An ESL or EC Sales List is required when a VAT registered businesses provides goods to another eu member state to another VAT registered business where the sale is subject to VAT however involves VAT exemption. The EC Sales List records all of these types of sales with detailed information involving the participating businesses and ensure the compliance and correct use of reporting. This is also known as reverse charge and allows you to report the VAT even though the invoice will sate 0% VAT.
Requirements for intra-Community transactions
It’s important to follow these guidelines when dealing with transactions in the EU:
- If your customer can provide you with a valid EU VAT Registration number, you can apply the zero rate of VAT to the sale
- The VAT will be due in the destination country from the customer on acquisition of the goods
- You must keep paperwork that shows both the seller’s and buyer’s VAT registration numbers on the invoice
- You must number your sales invoices in sequence
- You must also obtain and keep valid evidence that the goods have been removed from the UK within certain time limits to be able to zero rate
All companies, freelancers and other professionals wishing to work with intra-Community transactions, *have to be registered for VAT* in another member state in the European Union. After receiving your customer’s VAT number, you should check that the VAT number is given in the right format for that country and that it matches the customer’s name and address. By checking out the European VAT number validation system you can do a search and verify the VAT number of your customer.