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EU VAT Glossary
Plain-language definitions of EU VAT and compliance terms — written for developers, not tax lawyers.
EU VAT legislation introduces a dense vocabulary of acronyms and mechanisms — VIES, reverse charge, OSS, DAC7, EORI — that appear in API responses, tax authority documentation, and compliance requirements. This glossary explains each term in the context a developer actually needs: what it means for your integration, when it matters, and how it maps to TaxID API behaviour.
Terms are grouped by category: Validation covers concepts directly related to checking VAT and tax IDs; Compliance covers the EU rules that determine when validation is required; Reporting covers obligations like OSS and DAC7 that flow from selling across EU borders; Customs covers identifiers relevant to cross-border goods; and Registration covers how businesses acquire and maintain tax identifiers across EU member states.
VIES (VAT Information Exchange System)
The EU Commission's official real-time system for validating VAT numbers across all 27 member states. It queries national tax databases and returns the registration status, company name, and address of any EU-registered business.
EU VAT Number
A unique identifier issued by a national EU tax authority to businesses registered for value added tax. It enables zero-rate treatment on cross-border B2B transactions and is the basis for all EU VAT compliance.
Reverse Charge VAT
A VAT accounting mechanism where the buyer — not the seller — accounts for VAT on a cross-border B2B supply. The seller invoices at zero-rate; the buyer self-assesses VAT in their own country. EU law requires VAT number validation before applying it.
B2B VAT Exemption
Zero-rate treatment applied to cross-border EU B2B supplies where the buyer holds a valid VAT number in a different member state. Not a true exemption — the transaction is still VAT-applicable; the buyer self-accounts via the reverse charge mechanism.
DAC7 (EU Directive 2021/514)
EU Council Directive 2021/514 requiring digital platform operators to collect, verify, and annually report seller income data and VAT numbers to national tax authorities. Applies to marketplaces and gig platforms with 30+ sellers or €2,000+ in facilitated transactions.
EORI Number
Economic Operators Registration and Identification number — a unique identifier for businesses engaged in customs activities within the EU. Required for importing or exporting physical goods across EU borders. Distinct from a VAT number and not validated via VIES.
EU OSS Registration
The EU One Stop Shop (OSS) scheme, introduced July 2021, allows businesses selling digital services to EU consumers (B2C) to register for VAT in one EU country and remit VAT for all EU consumer sales through a single return — eliminating the need for separate VAT registrations in each member state.
Intrastat
The EU system for collecting trade statistics on goods moved between EU member states. Required for businesses that trade physical goods above national thresholds. Does not apply to digital services or SaaS. Distinct from VAT reporting.
Standard VAT Rate
The default VAT rate applied to most goods and services in a country, ranging from 17% (Luxembourg) to 27% (Hungary) across EU member states.
Reduced VAT Rate
A lower VAT rate applied to specific categories of goods and services deemed socially or culturally important, such as food, books, and medical goods. EU reduced rates range from 5% to 15%.
Place of Supply
The tax jurisdiction where a supply of goods or services is deemed to take place for VAT purposes, determining which country's VAT rules apply to the transaction.
VAT Exemption
A VAT exemption means a transaction is not subject to VAT, either without the right to deduct input VAT (exempt without credit) or with full input VAT recovery (zero-rated).
VAT Invoice Requirements
The mandatory information that must appear on a VAT invoice under EU Directive 2006/112/EC, including supplier and customer details, VAT number, tax amount, and tax rate.
Tax ID Validation
The programmatic process of checking whether a tax identification number (VAT, ABN, UID, or similar) is legitimately registered with the issuing government authority. Tax ID validation confirms both the format and the live registration status of the number.
VAT MOSS (Mini One Stop Shop)
A simplified EU registration scheme that allows businesses selling digital services to consumers in multiple EU countries to file a single VAT return in one member state instead of registering for VAT separately in each country. Superseded by the broader OSS (One Stop Shop) scheme in July 2021.
VAT Number Format
The country-specific structure that a VAT number must follow to be considered valid. Each EU member state has a unique format: a two-letter country prefix followed by 8–12 characters that may be numeric, alphanumeric, or include specific separators. Format validation is the first step before querying VIES.
VAT Registration Threshold
The annual taxable turnover level above which a business is required to register for VAT in a given jurisdiction. Businesses below the threshold may choose to register voluntarily. For EU cross-border B2C digital services, the threshold is €10,000 per year across all EU member states combined.
EU VAT Directive
EU Council Directive 2006/112/EC — the primary legal framework governing VAT across all EU member states. It defines the rules for taxable persons, taxable transactions, the place of supply, VAT rates, exemptions, and the reverse charge mechanism. Compliance with the VAT Directive is a legal obligation for businesses selling across EU borders.
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