If yours is a UK VAT registered company selling goods or services to anyone in another EC Member State, you will normally charge VAT at a zero rate on the transaction if the sale is in line with intra-EC sales rules. These rules include the requirement that the customer supplies you with their VAT Registration Number. This does not mean that tax on the transaction disappears; it is accounted for in reports such as the VAT Return and the EC Sales List. The EC customer also accounts for the VAT that would have been paid in adherence to their State's, and EC, rules.
The "EC Sale" code should only be used when making a sale that conforms to Customs & Excise rules governing intra-EC sales. No VAT amount will be tracked on the sale. The VAT Rate and EC Reported Rate are set to 0%, as you are not collecting VAT on the sale.
Carriage costs on sales to EC customers may also need to appear on the EC Sales List report. In this case, don't put carriage costs into the carriage box on the sales entry screen; add it as a line to the invoice. Entries in the carriage box do not appear on the EC Sales List report.
Click below for the step-by-step procedure: