{"id":5949,"date":"2026-07-21T17:15:15","date_gmt":"2026-07-21T15:15:15","guid":{"rendered":"https:\/\/leyton.majjane.agency\/be\/?post_type=article&p=5949"},"modified":"2026-07-26T17:05:55","modified_gmt":"2026-07-26T15:05:55","slug":"supply-assembly-installation-in-the-eu-could-be-costing-you-vat","status":"publish","type":"article","link":"https:\/\/leyton.com\/be\/en\/insights\/articles\/supply-assembly-installation-in-the-eu-could-be-costing-you-vat\/","title":{"rendered":"Supply, Assembly & Installation in the EU: Could be costing you VAT!"},"content":{"rendered":"\n

If your business sells machinery, equipment or other goods that require installation or assembly in another EU Member State, your VAT obligations may be far more complex than they appear.<\/p>\n\n\n\n

Many businesses discover too late that the physical presence of staff or even subcontractors on a site can change where VAT must be taxable and who is responsible for its payment.<\/p>\n\n\n\n

The EU VAT Directive 2006\/112\/EC is full of nuances that can quickly turn a straightforward sale into a compliance challenge. Articles 36, 47 and 194 are especially relevant when managing supplies that involve both goods and on-site work. Understanding how they interact is critical to avoiding unnecessary VAT registrations, delayed refunds, or, in the worst cases, double taxation.<\/p>\n\n\n\n

The Core Principle: Installation Determines the Place of Supply<\/h2>\n\n\n\n

Under Article 36 of the VAT Directive, when goods are installed or assembled by (or on behalf of) the supplier, the place of supply is deemed to be the country where the installation or assembly occurs.<\/p>\n\n\n\n

In practice, this means VAT is usually due in the country of installation, often where a foreign supplier has neither a permanent establishment nor a VAT registration.<\/p>\n\n\n\n

However, the analysis becomes more complex: where the installation forms a permanent part of a building as, for example, lifts, embedded pipelines, or fixed wiring, the supply may instead fall under Article 47 as a service connected with immovable property. By contrast, freestanding machinery or equipment that does not become an integral part of the building will generally remain classified as a supply under Article 36.<\/p>\n\n\n\n

Further considerations are required when discussing cases of temporary installations or involving goods not owned, and other special situations.<\/p>\n\n\n\n

Determining which rule applies is not just a legal exercise: it directly affects how you invoice, whether you need apply reverse charge to your customers, or whether you should start planning for a VAT registration.<\/p>\n\n\n\n

Reverse Charge or Local Registration?<\/h2>\n\n\n\n

Article 194 allows Member States to shift VAT liability to the customer when the supplier is not established locally. In these cases, if the domestic reverse charge mechanism applies, you can invoice without VAT and avoid a local VAT registration.<\/p>\n\n\n\n

However, not every country implements Article 194 in the same way. For general supplies of services, the rule is mostly uniform inside the EU, but it complicates when considering goods with installation or immovable property \u2013 you need to examine specific provisions, otherwise it\u2019s safe to assume VAT is due.<\/p>\n\n\n\n

Where reverse charge is not available, suppliers may face the need for local VAT registration and VAT-charged invoicing. And if you incur local input VAT on costs (e.g., subcontractor services, materials, or accommodation), reclaiming it may require a slow and paperwork-heavy refund process under the 8th<\/sup> or 13th Directive refund mechanisms. Depending on the value of input VAT, local registration might be the more efficient route.<\/p>\n\n\n\n

Practical Steps: Align Contracts and Reporting<\/h2>\n\n\n\n

Your contracts and invoices should always reflect your VAT assessment:<\/p>\n\n\n\n