Digital Nomad VAT: Where You Owe Tax When You Work from Anywhere

The short answer: for the vast majority of B2B service providers, no. Your physical location on the day you perform the work has almost no relevance to where VAT is due. The EU VAT system for services is built around the concept of establishment, not physical presence.

This is a relief for the growing number of freelancers and consultants who work from different EU countries. Whether you deliver consulting from Berlin, Tallinn, or a beach in Crete, the VAT place of supply rules look at where your business is established and where your customer is established — not where you happen to be sitting.

However, there are important nuances. If your temporary presence in another country becomes permanent enough to constitute a "fixed establishment" for VAT purposes, the rules shift. Understanding that threshold is essential for anyone working across borders.

Article 44 of the VAT Directive sets the general rule for B2B services: the place of supply is where the customer is established. The supplier's location does not factor into this determination at all.

If you are a Dutch-registered consultant working from Portugal and your client is a German company, the place of supply is Germany. The German client self-assesses VAT under the reverse charge mechanism (Article 196). You issue a reverse charge invoice with zero VAT. It does not matter that you performed the work in Portugal.

This rule applies to most professional services: consulting, software development, design, marketing, legal, accounting, and any service that is not specifically listed in the exceptions (Articles 46–59a).

For B2C services, the picture changes. Article 45 provides that the place of supply is where the supplier has established their business or, if the service is provided from a fixed establishment in another location, where that fixed establishment is.

This means your establishment determines where VAT is due. If you are established in the Netherlands and provide B2C consulting to an individual in France, the place of supply is the Netherlands — you charge Dutch VAT. Your temporary presence in Lisbon does not change this.

The critical question becomes: where is your "establishment" for VAT purposes? And could your temporary presence in another country have created a new one?

Article 11 of Implementing Regulation 282/2011 defines a fixed establishment as a place with a "sufficient degree of permanence and a suitable structure in terms of human and technical resources to enable it to receive and use the services supplied to it for its own needs" (for receiving services) or "to enable it to provide the services which it supplies" (for providing services).

The CJEU has developed substantial case law on what constitutes a fixed establishment:

Welmory (C-605/12): The court established that a fixed establishment requires human and technical resources with a sufficient degree of permanence. The concept serves to determine the place of supply, and the fixed establishment must have the resources to independently supply or receive the relevant services.

Titanium (C-931/19): A property without staff does not constitute a fixed establishment. The court ruled that a letting of immovable property in another Member State is not sufficient, on its own, to constitute a fixed establishment if the owner has no own staff there. This case is particularly relevant for digital nomads who rent an apartment but have no staff in the host country.

Berlin Chemie (C-333/20): The court clarified that a fixed establishment requires resources over which the entity has the right to dispose as if they were its own. Having a service provider in another country does not automatically create a fixed establishment — the resources must be under the entity's control.

Cabot Plastics (C-232/22): Reinforced that a toll manufacturer's resources do not create a fixed establishment for its principal, even with a long-term exclusive contract. The test requires resources that are genuinely at the disposal of the taxable person.

Crucially, Article 11(3) states that having a VAT identification number in a Member State is not in itself sufficient to constitute a fixed establishment there.

A common concern: does using a coworking space in another EU country create a fixed establishment? Based on the CJEU case law, the answer is almost certainly no for a typical digital nomad scenario.

A coworking desk or office does not meet the fixed establishment test because:

It is temporary — a month-to-month membership or a short-term booking lacks the "sufficient degree of permanence" required by Article 11. It involves shared resources that are not under your exclusive control. The coworking space provides its facilities to many businesses; they are not "at your disposal" in the way the CJEU requires. You have no own staff there — the Titanium ruling confirmed that premises without own staff do not create a fixed establishment.

However, if you rent a dedicated private office for an extended period, hire local staff, and operate autonomously from that location, the analysis changes. At that point, you may be crossing the line into a fixed establishment.

This is a frequent source of confusion. Your income tax residency and your VAT establishment are determined under entirely different rules and can be in different countries.

Income tax residency is typically based on where you spend most of your time (the 183-day rule is common) or where your centre of vital interests lies, as defined by double tax treaties following the OECD Model Convention.

VAT establishment follows the EU VAT Directive and Implementing Regulation. Article 10 of Regulation 282/2011 defines "place of business" as the place where the functions of the business's central administration are carried out — where essential management decisions are made and central administration functions are exercised. A mere postal address is not sufficient.

Article 13 defines "usual residence" for natural persons as the place where they habitually live, determined by personal and occupational ties. Where those ties are in different countries, personal ties prevail.

There is no bright-line rule for when a temporary presence in another country becomes a fixed establishment. The CJEU applies a substance-over-form analysis. However, certain factors increase the risk:

Duration: Staying in one country for months rather than weeks increases the "permanence" factor. There is no specific time threshold in the Directive, but the longer you stay, the stronger the argument for permanence.

Infrastructure: Moving from shared coworking to a dedicated office with your own equipment shifts the analysis. If you lease premises, install equipment, and operate from a fixed location, you are building the "technical resources" element.

Staff: Hiring anyone locally — even a part-time assistant — creates the "human resources" element. This is often the tipping point.

Client relationships: If you start acquiring local clients and your business increasingly depends on the host country market, tax authorities may argue the establishment has shifted.

Central administration: If you are making all your business decisions from the host country, managing your accounts there, and running day-to-day operations from that location, the "place of business" under Article 10 may have moved.

Several EU and EEA countries now offer digital nomad visas or temporary residence permits for remote workers: Portugal, Spain, Estonia, Croatia, Greece, and others. These visas explicitly contemplate the holder working for foreign clients or employers.

A digital nomad visa does not create a VAT establishment. The visa is an immigration instrument that permits you to reside and work in the country — it says nothing about your VAT obligations. Whether you have a fixed establishment for VAT purposes depends on the substance of your presence, not the type of visa you hold.

That said, some digital nomad visa programmes require you to register with local tax authorities for income tax purposes. This income tax registration is separate from VAT registration. Becoming an income tax resident does not, by itself, create a VAT establishment or trigger VAT registration obligations in the host country.

If you do not have a fixed establishment in the host country and you provide only B2B services under Article 44, you have no VAT registration obligation in the host country. The place of supply is the customer's location, and the customer accounts for VAT under reverse charge.

If you provide B2C services, the place of supply is your establishment (Article 45). If your establishment remains in your home country, you account for VAT there. No host country registration is needed.

Registration in the host country becomes necessary only when:

You create a fixed establishment there (meeting the Article 11 test). You make supplies of goods from the host country. You provide services with a place of supply in the host country under the specific exceptions in Articles 46–59a (such as services related to immovable property in that country under Article 47).