Short answer
Usually you do not charge your own VAT. A software-as-a-service subscription is a service. Where it is supplied to a taxable person acting as such, Article 44 of the VAT Directive places the supply in the customer's country, not yours. If you are not established in the customer's Member State, Article 196 makes the customer liable for the VAT under the reverse charge, and you invoice without VAT.
That result depends on three separate findings, each of which you must be able to evidence:
- the customer is a taxable person acting as such, rather than a consumer;
- the establishment that actually receives the service is in another Member State; and
- you have no fixed establishment in that Member State intervening in the supply.
If any of the three fails, the analysis changes. A consumer customer takes you to Article 58 and destination taxation. A receiving establishment in your own country keeps the supply domestic. A local fixed establishment of yours can displace Article 196 altogether.
Start with the customer's status, not the customer's VAT number
Article 44 turns on whether the customer is "a taxable person acting as such". The VAT number is evidence of that status; it is not the status itself.
The Implementing Regulation sets out how a supplier may establish it. Under Article 18(1), a supplier may treat an EU-established customer as a taxable person where the customer has communicated a VAT identification number and the supplier obtains confirmation of its validity, and of the associated name and address, through the administrative-cooperation channel. Where the customer has applied for a number but not yet received one, other proof plus a reasonable level of commercial verification can suffice.
The reverse presumption is narrower than many checkout flows assume:
"Unless he has information to the contrary, the supplier may regard a customer established within the Community as a non-taxable person when he can demonstrate that the customer has not communicated his individual VAT identification number to him." —
For electronically supplied services there is a stronger rule. Following the amendment made by Implementing Regulation 2025/518, a supplier of telecommunications, broadcasting or electronically supplied services may treat an EU customer as non-taxable for as long as that customer has not communicated a VAT identification number — and may do so irrespective of information to the contrary. For a SaaS vendor that is a practical safe harbour: no number supplied means you may charge destination VAT as if the customer were a consumer.
Private use converts a business customer into a consumer
Article 19 of the Implementing Regulation addresses the customer who has a VAT number but buys for private purposes. A taxable person who receives services exclusively for private use, including use by staff, is treated as a non-taxable person for Articles 44 and 45.
The same Article gives the supplier a workable rule of thumb: unless there is information to the contrary, such as the nature of the service, the supplier may treat the service as being for business use where the customer has communicated a VAT number for that transaction. Mixed private and business use falls under Article 44 in its entirety, provided there is no abusive practice.
For ordinary SaaS this is rarely contentious. It matters for products with a plausible consumer edition sold through the same checkout.
Identify the establishment that receives the service
Article 44 locates a B2B service where the customer has established its business. It shifts that place only where the service is provided to a fixed establishment located elsewhere:
"However, if those services are provided to a fixed establishment of the taxable person located in a place other than the place where he has established his business, the place of supply of those services shall be the place where that fixed establishment is located." —
The test is which establishment receives the service, not which one signs the order form or pays the invoice. For a group buying a single licence centrally and deploying it across several countries, the contracting entity's establishment is normally the receiving one. For a subsidiary that contracts and consumes locally, the subsidiary's establishment is.
Record the basis for the conclusion at the time of the supply. Reconstructing it during an audit three years later, from a billing address alone, is considerably harder.
Article 196 moves the liability to the customer
Where Article 44 places the supply in the customer's Member State and you are not established there, Article 196 states the consequence directly:
"VAT shall be payable by any taxable person, or non-taxable legal person identified for VAT purposes, to whom the services referred to in Article 44 are supplied, if the services are supplied by a taxable person not established within the territory of the Member State." —
Article 196 is mandatory. It does not depend on a Member State exercising an option, unlike the broader discretion in Article 194 for supplies by non-established persons generally. That is why cross-border B2B services are the most reliably harmonised corner of EU VAT.
In practice this means you issue an invoice without VAT, and the customer self-accounts in its own return, normally deducting the same amount in the same return where it has full recovery.
What your invoice and returns must show
Three operational points follow.
First, the invoice must carry the customer's VAT identification number and a reference to the reverse charge. The Directive's invoicing rules require the mention "Reverse charge" where the customer is liable for the tax. Wording that merely says "VAT not applicable" does not discharge that requirement.
Second, cross-border B2B services on which the customer accounts for VAT under Article 196 go into your recapitulative statement, alongside intra-Community supplies of goods. This is a separate filing from your domestic return and a common omission for software businesses that have never shipped goods.
Third, the One Stop Shop does not apply here. OSS covers B2C supplies. A B2B supply reverse-charged under Article 196 is reported through your ordinary domestic return and recapitulative statement, not through an OSS return.
Your own fixed establishment can break the reverse charge
Article 196 applies where the supplier "is not established within the territory" of the customer's Member State. A sales office, a local subsidiary that is not a separate contracting party, or technical infrastructure with sufficient human and technical resources can create a fixed establishment.
If that establishment intervenes in the supply, the supply may become a domestic one on which you must charge local VAT and register locally. Cloud vendors expanding into local data centres and local sales teams should test this deliberately rather than assume the reverse charge continues to hold.
Non-EU customers are a different question
Article 44 applies to taxable persons wherever established, so a supply to a business customer outside the EU is also outside the scope of EU VAT under the general rule. Article 18(3) sets out how to establish the status of a non-EU customer: a certificate from the customer's tax authority confirming economic activity, or failing that a VAT or similar business number plus reasonable commercial verification.
Separately, Article 59a permits Member States to shift the place of certain services into or out of the EU according to effective use and enjoyment. It is a national option, not an EU-wide rule, so contracts with material connections to a particular Member State should be checked against that state's legislation.
Operational checklist
- Collect and validate the customer's VAT number at checkout, and store the validation response with a timestamp.
- Record which establishment receives the service, and why.
- Apply the electronically-supplied-services safe harbour where no number is given: treat the customer as a consumer.
- Invoice without VAT, showing the customer's number and the reverse-charge reference.
- Include the supply in your recapitulative statement.
- Keep B2B reverse-charge supplies out of OSS returns.
- Re-test your establishment footprint whenever you add local staff or infrastructure.
Conclusion
Cross-border B2B SaaS inside the EU is normally invoiced without VAT, because Article 44 places the supply where the business customer belongs and Article 196 makes that customer liable. The rule is stable; the evidence behind it is where disputes arise.
Treat customer status, receiving establishment and your own establishment footprint as three findings to be documented separately at the time of supply. Where the customer gives you no VAT number, the amended Article 18(2) safe harbour lets you charge destination VAT as if to a consumer — which is usually the safer commercial default, and considerably easier to defend.
Sources
This article provides general legal information, not advice for a specific matter. Laws, facts and procedural deadlines may change the result. Follow the linked primary sources and obtain local advice before acting.