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Intra European Trade (IET)
European companies are required to declare their trade with other European companies in an addendum to
their VAT declaration. This trade is known as 'Intra European Trade' (IET).
You need to create new VAT Codes to distinguish European sales/purchases from your local sales/purchases.
You can use the VAT Wizard to setup the VAT Codes that are needed for Intra European Trade.
IET: Sale of Goods/Services
First, we're going to setup the VAT Code for the sale of goods and services to other EU countries.
All exports are excluded from VAT. The buyer needs to pay the VAT in his country.
Go to: 'VAT > VAT Wizard'
Step 1: Choose option: 'New vat code + percentage'
Step 2: Specify VAT percentage 0% and use the name: 'EU: Export of Goods 0%'.
Step 3: Check the summary and click on 'Finish'
You're not completely done, because you need to perform the same steps for the export of services.
Start the wizard again and create the VAT Code: 'EU: Export of Services 0%'
You should have the following two VAT Codes
- 'EU: Export of Goods 0%'
- 'EU: Export of Services 0%'
IET: Purchase of Goods/Services
You need to declare the VAT on imported goods/services on separate VAT Codes to distinguish them from local purchases.
You will use the VAT Wizard to create European variants of each local VAT Code.
Our European supplier will hand us an invoice that has no VAT. We're required to pay the VAT amount ourselves.
Go to: 'VAT > VAT Wizard'
Step 1: Choose option: 'New vat code + percentage'
Step 2: We will use Dutch VAT Code: 'VAT High 21% ' as an example here.
We need to create a European variant for this VAT Code. Specify name: 'EU: Import of Goods VAT High'.
Step 3: Check the summary and click on 'Finish'
You need to repeat these steps for each local VAT code.
You also need to create a services variant for each code, because you need to report the import of
goods and services separately from each other on your VAT statement.
E.g. Dutch companies will end up with the following six codes (2014):
- 'EU: Import of Goods VAT High' - 21%
- 'EU: Import of Services VAT High' - 21%
- 'EU: Import of Goods VAT Low' - 6%
- 'EU: Import of Services VAT Low' - 6%
- 'EU: Import of Goods VAT Zero' - 0%
- 'EU: Import of Services VAT Zero' - 0%
Declare Intra European Trade
You need to declare all your European imports & exports on a special IET form that your local tax agency supplies.
E.g. Dutch companies need to specify their European trade on their ICP form.
You use the Foreign Trade report when you need to declare the details of your IET form.
Go to: 'Accounting > Reports > Foreign Trade'
The report shows you the exact amount that you must declare.
The amounts are shown per customer, which is a requirement of the Dutch IET report.
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