If your business performs several transactions to a customer at the same time, like the delivery of goods (sale of a machine) and a service (its installation), it may be challenging to determine whether it should be treated as a single transaction or two separate transactions. This is relevant for tax treatment when the business is across EU lands.
Normally, the supplier should be VAT registered in the country where goods are installed, as installation is a service, and services are taxed in the country of the buyer. Nevertheless, some EU Member States, like The Netherlands, offer simplification arrangements under which if you supply goods and the corresponding installation from another EU country, there is no need to be VAT registered in The Netherlands. The intra-EU transaction of both sales of goods and providing of installation service from another EU country to the Netherlands is then intended as one transaction and ruled under the reverse charge mechanism. The question is where in the other EU lands, and under which circumstances, the simplification agreement exists and how it is applied.
As there is a lack of harmonization among EU countries to determine the aforementioned, it is crucial to understand the specifics of transactions, how the EU destination country intends the concept of installation of goods, and whether the EU country offers simplification arrangements. Our Tax team can help you apply the correct VAT treatment according to each unique case and support your business to be locally compliant.
Please contact us if you have any questions or would like our assistance!