Complete EU VAT Guide for Digital Products
Are you selling digital products or SaaS in Europe? Understanding EU VAT doesn't have to be complicated.
What is EU VAT?
Value Added Tax (VAT) is a consumption tax applied to goods and services in the European Union. For digital sellers, understanding VAT is crucial for compliance.
Key Points:
- Standard rate: 17-27% across EU
- Applied to digital services
- Customer's location determines rate
Do I Need to Register?
VAT registration requirements depend on your country's specific threshold. Each EU member state sets its own threshold for VAT registration, which varies significantly from country to country.
Understanding VAT Thresholds
VAT registration thresholds vary by country. Some examples:
- Germany: €22,000
- France: €85,800 (for services), €176,200 (for goods)
- Netherlands: €20,000
- Spain: No threshold (register from first sale)
- Luxembourg: €35,000
- Romania: RON 300,000 (approximately €60,000)
Note: There is also an EU-wide threshold of €10,000 for distance sales of goods and digital services. Once you exceed this amount, you must charge VAT based on the customer's location rather than your own location.
Once You Need to Register
When you cross your country's threshold, you need to:
- Register for VAT in your home country or use the One Stop Shop (OSS) system
- Charge the correct VAT rate based on customer location
- File quarterly VAT returns
- Keep detailed records of all transactions
VAT Rates by Country
Each EU country sets its own VAT rates within EU guidelines. Here are some examples:
| Country | Standard Rate | Reduced Rate |
|---|---|---|
| Germany | 19% | 7% |
| France | 20% | 5.5% |
| Romania | 19% | 9% |
Need help? Try our VAT Calculator or contact us.
Last updated: March 15, 2025