8 EU VAT Tips You Need to Know
15th February 2019
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Retailers have a massive opportunity of expanding their sales to Europe.

There is a recent European B2C E-commerce Report that found: Europe has 296 million online shoppers. Each of these shoppers is spending $1,800 on average every year. But there are some issues with EU VAT you have to deal with. Below are some eight tips that will go a long way in helping you sell into Europe more easily:


1. The VAT rules will vary from one country to another

The EU is a single market, but each of the member countries is responsible for the collection of their VAT.

There are 26 member countries in the EU, and each of them has its own EU rates, methods of collecting EU VAT, product rates, the frequency of filing and reporting. Don’t be surprised when you find two neighboring countries having a totally different approach to VAT. For more information on EU VAT visit VATIT.


2. Amazon can be of help when it comes to selling in the EU

Amazon occupies five markets in the EU, and they also have 31 fulfilment centers that are distributed across seven countries.

This means they have access to a €500 billion market that is growing at a 12% rate every year. Amazon provides five main programs that will help you get started in the EU market:


3. You will have to pay for the EU VAT on your inventory up front

You are going to be charged VAT at the first point of entry when the goods are higher than the low-value consignment threshold (this is around $20). This means you will have to decide between you and the customer, who is going to responsible for the import charges.


If you have exported to the US in the past and did not experience these types of charges, then there is a good chance the customer will be known as the “importer of record”. This isn't a good thing because the customer is forced to pay for the duties or VAT before the goods they have bought can be delivered.


On the other hand:

If you register for VAT voluntarily, then you will be the importer of record. What this means is that goods are going to be sent with the duty paid – and the customer will not be impacted by this.

The costs you will have to meet on EU VAT compliance so you can become the importer of record is going to be outweighed by the drop of the number of returns and losing customers because they were irritated.


4. Before exporting to Europe, you will need an EORI number

An Economic Operator Registration and Identification (EORI) number is a unique number that will be used in identifying the importer to the EU customs authorities.

The number will be put on the importation documents so you can be identified as the importer.


5. Any inventory you store in the EU will need to be VAT registered

When you have stock stored in any EU country, it triggers an automatic obligation to be VAT registered. If you are going to use the EFN service by Amazon in a given EU country (say the UK), then you will just need to have one VAT registration in the country where the stock is held.

If you have your stock stored in multiple locations, then you will have to VAT register in each country. The PAN EU FBA program requires registering in all the countries.


6. There are countries where you will need to get legal representation

If you are a non-EU company, then you need to keep in mind that you might need fiscal representation if you are to register VAT in some of the countries – example Italy, France, and Poland.

The fiscal representatives are going to be jointly eligible for the VAT owed. If you are a non-EU company, then you might have to pay for increased fees or bank guarantee.

A good idea of avoiding this is establishing a company in the EU. You can establish one in a country like the UK, where EU-to-EU rules apply.


7. The marketplaces are not going to take any responsibility for your EU VAT

The marketplaces are not going to take any responsibility for the collection of tax from the customer – and governments have crackdowns to try and make sure that the tax is collected.


EU tax authorities are in the active pursuit of retailers, especially with the findings that the EU is losing €193 billion in undeclared VAT costs.


After it allowed the marketplace to be liable for VAT that has not been collected, failing to pay the tax will lead to Amazon shutting down your store in 30 days. It is a good idea to stay ahead of the game so you don’t end up dealing with these problems in the future.


8. Beginning in March 2019, the UK might no longer have access to the single market

The UK went to a referendum and they decided to leave the EU, and this means they were no longer have access to the single market. If you have the UK as the key territory, you will need to export your goods the same way countries like China do.If you are interested in accessing the UK market, you will need to have UK VAT registration when you have your stock in UK FBA.Selling to the EU market provides retail businesses with a great opportunity. But it is very important to invest time and effort in planning to avoid risks and hefty punishments.

The above tips will go a long way in helping you expand your business.

About the Author

Mandy Bular

Member since: 30th January 2018

Mandy Bular is a freelance content writer. She has written many good and informative articles on different categories such as technology, health, fashion, education, career, travel etc. She is a featured...

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