EU Vat can be an area of confusion for many people, however here are some tips to make things clearer for sellers and buyers alike.
Tip #1: EU VAT Rules Differ According To The Country
Despite the European Union being considered as a single market, each country in the EU is responsible for its specific collection of VAT. This means that the 28 countries utilize 28 different types of EU VAT rates, goods rates, means of EU VAT collection, and frequency of reporting and filing – all dependent on the country.
Tip #2: Amazon Can Assist You In Selling Products In The EU
Amazon occupies five marketplaces within the EU, along with 31 Fulfilment Centers distributed over seven different countries. This means Amazon has access to a market of approximately €500 billion, and the market continues to grow at 12% per annum. At the moment, there are five different programs offered by Amazon to help you begin successfully selling products in Europe.
Tip #3: You Will Need To Pay EU VAT On All Inventory Up-Front
VAT, also known as value-added tax, will be charged at your first point of entry if the products are above the low-value consignment threshold – an amount that is a maximum of $20. To avoid this problem, you need to decide who will be responsible for the product import rates – you or the consumer.
If you have exported from the United States in previous years, and did not experience any of these import charges, it is likely that the consumer will be considered an “importer of record”. This is not a beneficial experience, as it means that the consumer will need to pay duties or EU VAT before products are delivered to them.
On the contrary, by voluntarily registering for EU VAT, you will be considered the importer of record as a retailer. This means that the product will be sent with the import duty charges already paid, and the customer will not be impacted financially in any way.
Tip #4: You Require An EORI Number To Export Goods To Europe
The Economic Operator Registration and Identification (EORI) number is a unique number utilized through the European Union as a means of identifying the product important to the EU customs authorities. This number is required on all import documentation as a means of identifying the importer. You can learn more about how to obtain an EORI here.
Tip #5: Any Inventory Stored In The European Union Must Be Registered For VAT
Holding any stock in a country that is part of the EU triggers an automatic requirement to be VAT registered. For example, if you are utilizing Amazon’s EFN service in a single EU country, such as the United Kingdom, you will require a single VAT registration where the products are being held. However, if you hold stock in various countries, you will need to be registered for VAT in each separate country. Look at this post on French Vat to get an idea of what’s involved.
Tip #6: You Will Require Legal Representation In Certain Countries
Within all non-EU countries, it is important to acknowledge that you will require fiscal representation should you register for VAT in specific countries – such as Poland, Italy, and France.
These representatives are both eligible for the VAT owed on products. Working as a non-European Union company, you will require increased rates or bank guarantees. Establishing a business is the EU can be a beneficial act to avoid this issue; for example, in the United Kingdom where EU-to-EU rules continue to apply.
Tip #7: Marketplaces Do Not Hold Responsibility For A Retailer’s EU VAT
A marketplace does not hold any responsibility for collecting tax from the consumer, and European authorities are placing an emphasis on this issue to ensure the tax is collected. EU tax authorities now actively pursue retailers when discovering undeclared VAT cost the European Union €193 billion in lost revenue over 2011.
After allowing marketplaces to be held responsible for VAT not collected, not paying tax means that Amazon has the right to shut down the retailer’s store within one month; therefore, staying ahead of the game can avoid any serious problems in the future.
Tip #8: The United Kingdom May Not Have Access To The Single Market From March 2019
The United Kingdom decided, in 2016, that they will be leaving the European Union. This means that they will no longer have access to the single market; therefore, if the UK is the primary territory for your company, the goods need to be exported in a similar means as China.
If you wish to access the UK market, you will still require UK VAT registration when keeping stock in the UK FBA. Selling products into the EU can be a good opportunity for retailers across the globe, but only through planning and preparation can you avoid severe penalties.