Contrary to other taxes that are developed separately and levied by each country, VAT, value added tax, is a European tax that has its own rules laid down in the EU VAT Directive which each EU Member State must implement.

If there is one tax that is truly international, it is VAT

The VAT Directive gives the blueprint which the member states must transpose in their domestic law. A uniform interpretation of the VAT rules across the European Union is guaranteed by the decisions of the European Court of Justice.

Contrary to domestic taxes that are mostly imposed without any special regard for issues of double taxation, the VAT Directive has very specific rules to avoid that VAT is due in two jurisdictions at the same time. There are detailed rules that determine where VAT is due when goods are sold from one country to another, or when a company provides services for a client in another country.

The rules on intracommunity supply of goods and services are very detailed, but the VAT-payer cannot afford to misread these rules. It is ultimately his responsibility to apply these correctly. If he issues a zero VAT invoice by mistake, he may have to pay the VAT with fines and interest.