> ## Documentation Index
> Fetch the complete documentation index at: https://docs.getlago.com/llms.txt
> Use this file to discover all available pages before exploring further.
# Lago EU Taxes
Lago now features an automatic European tax detection integration for your customers.
**Lago EU Taxes is a community-maintained integration.** It covers very basic European tax scenarios, but may not address every edge case or jurisdiction. If you need a complete, production-grade tax setup, we recommend using a dedicated tax provider like [Anrok](/integrations/taxes/anrok) or [Avalara](/integrations/taxes/avalara), which are natively integrated with Lago.
## Enable Lago's EU Tax integration
Activate Lago's automatic EU tax detection in just a few steps:
1. Navigate to your Lago instance **Settings**;
2. Select the **'Lago EU Tax Management'** integration;
3. Enter or confirm your organization's country; and
4. Hit **'Connect'** to activate this integration.
## Automated EU tax rates detection
When you connect the Lago EU Tax Management integration, it automatically generates a list of standard European tax rates.
These rates, labeled as `automated` in Lago, are synchronized with the latest standard tax rates for European countries,
ensuring your tax calculations are always up-to-date and compliant.
Each tax rate begins with the `lago_` prefix, ensuring a uniform and easily identifiable format across your tax rate list.
This systematic approach simplifies the management and recognition of these automated tax entries within your system.
## Auto-application of taxes: decision tree
Before applying standard B2B/B2C rules, Lago checks the customer's **postal code** to detect EU special territories — regions that are outside EU VAT territory or have reduced rates despite belonging to an EU member state. If a match is found, the territory-specific rate is applied and VIES validation is skipped.
If no special territory is detected, Lago's next step involves verifying if a customer has a `tax_identification_number`. This check occurs whenever a customer's profile is created or updated, ensuring that the most current tax-related information is used in subsequent processes.
## Special territory detection
When a customer has a `zipcode` set, Lago matches it against known special territory postal code patterns. If matched, the standard country rate is overridden with the territory's exception rate.
Make sure to set the **zipcode** on your customer profile. Without a postal code, Lago falls back to the standard country rate and special territory detection is skipped.
The following 17 territories are supported across 7 EU countries:
| Country | Territory | Tax Code | Postal Code Pattern | Rate |
| -------- | --------------------- | -------------------------------------------- | ------------------- | --------------- |
| Spain | Canary Islands | `lago_eu_es_exception_canary_islands` | 35xxx, 38xxx | 0% |
| Spain | Ceuta | `lago_eu_es_exception_ceuta` | 51xxx | 0% |
| Spain | Melilla | `lago_eu_es_exception_melilla` | 52xxx | 0% |
| France | Guadeloupe | `lago_eu_fr_exception_guadeloupe` | 971xx | 8.5% (B2B only) |
| France | Martinique | `lago_eu_fr_exception_martinique` | 972xx | 8.5% (B2B only) |
| France | Guyane | `lago_eu_fr_exception_guyane` | 973xx | 0% (B2B only) |
| France | Réunion | `lago_eu_fr_exception_reunion` | 974xx | 8.5% (B2B only) |
| France | Mayotte | `lago_eu_fr_exception_mayotte` | 976xx | 0% (B2B only) |
| Germany | Büsingen am Hochrhein | `lago_eu_de_exception_busingen_am_hochrhein` | 78266 | 0% |
| Germany | Heligoland | `lago_eu_de_exception_heligoland` | 27498 | 0% |
| Italy | Livigno | `lago_eu_it_exception_livigno` | 23041 | 0% |
| Italy | Campione d'Italia | `lago_eu_it_exception_campione_d_italia` | 22061 | 0% |
| Portugal | Azores | `lago_eu_pt_exception_azores` | 95xx | 18% |
| Portugal | Madeira | `lago_eu_pt_exception_madeira` | 9xxx | 22% |
| Austria | Jungholz | `lago_eu_at_exception_jungholz` | 6691, 6992 | 19% |
| Austria | Mittelberg | `lago_eu_at_exception_mittelberg` | 6991, 6993 | 19% |
| Greece | Mount Athos | `lago_eu_gr_exception_mount_athos` | 63086 | 0% |
**France DOM-TOM exception:** For French overseas territories (Guadeloupe, Martinique, Guyane, Réunion, Mayotte), the exception rate only applies to **B2B customers** (those with a `tax_identification_number`). B2C customers in these territories are charged the standard French rate of 20%, in line with French tax law (CGI Articles 294–296).
### B2B tax decision process
When a `tax_identification_number` is identified on a customer profile, Lago conducts a real-time verification
using the [EU's VAT Information Exchange System (VIES)](https://ec.europa.eu/taxation_customs/vies/#/vat-validation) to
confirm the existence of the company.
**In case the VIES check matches a valid company:**
1. If the customer's company is registered in the same country as your organization, Lago applies the customer
country's tax rate;
2. If the customer's company is registered in the same country as your organization, but there is a tax exception for a particular zipcode, Lago applies the tax exception of this specific zipcode; or
3. If the customer's company is registered in a different country than your organization, Lago implements a
**reverse charge** mechanism, applying a 0% tax rate.
### B2C tax decision process
If the VIES check does not confirm an active company or if no `tax_identification_number` is provided,
Lago then assesses the `country` associated with your customer. Based on this:
1. If your customer's `country` is unspecified, Lago defaults to applying your organization's country tax rate; or
2. If your customer's `country` is within the European Union, Lago applies the tax rate corresponding your organization's country tax rate; or
3. If your customer's `country` is outside the European Union, Lago applies a **tax exempt** rate at 0%.
## Guidelines for VIES checks by Lago
Lago performs VIES verifications under these circumstances:
* The Lago EU Tax Management integration is activated;
* A customer profile is either created or updated. Changes in customer details could influence their applicable tax rates;
* Zipcodes are important to define tax exceptions. Make sure to define them for all your customers; and
* When a new tax rate is identified for a customer, Lago automatically updates the customer's profile by replacing the old tax rate with the new one.
## Logging VIES verifications
Lago ensures transparency and compliance by logging each VIES check. This occurs whenever you create or update a customer.
For each check, Lago dispatches a webhook message. This allows you to record these validations for compliance purposes.
You can access and review any of these automated checks as needed.