The frequency of cross-border distance selling to consumers over the Internet has had unprecedented growth in recent years. With 28 EU Member States each having different sales thresholds, businesses have to struggle with the international VAT issue that comes with this sector, often requiring local VAT registration in multiple countries across the EU.
When selling products into the other EU Member States, there are numerous things that you require to know. Each country in the EU has its own set of VAT compliance measures that you must obey to. On this page, we will briefly focus on what you require to know about monitoring your distance selling if you are shipping across the EU.
Each country in the EU has their own distance selling threshold with most around €35,000.00 and some can be as high as €100,000.00. It is vital to note that only your NET sales count towards this threshold if you are at present paying domestic VAT in your home country.
You must also total all sales that are being shipped from different EU Member States into a single Member State. This is crucial in order to appropriately calculate how close you are to reaching the threshold for that country.
The EU Distance Selling Threshold is calculated between the 1st January and 31st December of a calendar year.
If a business is VAT registered in the UK, Germany and France, and also has warehouses storing goods within those EU Member States. If this business was selling goods to Austria which has a distance-selling threshold of €35,000.00, all the NET sales from UK, Germany or France would all connect towards the Austrian sales threshold.
If the UK warehouse sold €18,000.00 worth of goods into Austria.
The German warehouse sold €15,000.00 worth of goods into Austria.
The French warehouse sold €2,999.00 worth of goods into Austria.
This would total €34,999.00 worth of goods sold, which is €1.00 under the threshold of Austria. So if your business went past that threshold it is your responsibility to get VAT registered and pay VAT to Austria going forward.
If you continued to sell in Austria without being VAT registered, you would be failing VAT compliance, which in turn could lead to penalties/fines against your business. Thus, you are losing money.
At amavat® our IT specialists can offer a nice feature in our Customer Portal which will inform you when you are getting near to reaching the threshold of an EU country, as each country have different thresholds. Each EU Member State differs with its sales thresholds, so it is very important and you will be less likely to fail compliance.
You will see real-time figures of sales with each EU Member State, along with percentage of sales with a specific EU Member State.
The above screen allows you to monitor how your sales are doing in each EU Member State, which gives you the ability to keep track of how close or far from a threshold you are.
amavat® can deliver all required support to assist all clients engaged in cross-border distance selling operations, and provide hands-on help to deal with all characteristics of foreign VAT compliance. This consists of any systems support that may be necessary, voluntary disclosures required to recover VAT incorrectly charged in the Member State of establishment of the supplier.
Being compliant is a top priority, this is why amavat® offer further assistance to keep you on track.
We can help you monitor your sales with regards to thresholds in each EU country, after separate order: for deliveries to the EU countries that are not covered by an existing amavat® mandate agreement, we can set this up at €15.00 per month.