8 EU VAT Tips for Retailers Selling into Europe
- Written by Anwen Williams
Expanding sales into Europe is a massive opportunity for retailers. In fact, a recent European B2C Ecommerce Report found:
- There are 296 million online shoppers in Europe
- With the average shopper spending around $1,800 a year.
But there are some pretty pressing EU VAT rules and regulations to abide by. So we’ve taken eight tips from our recent masterclass with SimplyVAT that’ll make selling into Europe a piece of cake:
SEE ALSO: How to Make More Sales by Expanding Your Ecommerce Business into the EU
- EU VAT rules are different for each country
Although the EU is envisioned as a single market, each country within the EU is responsible for its own collection of VAT. This means that there are 28 countries that use different EU VAT rates, product rates, methods of collecting EU VAT and frequency of filing and reporting differently.
- Amazon can help you sell in the EU
Amazon occupy five marketplaces in the EU, with 31 Fulfillment Centers distributed across seven countries. This gives them access to a €500 billion market which is growing 12% year-on-year. There are five main programs Amazon offer to kickstart your European domination:
- You’ll need to pay EU VAT on all your inventory up front
VAT will be charged at the first point of entry if your goods are above the low value consignment threshold (up to around $20). You must decide who is responsible for the import charges, be it you or the customer. If you’ve previously exported from the US and haven’t experienced any of these charges, it’s likely that the customer will be what is known as the “importer of record”. This is not a great experience, as it means the customer will have to pay any EU VAT or duties before the goods are delivered to them. On the other hand: Voluntarily registering for VAT will make you as the retailer the importer of record. This means the goods will be sent with the duty already paid - and without impacting your end customer. The cost of EU VAT compliance to become the importer of record is far outweighed by the drop in number of returns and loss of repeat business by irritated customers.
- You need an EORI number to export to Europe
An EORI number (Economic Operator Registration and Identification) is a unique number used throughout the European community to identify the importer to the EU customs authorities. This number will need to go on your import documents to identify yourself as the importer. You can see more about getting an EORI here.
- Any inventory stored in the EU needs to be VAT registered
Holding your stock in an EU country triggers an automatic obligation to be VAT registered. If you’re using Amazon’s EFN service in one EU country (e.g. the UK) you’ll only require one VAT registration where your stock is being held. But if you have stock in multiple locations, you’ll need to be VAT registered in each country. The PAN EU FBA program requires registration in all countries.
- You’ll need legal representation in certain countries
For all non-EU companies it’s important to know that you may be obligated to have fiscal representation if you are to VAT register in certain countries - such as France, Italy and Poland. Fiscal representatives are jointly eligible for the VAT owed. As a non-EU company you may require bank guarantees or increased fees. Establishing a company in the EU could be a good option to avoid this. For example the UK, where EU-to-EU rules apply.
- Marketplaces don’t take any responsibility for your EU VAT
Marketplaces do not take any responsibility for collecting the tax from the customer - and European governments are cracking down to ensure this tax is being collected. EU tax authorities are actively pursuing retailers after finding that undeclared VAT cost the EU €193 billion in lost revenue in 2011. After allowing marketplaces to be held liable if VAT is not collected, not paying your tax means that Amazon can shut down your store within 30 days. So staying ahead of the game can save you some serious headaches in the future.
SEE ALSO: Why Google’s New Marketplace is Amazon’s First Serious Competitor (Ever)
- From March 2019, the UK might not have access to the single market
In 2016 the UK decided that they were going to leave the EU, meaning that they may no longer have access to the single market. So if the UK is a key territory for your business, goods will need to be exported in the same way that countries such as China do. If you want to access the UK market you will still need UK VAT registration when holding stock in UK FBA. So selling into the EU can be a massive opportunity for retail businesses all over the world. But planning and preparation is key - or you risk some hefty punishments. Use the tips above to get your EU VAT on point. And expand your business with confidence.