are met in relation to the intra community sale of goods.  It is also essential that the necessary record keeping requirements are met, around the proof of movement of the goods and the seller must retain transport documents showing that the goods have moved to the EU member state of the arrival of the goods.

In the event of a VAT authority audit, it will be required to provide the transport documents to the relevant VAT authority and failure to do so will result in the VAT exemption being rejected, meaning that the seller will require to pay the applicable VAT to the VAT authority. It may also lead to penalties being applied by the VAT authorities for non-compliance with the rules on the intra community sale of goods.

If you require any support on the supply of goods, or have any questions in relation to the above, please don’t hesitate to contact us.

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