If you are based in the EU and sell your products directly to customers in other EU countries, or use fulfilment centres in other EU countries, you will probably face an obligation to charge and collect local VAT.
The EU has created a special regime, known as Distance Selling, to simplify the administration and burden as far as possible to encourage free trade in the zone.
If your sales exceed certain ‘VAT Registration Thresholds’ in each EU country, you will have to VAT register in those countries. Each EU state has created a revenue threshold (usually €35,000 per annum) – once the retailer crosses this sales threshold, they are legally obliged to register as a non-resident VAT trader in the country.
This means that if you use fulfilment centres in the EU, you will immediately have the obligation to register for VAT in the countries where the goods are delivered from. However, you must also monitor the annual sales value of goods delivered to EU countries where you are not registered for VAT, because if the sales breach the revenue threshold, you must also register for VAT in the destination country.
For example, if you use Amazon’s fulfilment centre in Germany, you must register for VAT in Germany prior to the first sale (regardless of your total revenue). If you then fulfil orders from the FC in Germany to France, and the annual revenue to French customers reaches €35,000 – you must also register for VAT in France.
View the Distance Selling table