Intra-Community supply: everything you need to know

Are you delivering goods to a business customer in another EU country? Then you are dealing with an intra-Community supply. For many entrepreneurs, this immediately raises questions about VAT, invoicing requirements, and the associated burden of proof. In this blog, we explain exactly what an intra-Community supply is, when the zero-rate VAT applies, and the role that proof of transport plays in this process.

What is an intra-Community supply?

An intra-Community supply (ICS) is the delivery of goods by a VAT-registered business in one EU country to a VAT-registered business in another EU country, where the goods are physically transported across the border to the destination country. This is always a B2B transaction: both parties are businesses and subject to VAT.

The term ‘intra-Community’ refers to traffic within the European Union. As soon as goods cross the border to another EU country and a business transaction takes place, it is referred to as an intra-Community supply on the seller’s side and an intra-Community acquisition on the buyer’s side.

More information about the VAT rules regarding intra-Community supplies can also be found at the Tax and Customs Administration and at RVO.

When does the zero-rate VAT apply to an intra-Community supply?

In the case of an intra-Community supply, a zero-rate VAT of 0% applies under certain conditions. This means that as the seller, you do not charge VAT on the invoice. Instead, the VAT is reversed to the customer in the other EU country, who declares and offsets the VAT via the tax return in their own country.

The 0% rate is not an exemption but a zero rate. The difference is important: with a zero rate, you as the supplier retain the right to deduct the VAT you have paid on purchases related to the supply.

To be allowed to apply the zero-rate VAT, you as the supplier must be able to demonstrate that all conditions have been met. If you cannot prove this, you run the risk of the Tax and Customs Administration reversing the zero rate and issuing a retrospective VAT assessment.

Conditions for an intra-Community supply

To be allowed to apply the zero-rate VAT for an intra-Community supply, several conditions must be met:

The customer is a VAT-registered business in another EU country
The customer must have a valid VAT identification number (VAT ID) in another EU country. You are required to state this number on the invoice and validate it via the European Commission’s VIES system. Validation via VIES proves that the customer’s VAT ID was valid at the time of delivery.

The goods are physically transported to another EU country
The goods must actually leave the country of departure and arrive in the country of destination. You must be able to demonstrate this with proof of transport. An invoice or a purchase order alone is not sufficient.

The supply is made for consideration
There must be payment or compensation in exchange for the supply. In most cases, free deliveries do not fall under the zero-rate VAT for intra-Community supplies.

Intra-Community supply, VAT, and the invoice

A number of mandatory statements apply to the invoice for an intra-Community supply. You must always include:

• Your own VAT ID number
• The customer’s VAT ID (validated via VIES)
• The statement that the zero-rate VAT applies
• A reference to the legal basis, for example: “Intra-Community supply – VAT reverse-charged based on Article 138 of Directive 2006/112/EC”

In addition to the invoice, you also need accounting evidence. This includes the purchase agreement, payment confirmation, and correspondence with the customer. Together with the proof of transport, this accounting evidence forms the complete evidence file required to support the zero rate.

What proof of transport do you need for an intra-Community supply?

Since the introduction of the Quick Fixes in 2020, the rules regarding proof of transport for intra-Community supplies have been harmonized across Europe. Two categories of evidence have been established.

Category A – rebuttable presumption: If you possess at least two non-contradictory pieces of evidence from Category A issued by two independent parties, it is presumed that the goods have crossed the EU border. Category A evidence includes a signed CMR document, a bill of lading, or an invoice from the carrier.

Category B – supplementary evidence: Category B evidence can be used in combination with a Category A document. Examples include an insurance policy, bank proof of payment, or an official document from a government authority confirming arrival in the destination country.

In practice, a correctly completed and signed CMR waybill is the most commonly used and accepted piece of evidence for most EU road transport.

The CMR waybill as evidence for an intra-Community supply

The CMR waybill is the standard transport document for international road transport within Europe. In an intra-Community supply, the document plays a key role as proof of transport.

A correctly completed CMR waybill contains the name and address of the sender, the carrier, and the recipient, the description and quantity of the goods, the place of loading, and the place of destination. When the recipient signs for receipt upon delivery, this constitutes strong evidence that the goods have actually reached the destination country.

Note: the CMR waybill is proof of physical transport. It does not replace other requirements such as the invoice with the customer’s VAT ID and VIES validation. All pieces of evidence together form the file with which you can support the zero rate.

What is an intra-Community acquisition?

An intra-Community acquisition is the mirror image of an intra-Community supply. Where the seller speaks of an intra-Community supply, the buyer speaks of an intra-Community acquisition. The buyer in the destination country is required to declare the acquired goods in their own VAT return and pay the VAT due in their country.

This system ensures that VAT collection takes place in the country of consumption, in line with the destination principle applied within the EU.

What is an EC Sales List (ESL) declaration?

In addition to the regular VAT return, as an entrepreneur performing intra-Community supplies, you are required to submit an EC Sales List (ESL) declaration to the Tax and Customs Administration. In this declaration, you specify per customer the amount of intra-Community supplies you have performed in a quarter, including the customer’s VAT ID.

The ESL declaration does not relate to VAT to be paid or received but serves as a control tool for the Tax and Customs Administration to match cross-border supplies with the acquisitions declared by the customer in their country.

The declaration must be submitted no later than the last day of the month following the end of the quarter.

Special situations: collection transactions, ABC supplies, and triangulation

Not every intra-Community supply follows the standard procedure. There are several special situations that require extra attention.

Collection transaction
In a collection transaction, the customer picks up the goods from the seller themselves. In this case, the burden of proof for the seller is more difficult because the seller does not organize the transport. In this instance, the seller needs a statement from the customer confirming that the goods are being transported to another EU country, supplemented by additional evidence such as a vehicle registration document.

ABC supply and triangulation
An ABC supply involves three parties: party A delivers to B, who in turn delivers to C, while the goods go directly from A to C. This is also known as triangulation. In this case, specific VAT rules apply to prevent VAT obligations from arising in multiple countries. When in doubt, always consult a VAT advisor for these types of transactions.

Easy Road Transport and intra-Community supplies

If you deliver goods to business customers in other EU countries, correct proof of transport is essential. Easy Road Transport ensures a correct CMR waybill for every shipment, so you have the transport document you need for your VAT file.

Whether it concerns transport to Germany, Belgium, Spain, or Scandinavia, we arrange it for you. And for transport to England, where customs formalities also play a role alongside VAT rules, we help you with all the necessary documentation. Read more about transport to the United Kingdom.

Frequently asked questions about intra-Community supply