Intra-Community acquisitions: why the buyer accounts for VAT in its own country

Last updated 27 Oct 2026 · India

Short answer. Under Article 2(1)(b) and Article 20 of the VAT Directive 2006/112/EC, when goods are dispatched from one EU country to a VAT-registered business in another, the buyer makes an intra-Community acquisition. The supplier treats the sale as exempt (Article 138) if it has the buyer's valid VAT number and proof of transport. The buyer accounts for VAT at its own country's rate in its VAT return (Article 40: the place of acquisition is where transport ends) and, if the goods are for taxable business use, deducts the same amount as input VAT, so the net cost is usually zero. The buyer reports the acquisition in its domestic VAT return and keeps the supplier's invoice showing both VAT numbers.

Step by step for the buyer

Give the supplier your VAT number; check theirs on VIES.
Receive an invoice without foreign VAT that refers to the exemption.
In your VAT return, declare output VAT on the acquisition at your local rate.
Claim the same VAT as input tax if the purchase is for taxable business use.
Keep transport documents and the invoice.

Common mistakes

Paying the supplier's local VAT because the VAT number was not given.
Forgetting the output side and only claiming input.
Mixing this up with services, which follow the Article 196 reverse charge instead.

Not tax advice. This is a free explainer of the EU VAT Directive; national rules add to it, so confirm with your tax authority or adviser.

Frequently asked questions

Who pays VAT on goods bought from another EU country?

The VAT-registered buyer accounts for it in its own country, usually with an equal deduction.

What does the supplier need to zero-rate the sale?

The buyer's valid VAT number, proof that the goods left the country, and a correct invoice and EC Sales List entry.

Where is the acquisition taxed?

In the member state where the transport of the goods ends (Article 40).

Official sources

Not tax or legal advice. This is a free explainer of public rules; deadlines and rules can change by notification, so confirm on the official portal or with your CA before you file. Last checked 27 Oct 2026.

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