Intra-Community supplies of goods: the Article 138 exemption in practice

When goods are dispatched from one Member State to a VAT-registered business in another, the seller does not charge VAT and the customer accounts for VAT on the acquisition. The supply is exempt under Article 138 of the VAT Directive — but only if four conditions are met, and since the 2020 "quick fixes" two of them are strict.

The four conditions

1. The goods are dispatched or transported from one Member State to another, by or on behalf of the seller or the customer (Article 138(1)(a)).
2. The customer is a taxable person or a non-taxable legal person acting as such in a Member State other than the one of departure.
3. The customer is identified for VAT in a Member State other than the one of departure and has communicated that VAT number to the seller (Article 138(1)(b)) — a substantive condition since 1 January 2020.
4. The seller reports the supply correctly in its recapitulative statement (Article 138(1a)); a missing or wrong report can cost the exemption unless duly justified.

Proof of transport

The exemption stands or falls with evidence that the goods left the country. Article 45a of the Implementing Regulation (EU) 282/2011 gives a presumption when the seller holds two independent pieces of evidence — a signed CMR or bill of lading, a carrier's invoice, insurance, a bank document for the transport, or an official confirmation of arrival — issued by parties independent of each other and of the seller and customer. Keep them with the invoice.

What the invoice must show

• The customer's VAT identification number (Article 226(4)).
• No VAT, and a reference indicating the exemption — Article 226(11) accepts a reference to the Directive ("Article 138 of Council Directive 2006/112/EC"), to the national provision, or another clear indication that the supply is exempt.
• The usual full-invoice content; the supply date if it differs from the issue date.

What it is not

It is not a reverse charge: the customer accounts for acquisition VAT under Article 2(1)(b), and the mention is an exemption reference rather than "Reverse charge". It does not apply to consumers — sales to private individuals in another Member State are distance sales, taxed in the customer's country above the EUR 10,000 EU-wide threshold and declared through the One-Stop Shop. And it does not cover new means of transport, excise goods or chain transactions, each of which has its own rules.

How EUFactura does it

For a goods line to a VIES-validated business in another Member State, EUFactura suggests the exempt intra-Community supply, cites Article 138 on the PDF in the document's language and reminds you that transport evidence is yours to keep. Without a validated VAT number the line is marked for review, not exempted.