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If I were to buy some equipment as a d.o.o. from a site that offers business to business (b2b) payment model, I was told I would not have to pay VAT on that equipment. Note that the shop and d.o.o. are both in EU, but not in the same country.

How does that work? Would I have to pay VAT elsewhere at a later date? I do have to pay the VAT somewhere, right?

  • 1
    Hi welcome to the site. While questions about tax law are on topic here, you might find a more ready audience at personal finance and money. We (and they) need jurisdictions - 2 EU countries is not specific enough. Also, please explain your acronyms - I know (as would most people) what VAT and EU mean but you should still spell them out. d.o.o. Is a mystery to me. – Dale M Jul 20 '17 at 22:20
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You have to pay acquisition VAT.


The VAT rules (but not the rates) are standardised across the EU. Here is the UK example from VAT notice 725

3. Supplies to customers registered for VAT in another Member State

3.1 How is VAT accounted for?

The normal VAT treatment of goods supplied between VAT-registered traders in different Member States is as follows:

  • the supply in the Member State of dispatch is zero-rated (how this applies in the UK is explained in more detail in section 4), and
  • VAT is due on the acquisition of the goods in the Member State of arrival and is accounted for by the customer on their VAT Return at the rate in force in that Member State (how this applies in the UK is explained in more detail in section 7)

(my emphasis)

Section 7 is worth reading.


Here is what the EU say

What is an intra-EU supply?

An intra-EU supply of goods is a transaction in which goods are dispatched or transported by (or on behalf of) the supplier or the customer from one EU country to a destination in another EU country.

The exemption

 Case 1
 Supplier in EU country 1    Customer in EU country 2
 -------------------------   ------------------------
 Business (taxable person)   Business or
                             Non-taxable legal entity 
                             (such as public body) acting as such

the transaction is exempt (Article 138(1) VAT Directive), although there are some exceptions

When an intra-EU supply takes place, the customer makes a corresponding intra‑EU acquisition. This is a transaction that is normally taxed.

The right to deduct

Although an intra-EU supply in these circumstances is normally exempt, the input VAT incurred on goods and services used for the purposes of making that supply may be deducted by the supplier (Article 169(b) VAT Directive). This is because the corresponding acquisition is taxed.

Example

An Irish electronics manufacturer supplies circuit boards to a French company for use in the French company’s factory in Montpellier.

The Irish company’s supply is exempt from Irish VAT as an intra-EU supply. However, the input VAT the Irish company incurs is deductible.

The French company makes an intra-EU acquisition of goods, which is subject to French VAT.

(my emphasis)


Where you pay VAT and how much you pay depends on whether you (or your company) are VAT registered.

Whether you (or your company) have to be VAT registered depends on your (its) annual turnover (this is the law where I live, this may differ in other EU countries).

Example

You must tell HM Revenue and Customs (HMRC) about goods that you bring into the UK, and pay any VAT and duty that is due.

As a VAT-registered company you can reclaim VAT paid out (that's the way VAT works) but you have to charge VAT on goods produced using the equipment you purchase and when you sell that equipment.


It's probably irrelevant, but by d.o.o. I guess you mean the type of limited liability company formed in countries like Slovenia.

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  • "You have to pay acquisition VAT." - That's not (necessarily) true. If a VAT registered person buys from a VAT-registered person in another EU country, then the supplier does not need to charge VAT. This is precisely the situation the OP appears to be in. – Martin Bonner supports Monica Jan 11 '18 at 15:36
  • @MartinBonner: See updated answer. The supplier doesn't charge VAT but the purchaser has to account for VAT on "arrivals". – RedGrittyBrick Jan 11 '18 at 16:03
  • Ooo! That's much clearer. I hadn't realized "acquisition VAT" was a term of art. So if a UK firm buys from a French wholesaler (for £1000) something they sell to a consumer at an ex-VAT price of £1100: a) They have to pay £200 on the wholesale goods to HMRC; b) charge the consumer £1320 (£1100 + £220); c) pay the £220 to HMRC, but they can deduct the £200 they have already paid. – Martin Bonner supports Monica Jan 11 '18 at 16:41
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If you are VAT registered, then you don't have to pay VAT on the order from another EU country, you just have to give them your VAT number when ordering.

If you have paid that VAT, you can reclaim it back later.

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