EU VAT for SaaS Businesses — 2026 Ultimate Guide

Selling SaaS (Software as a Service) in or to European Union requires understanding where your customer is located, how VAT applies to digital services, domestic vs. cross-border transactions, and the different obligations for B2B and B2C sales. This guide provides a comprehensive overview, including OSS, SME thresholds, registration, filing, deadlines, and country-specific requirements.

All references are aligned with the European Commission and official national tax authorities.

Why VAT Matters for SaaS

VAT is a consumption tax applied to most goods and services in the EU. SaaS services, including cloud subscriptions, APIs, AI software, and digital platforms, are considered electronically supplied services. VAT for SaaS depends on the customer's location, not the seller's.

⚠️ If your business sells SaaS to multiple EU countries, incorrect VAT application can result in penalties, interest, and compliance issues.

Understanding B2B and B2C Transactions

When analyzing VAT, the first question to ask is: Who is the customer?
The VAT treatment depends largely on whether the transaction is with a business (B2B) or a private individual (B2C).

B2B (Business-to-Business): In a B2B transaction, the customer is a company or organization, typically registered for VAT. The purchase is made in the course of business activities.
Examples:
- A company purchasing SaaS licenses for its employees
- A marketing agency subscribing to analytics software
- A startup paying for API access
VAT consequence: The business customer can generally recover the VAT charged as input tax (subject to applicable deduction rules).
B2C (Business-to-Consumer):

Learn more about how InvoiceRapid can help you manage tax processes efficiently.

Disclaimer: This guide is for informational purposes only and does not constitute legal or tax advice. Always consult the official VAT guidance published by the tax authority of the country concerned or a qualified tax professional for case-specific advice.

Country	Standard VAT Rate
Austria	20%
Belgium	21%
Bulgaria	20%
Croatia	25%
Cyprus	19%
Czech Republic	21%
Denmark	25%
Estonia	24%
Finland	25.5%
France	20%
Germany	19%
Greece	24%
Hungary	27%
Ireland	23%
Italy	22%
Latvia	21%
Lithuania	21%
Luxembourg	17%
Malta	18%
Netherlands	21%
Poland	23%
Portugal	23%
Romania	19%
Slovakia	23%
Slovenia	22%
Spain	21%
Sweden	25%

Country	Domestic SME Threshold	Notes
Austria	55,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Belgium	25,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Bulgaria	0 EUR	There is no Domestic SME VAT exemption scheme.
Croatia	60,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Cyprus	15,600 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Czech Republic	2,000,000 CZK (78,848.81 EUR)	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Denmark	50,000 DKK (6,713.66 EUR)	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Estonia	40,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Finland	20,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
France	37,500 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Germany	25,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Greece	10,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Hungary	18,000,000 HUF (58,344.95 EUR)	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Ireland	85,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Italy	85,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Latvia	50,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Lithuania	45,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Luxembourg	50,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Malta	35,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Netherlands	20,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Poland	200,000 PLN (48,001.92 EUR)	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Portugal	15,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Romania	300,000 RON (64,543.89 EUR)	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Slovakia	50,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Slovenia	60,000 EUR	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.
Spain	0 EUR	There is no Domestic SME VAT exemption scheme.
Sweden	120,000 SEK (12,206.91 EUR)	If the business opts for the Domestic SME scheme, there is a VAT exemption until the SME threshold.

Country

Domestic SME Threshold

Notes

Austria

55,000 EUR