Understanding Intracommunity VAT

Goods sold from a taxable entity in one EU member state to a taxable entity in another EU member state are treated as exempt from VAT. The buyer is then subject to output VAT on the transaction in the buyer's own EU member state. In some cases, the buyer is entitled to recover the amount of the output VAT as input VAT.

In the JD Edwards EnterpriseOne Accounts Payable system, you record the VAT on these transactions by setting up a tax rate/area for intracommunity VAT. The VAT payable is compensated with the VAT receivable, and both amounts must be displayed in the relevant reports. The reports must also display the transactions that were exempt from VAT.

In most EU countries, you must submit various reports on VAT, including the VAT that has been exempted on intracommunity transactions. To record the exempted VAT on transactions between EU members, you need to set up a tax rate for intracommunity VAT.

To qualify for the intracommunity VAT exemption, the buyer's VAT registration number, including the European Union Member State National Identification Number, must be quoted on the supplier's invoice.