VAT on Digital Services via Stripe: Reverse Charge, VIES, and OSS

For digital services sold through Stripe, VAT mainly depends on two questions: is the customer a business or a consumer, and where are they established? As a rule, charge Portuguese VAT to a Portuguese customer, use the reverse charge for intra-EU B2B supplies, and apply the consumer's country VAT to B2C sales covered by OSS.

What counts as a digital service for VAT purposes?

In this context, an electronically supplied service must be distinguished from a service that is merely ordered or delivered over the internet. The former depends essentially on technology, involves minimal human intervention, and would not be viable without information technology. Automated access to a SaaS application is the usual example.

A consultancy session by video call or bespoke software development does not automatically become an electronic service because it is sold through Stripe or delivered online. The VAT Directive expressly says that communicating by email is not enough for that classification. This distinction changes the B2C rules, so the nature of the supply must be confirmed before configuring tax.

Which VAT treatment applies to each of the four customer types?

The table gives the starting point for a business established in Portugal that sells an electronically supplied service. It does not replace an assessment of fixed establishments, effective use and enjoyment, or special local rules.

For example, the same €100 subscription should not receive the same rule merely because its price and product are identical. A Lisbon company, a VAT-identified Spanish company, and a French consumer belong on different rows of this table.

When does the reverse charge apply to an intra-EU service?

Under the general B2B rule, Article 6 of the Portuguese VAT Code and Article 44 of the VAT Directive locate the service where the taxable customer is established or where the fixed establishment receiving it is located. If the Portuguese supplier is not established in that Member State, Article 196 normally makes the customer liable for the tax.

The invoice should not show a Portuguese 0% rate as though VAT had been discounted. It should reflect that the supply is not taxable in Portugal and, when the customer is liable, contain the wording “IVA - autoliquidação”, required by Article 36 of the Portuguese VAT Code. The parties' tax identification numbers must also appear when required.

Consider a Portuguese company supplying SaaS access to a Spanish company. Before applying the reverse charge, it must confirm that the customer acts as a business, that its VAT number matches the stated country, and that the service is received at that establishment. A number typed into Checkout does not decide the treatment by itself.

How should an intra-EU VAT number be checked in VIES?

VIES queries national registers to indicate whether a VAT number is valid for cross-border transactions in the EU. The check should use the country prefix and number supplied by the customer. A valid result supports the customer's identification, but does not by itself prove the nature of the service, the establishment receiving it, or all of the organisation's details.

Keep a dated record of the number and country checked, the result shown, and any reference returned, together with the associated order, contract, and billing details. This guide does not assign a statutory retention period to that record. The retention policy should be agreed with the accountant according to the obligations that apply to the business.

If VIES returns “invalid”, do not grant the reverse charge automatically. If the service is unavailable, distinguish a temporary failure from an invalid number, retry the check, and document the decision. For example, an outage one morning does not turn a business customer into a consumer, but it does not justify skipping validation either.

How does the €10,000 threshold work for EU B2C sales?

For B2C telecommunications, broadcasting, television, and electronic services, the general rule points to the consumer's country. There is an exception for a supplier established in only one Member State: if the eligible total does not exceed €10,000 excluding VAT in the current or previous calendar year, taxation can remain in the supplier's Member State.

The threshold is EU-wide and combines the covered services with relevant intra-EU distance sales of goods; it is not €10,000 per country. Once the amount is exceeded during the year, the consumer-country rule applies from that point. A business can opt into that rule before reaching the threshold, and that choice binds it for two calendar years.

A company selling €7,000 to consumers in Spain and €4,000 to consumers in France reaches €11,000 in total. It cannot assess the countries separately to remain below the threshold. Invoicing and Checkout configuration must follow the point at which the combined amount is exceeded.

What is OSS and when is its return due?

The Union scheme of the One Stop Shop, or OSS, allows a business to declare in one Member State the VAT due in several EU countries on covered B2C sales. It does not change the place of taxation or create a common rate. It centralises the declaration and payment of the amounts calculated for each Member State of consumption.

The OSS return is quarterly and must be submitted by the end of the month following the quarter. Payment has the same deadline. A return covering January, February, and March is therefore due by 30 April. The Directive requires a return for the quarter even if there were no supplies covered by the scheme.

OSS does not replace the Portuguese periodic VAT return, include domestic sales, or turn a reverse-charge B2B supply into a B2C sale. For example, the sale to a French consumer can enter the OSS return, while the earlier sale to a Spanish company follows the applicable B2B process.

Which VAT treatment applies to a customer outside the EU?

“Outside the EU” is not a VAT rate. For a B2B supply, the general rule locates the service where the taxable customer is established. For a B2C electronic service, the destination rule can also place the supply in the consumer's country. In either case, indirect taxes or registration obligations may arise there.

Effective use and enjoyment exceptions can also apply, and the answer changes if the product is not legally an electronic service. An automated subscription sold to a consumer in the United States might fall outside Portuguese VAT, but that does not justify marking every non-European sale as 0%. Determine the place first, then apply the corresponding tax configuration.

How do Stripe Tax, VIES, and OSS fit together?

Stripe Tax uses the business address, configured tax registrations, product tax code, customer location, and customer status to calculate tax in supported jurisdictions. The business must provide consistent data and enable collection where it is registered. The calculation does not replace OSS registration or the corresponding return.

Checkout checks the number's format during the session. For EU VAT numbers, Stripe then runs an asynchronous validation through VIES. However, Stripe Tax can apply B2B treatment based on the format before that validation finishes. The seller remains responsible for monitoring the status and confirming the customer's information.

The integration with invoicing software should preserve the amounts, line items, and tax behaviour received from Stripe, using the tax map configured by the business. It must not recalculate VAT from an address, postcode, or VAT-number prefix. When Stripe provides no tax data, it should use 0% with the business's configured default exemption code. Only a missing configured exemption code sends the case to manual review.

What should be tested before selling into another country?

1. Classify the service and confirm whether it is genuinely supplied electronically.
2. Separate consumers from businesses, collecting country, address, and VAT number where applicable.
3. Validate intra-EU VAT numbers in VIES and link the check record to the transaction.
4. Confirm tax registrations, the OSS election, and product tax codes before enabling calculation.
5. Simulate all four cases in Stripe and check the rate, amount, wording, and customer details on the test invoice.
6. Reconcile Stripe sales, issued documents, and totals prepared for OSS each quarter.

A test with four fictional customers, one Portuguese, one EU business, one EU consumer, and one customer outside the EU, exposes configurations copied between cases by mistake. The expected result should be approved by the accountant before the first live sale.

Which other guides complete the invoicing flow?

The guide to Stripe in Portugal, fees, and tax ID collection explains the initial payment setup. To understand why a payment processor's document does not replace a fiscal invoice, read Is a Stripe invoice valid in Portugal?

The article on invoices without a NIF and collection in Checkout covers the limits of the tax ID field. After agreeing the rules with the accountant, the guide to automating Stripe invoicing in Portugal shows how to transfer the data without creating a second VAT engine.