EU trade: VAT ID, OSS and reverse charge explained simply

In short: When selling to other EU countries special VAT rules apply: B2B supplies with a VAT ID are mostly tax-exempt (reverse charge), B2C sales above the delivery threshold are taxed in the destination country, the OSS simplifies this.

In more detail: Whoever sells to customers in other EU countries needs more than German VAT knowledge. The rules depend on numbers and cases; here is the overview. For binding information: tax adviser/tax office/BZSt.

In Depth

Terms

• VAT ID (value-added tax identification number, DE123456789): you apply at the Federal Central Tax Office (BZSt); needed for businesses in EU trade. It differs from the tax office’s tax number.
• Intra-community supply: supply of goods to a business in another EU country (tax-exempt in DE, acquirer taxes there).
• Reverse charge: for certain B2B services the recipient owes the tax.
• VIES: EU database for checking foreign VAT IDs.
• Recapitulative statement (ZM): report of intra-community supplies to the BZSt.

B2B and B2C

• B2B (business → business): with a valid VAT ID of the customer (check, document) and proof of transport mostly a tax-exempt intra-community supply; invoice with note “tax-exempt intra-community supply” and both VAT IDs.
• B2C (to private persons): in principle German VAT, unless the EU-wide delivery threshold of €10,000 net per year is exceeded: then the VAT of the destination country applies (rates differ). The OSS (one-stop shop) lets you report and pay this tax centrally at the BZSt instead of registering in each country.
• Third countries (e.g. Switzerland, UK, USA): export, usually tax-exempt with proof; customs and import VAT with the buyer, IOSS for small consignments into the EU.

Small businesses and special cases

Small businesses (§ 19 UStG) do not charge VAT; special rules apply for the EU delivery threshold (since 2025 there are special cases for small-business exemption in other EU countries that require registration). Digital services (downloads, software, subscriptions) to private persons in the EU: taxed at the customer’s location, no threshold beyond €10,000, use OSS. Platforms (Amazon, eBay, Etsy) often enforce a VAT ID or collect tax themselves. Chain transactions and triangular transactions get complex: get advice.

Practical checklist

1. Determine customer type (B2B/B2C), check the customer’s VAT ID in VIES and save it.
2. Archive proof (shipping document, confirmation of arrival/tracking).
3. Invoice correct (mandatory details, note on tax exemption/reverse charge).
4. Evaluate revenue by country (watch the threshold).
5. Advance returns/reports on time (UStVA, ZM, OSS quarterly report).
6. Use accounting/shop software with EU tax rates (plugins).
7. Additionally observe consumer law of the destination country (withdrawal, language, packaging/EPR). Especially for beginners: first domestic clean, take on EU sales deliberately and with tax advice.

See also: VAT: rates and basic terms, Small-business rule, VAT advance return, E-invoice