If you’re operating an EU VAT-registered business and are selling goods and services to other VAT-registered businesses in the EU, you need to submit EC Sales List (ESL) returns on a regular basis (monthly, quarterly or annually).
You don’t owe taxes when submitting an ESL declaration, but it’s still an important obligation in the EU that you need to comply with, otherwise you risk fees and penalties.
In some EU member states, such as Poland, Hungary and Spain, you also need to declare the supplies you’ve purchased from other countries within the EU. This return is referred to as the EC Sales and Purchases List (ESPL).
What do you need to include in your ESL declaration—and how often do you submit it?
The ESL should contain the following information:
- Your customers’ names and VAT numbers
- The country codes of their countries of tax residence
- The amounts of the cross-border transactions
Each country has different rules for the frequency and deadlines for submitting your ESL or ESPL declaration. It can be a monthly, quarterly or annual submission, based on specific thresholds, so you need to check this in the country where you’re operating.
All VAT numbers (yours and those of your customers) need to be VIES-registered (VIES is the EU VAT Information Exchange System). In essence, this means that the ESL declaration only contains zero-rated intra-EU transactions.
What are the differences between ESL and Intrastat?
Intrastat is another reporting obligation you have for your intra-EU transactions, however, it’s only used for statistical purposes. You submit it to statistics institutes or authorities, and also to customs. It’s used to track intra-community trade flows by collecting data on the movement of goods in the EU.
Contrary to that, ESL is a tax return that you submit to your tax office. Both contain different sets of information. Intrastat declarations are very detailed, and feature additional information such as:
- Commodity codes
- Transport means
- Country of origin and destination country
As we could see, ESL declarations only contain information on your customers’ names, VAT numbers, countries, and the value of cross-border transactions. In the ESL, however, you also need to include services, while Intrastat is only for products.
Specific exemption thresholds apply for Intrastat: under those limits, you don’t need to file an Intrastat declaration. Contrary to that, for the ESL, there’s no minimum threshold: if you have intra-community transactions with other VAT-registered businesses, you need to file an ESL, regardless of the total transaction amount.
Intrastat is submitted on a monthly basis, while the frequency of filing of the EC sales list depends on each country’s rules and thresholds. In most cases, the ESL list is filed in the country of origin, while Intrastat is filed in the destination country.
Do you need to charge VAT on B2B sales within the EU?
If your customer is VIES-registered, you don’t need to charge VAT, as the reverse charge mechanism applies. Your customer would be the one who needs to report VAT on this transaction. For this, however, you need to make sure that your customer is registered in the VIES system.
Checking Your Customers’ Tax ID
At Fonoa, we have developed a platform that allows companies to meet their tax compliance obligations across the world in a plug-and-play manner. With our Lookup tool, you can automatically (via API) validate tax numbers from your customers and suppliers in different countries. Our proprietary technology has several verification methods built-in and leverages direct connections with tax authorities across the globe. This way, you can be sure you have done anything you can to validate your customers’ tax status.
Reach out to us, and we will be happy to help you.