Place of supply

What it means

Place of supply is the rule deciding in which country a transaction is subject to VAT. It is neither the address on the invoice nor the supplier’s seat - it is the outcome of a statutory test based on what is supplied and to whom.

For goods, what matters is mainly where they are at the time of supply or where transport begins. For services the basic rule differs between business and non-business customers, with exceptions for property, transport, admission to events and electronic services.

The place of supply answers only the question where, not when. When the tax arises is governed by a separate rule on the tax point. Both questions are settled for each supply separately, and when they get mixed up, an invoice may be right about the country but land in the wrong tax period.

How it works in practice

Everything else follows from the place of supply: whether tax is charged, whether reverse charge applies, whether it is an intra-EU supply, an export or a sale through OSS.

The practical routine is always the same: what is supplied, to whom (with or without a VAT ID), where the goods physically move, and where the customer is established. The answers are recorded, because they have to be provable.

A typical case: a Slovak s. r. o. writes software for a company in Germany. For a service to a foreign business, the general rule puts the place of supply with the customer, so the invoice is issued without Slovak VAT and with a reverse charge note, and the supply is reported in the EC sales list. The German customer accounts for the tax itself.

What to watch out for

Getting the place of supply wrong means tax paid in the wrong country - a double problem: an assessment where it should have been, plus an awkward refund claim where it was paid needlessly. Electronic services and online retail are where this happens most.

The business-to-business rule applies only if the customer really is a business. If its VAT number is invalid and nobody checked it in VIES, the supply may be treated as one to a non-business customer with Slovak VAT, which the supplier then pays out of its own pocket. The check is therefore done before the invoice is issued, and its result is kept.