EU VAT guide

EU VAT for digital products and SaaS

Digital products and online services often create VAT questions because the customer may be in a different EU country from the seller.

Start with customer type

For B2B sales, collect and verify the customer's VAT number before deciding whether reverse charge treatment is appropriate.

For B2C sales, review whether destination VAT and OSS apply. Digital checkout flows should capture reliable customer country evidence and store enough information for audit.

Checkout checklist

  • Ask whether the customer is a business or consumer.
  • Collect VAT number and billing country for business customers.
  • Validate EU VAT numbers through VIES when reverse charge is used.
  • Apply the correct country VAT rate for B2C sales covered by OSS.
  • Keep invoice, payment, refund, and customer location records together.

Common platform cases

  • A marketplace may be responsible for collecting VAT in some transactions.
  • A merchant-of-record provider may handle VAT collection and invoicing for the seller.
  • A direct Stripe, Shopify, WooCommerce, or custom checkout flow may leave VAT configuration and record keeping with the seller.

FAQ

Can I avoid VAT by selling digital products from outside the EU?

Not automatically. EU consumer sales can still create VAT obligations even when the seller is outside the EU.

Is a payment processor the same as a merchant of record?

No. A processor moves money. A merchant of record may take legal responsibility for selling, tax collection, and invoicing depending on the service contract.

Official sources