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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.
EU Council Directive 2006/112/EC (commonly called 'the VAT Directive') is the primary legal text governing VAT across all 27 EU member states. It defines who is a taxable person, what constitutes a taxable supply, how to determine where a supply takes place (the 'place of supply' rules), which supplies are exempt, what VAT rates apply, and how the reverse charge mechanism works. National VAT laws across the EU implement this Directive — Germany's Umsatzsteuergesetz (UStG), France's Code général des impôts, and the UK's pre-Brexit VAT Act are all implementations of the same underlying framework.
Key Articles for SaaS and Digital Services
| Article | Provision | Relevance for SaaS |
|---|---|---|
| Article 44 | B2B place of supply rule | Cross-border B2B supplies taxed where the customer is established |
| Article 45 | B2C place of supply rule | Digital services to consumers taxed where the consumer is located |
| Article 138 | Intra-community zero-rating | Conditions for applying reverse charge to B2B supplies |
| Article 196 | Reverse charge for B2B | Buyer must account for VAT when receiving cross-border B2B services |
| Article 218–226 | Invoice requirements | What must appear on a VAT invoice, including 'Reverse charge' notation |
| Article 358a–369k | OSS for digital services | Simplified registration scheme for EU consumer sales |
Article 138: The VAT Validation Requirement
Article 138 is the provision most directly relevant to VAT number validation. It requires that for a cross-border B2B supply to qualify for zero-rate treatment, the supplier must have 'taken reasonable steps to ensure that the customer is a taxable person'. In practice, 'reasonable steps' means querying VIES to verify that the customer's VAT number is currently registered — not just accepting the number the customer provides. Without this verification, zero-rating is not legally justified and the seller bears the VAT liability.
The TaxID API queries the live VIES registry in real time and returns a request_id that can be used as evidence of due diligence. Storing the API response — status, company name, address, and request_id — with each zero-rated invoice creates the documentation required by Article 138 in the event of a tax audit.
Validate EU VAT numbers via API
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