What You Need To Know About Selling Into Europe And VAT
1. The EU Rules On VAT Are Different For Each Country
Even though the EU is thought of as just one market, every country that falls under the EU holds the responsibility of collecting VAT on their own terms.
This actually means that the 28 countries in the EU use different EU VAT rates, methods of how EU VAT is collected, product rates, and the frequency of reporting and filing differently.
2. Amazon Can Assist You With Selling In The EU
Amazon already occupies 5 marketplaces within the EU, with 31 Fulfillment Centers spread across 7 countries.
This has granted them accessibility to a €500 billion market, which is currently growing 12% year-on-year.
3. You Have To Pay EU VAT On Your Inventory Upfront
VAT is charged on the initial entry point if the goods that you own exceed the "low-value" consignment threshold (up to about $20). VATGlobal says that you need to decide whether you or your customers will be responsible for these import charges.
If you have in the past exported out of the US and you have not yet experienced such charges, then in most cases it will be your customers which are regarded as the “importer of record”. This is not the ideal experience, because it will mean that your customers are forced to pay the duties or EU VAT before their goods will be delivered.
If you decide to voluntarily register for VAT, you as a retailer will become the “importer of record”. This will mean that any goods that are sent will already have the duty fees paid, without impacting the end customers.
The overall costs involved in EU VAT compliance in order to become an “importer of record” is significantly outweighed by a drastic decrease in return numbers and losing repeat business from customers that are agitated.
4. You Will Need An EORI Number In Order To Export To Europe
The EORI number which stands for Economic Operator Registration and Identification is a number that is unique which is used across the European community in order to identify importers to the customs authorities within the EU.
You need to use this number on all your import paperwork and documents which identifies you as an importer.
You can find out more about how to get an EORI here.
5. If You Store Any Inventory In The EU It Needs To Be VAT Registered
If you store any of your goods in an EU country it will automatically trigger an obligation to become VAT registered. If you use Amazon’s EFN service in an EU country (like the UK), you will only need a single VAT registration where the stock is held.
On the other hand, if you are storing your stock in several locations, then you need to VAT register your stock in each of these countries. The PAN EU FBA requires VAT registration in every country.
6. You Will Need Legal Representation In Specific Countries
For all the non-EU companies, you might be obliged to obtain fiscal representation when you VAT register in specific countries. Some of these include Poland, Italy, and France.
The fiscal representatives are eligible jointly for the VAT that is owed. If you are a non-EU company you might require a bank guarantee or an increase in fees.
In order to avoid this, it might be best to establish a company within the EU. You could establish your company in a country like the UK whereby the EU-to-EU rules apply.
7. The Marketplaces Do Not Take Responsibilities For Your EU VAT
Marketplaces don’t take any responsibilities whatsoever for the collection of tax from customers, and the governments in Europe are becoming a lot stricter to make sure this type of tax is collected.
The tax authorities in the EU are pursuing the retailers actively after it was discovered that undeclared VAT cost the EU €193 billion in revenue that was lost in 2011.
Now that the marketplace can become liable when VAT has not been collected, if you do not pay your taxes, Amazon can shut your store down within 30 days. Making sure that you keep up with these regulations and tax payments could save you major headaches into the future.