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Intra-Community movement of goods

Intra-Community movement of goods (innergemeinschaftlicher Warenverkehr)

When the European Union internal market came into force on 1 January 1993, the customs barriers between the member countries of the European Union fell. If an item from one member state is supplied to another member state of the European Union, then the entrepreneur performing is making a tax-free intra-Community supply, provided the recipient is likewise an entrepreneur and is acquiring the item for its business. The value-added tax is levied on the customer.

Aspects affecting the seller

If a supply to an entrepreneur in another member state of the Euorpean Union is to be treated tax-free, the business performing (the seller) has to furnish various kinds of proof to the tax authorities. Amongst other things, he has to be able to prove that the item of the supply really is taken to territory belonging to the European Union, and that tax is levied when it is purchased there.

The entrepreneur making the supply may not treat its supply tax-free, if for instance the customer does not have a valid value-added tax identification number (Umsatzsteuer-Identifikationsnummer).

Aspects affecting the buyer

Tax is charged on the item when it is acquired by the entrepreneur who is the customer (the buyer). The buyer must declare all his intra-Community supplies of goods in its ongoing value-added tax return, and pay to his tax authority the value-added tax rate charged in his country. At the same time, the buyer may deduct the value-added tax on the intra-Community supply of goods as so-called input tax (Vorsteuer) from its value-added tax debt.

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© Bundeszentralamt für Steuern - 2014