|Recent announcements from Amazon stated that HMRC is tracking VAT compliance, and under UK law, Amazon is required to disclose to HMRC seller account data on request if HMRC believes a seller may not be compliant. A similar statement was also released to all sellers within German The Amazon fulfilment centres to highlight the need to comply with the local tax authorities. Have you prepared your business for VAT compliance in the European Union (EU)?
Here are a list of things to know:
1. Fulfilment By Amazon
Holding stock in an Amazon warehouse within the EU creates a taxable supply meaning you must immediately register for VAT in that EU country. Be aware of Amazon’s different European stock placement programs to ensure you are not eligible for penalties or fines due to VAT non-compliance.
2. Companies Based Outside of the EU
Non-EU companies must strategize their growth in Europe as some EU countries require you to have Fiscal Representation, which raises the costs of compliance. Countries such as France, Spain, Italy, and Poland are main Amazon fulfilment centres where Fiscal Representation is compulsory for non EU companies.
3. Import VAT
Upon your freight shipment entering the EU, a local import VAT will be charged on the cost value of the goods. These costs must be paid straightaway but are reclaimable on the next VAT return if your company is VAT registered in the country of import.
4. EU Distance Selling Rules
Once you are VAT registered in one EU country, sales made directly to private customers in other EU countries follow the distance selling rules. The rules allow sellers to sell cross border up until a specific distance selling threshold is met. A seller must then VAT register in the country where the threshold was exceeded.
The thresholds are:
|• Euros 35,000 (or equivalent) in All EU countries, except:
|• Euros 100,000 (or equivalent) in Germany, Netherlands, Luxembourg
|• £70,000 (or equivalent) in the UK
5. Stay informed about local VAT laws
Each EU country has different VAT rates dependent on the product being sold. Standard VAT rates and Reduced VAT rates vary between both countries and products so it is best to understand which VAT rates are applicable to the products you sell.
In some EU countries, it is compulsory to provide the customer with a VAT invoice. Make sure you are informed of which country requires what information including which currency to report in.
6. Check your Pricing
European VAT should always be included in the price shown to customers. Ensure your margins are inclusive of VAT and you will still be making a profit on your international sales.
Let SimplyVAT.com help you master your VAT Compliance needs in 2017! Contact me at email@example.com to discuss your specific business needs whilst selling throughout Europe.