New legislation means that e-commerce platforms (like Amazon and ebay) will not let you sell across Europe unless you are registered for VAT where applicable. For Amazon FBA, this means wherever you use their Fulfilment Centres. Therefore, if you want to sign up to sell on Amazon’s prime service, you will need to register for VAT in multiple countries.
VAT compliance is very difficult, especially for businesses not established in the European Union. You cannot register without appointing local representatives and being VAT registered comes with various obligations
In many cases, online sellers who are established outside the EU are not allowed to register for VAT unless they appoint a Fiscal Representative.
In 5 of the countries where Amazon has FC’s, fiscal representation is required. Therefore, it is impossible to use the Amazon FBA solution unless you find a fiscal representative to help you in France, Spain, Italy and Poland.
The fiscal rep must be tax registered and willing to act as the local representative of the company, managing with queries and filing obligations of the company for dealings with the tax authorities.
The fiscal rep is jointly liable for all VAT payments of the company. Most companies who offer VAT services for online sellers do not act as fiscal representative. This means you will either be forced to find 3rd party companies in addition to the VAT agent. In some cases, the company will only represent you if you establish an EU business (which comes with several other unnecessary complications).
VATGlobal will act as fiscal rep on your behalf in all EU countries where required. No other agent in the market offers full coverage in this area and it is impossible for a non-EU seller to be compliant without it.
Being VAT compliant requires 5 key steps:
Once you have appointed a fiscal representative, the process to apply for a VAT number in an EU country is very complicated. Each tax office has its own set of unique requirements and all information is presented and must be submitted in the local language.
You will be required to collate all the required documents, translate them into the local language and provide all supporting information (which differs per country).
Finally, the relevant forms must be completed accurately in the local language and submitted according to the specified procedures. If everything is 100%, the tax office will issue the VAT number within 2-6 weeks – however, it is very likely that they will come back with queries or requests for additional information.
VATGlobal takes care of the whole registration process:
• List of requirements is presented to seller online with ability to upload the docs for approval
• All docs and information will be translated on your behalf if required
• Our registrations team will collate all information and prepare the application forms
• The registration pack is submitted directly to the tax office and our registration team will deal with all correspondence to ensure the VAT number is issued ASAP
Once registered for VAT in one or multiple countries, your sales that originate in those countries or sales that are made to customers in those jurisdictions, must be treated in accordance with the local VAT legislation.
There is a lot to consider, including:
• Should VAT be charged, and If so – which country’s VAT rate is applicable?
• How do I recover the VAT paid on my imports?
• Does the standard or reduced rate of VAT apply?
• What are my obligations if my sales are made in foreign currencies?
• Do I need to issue VAT invoices?
• When am I obligated to report sales and pay over taxes?
If you make a mistake with any of the above issues, the tax office will be very strict with issuing of penalties and charging interest on any late or incorrect VAT payments. Often potential the cost of non-compliance can exceed the total annual cost of doing business in a country.
VATGlobal will give you a free copy of our comprehensive VAT Guide, which is document that lists all compliance considerations and gives practical explanations. In addition, we will appoint you a dedicated account manager who will provide ongoing support via telephone or email should you have any compliance questions.
The VAT you charge to your customers is not your revenue – it must be paid to the relevant tax office in accordance with their deadlines. Similarly, if you have paid VAT on imports or other European expenses, this VAT can be claimed back from the tax office – but there are very special rules relating to refunds.
Calculating the correct amount of VAT to pay will depend on a few factors:
• Which FC was the sale made from?
• Where is your customer established?
• Did you quote an online price including or excluding taxes?
• What currency was your sale made in?
• Were any sales returned or credited?
It is important to keep a detailed record of all transactions in each period to be able to justify your VAT calculation to the tax office.
If you get the calculation wrong, or make a payment late, penalties will be applied. In some countries, VAT payments must be made via a local bank account or special tax payment method.
In addition to ensuring the VAT calculation is correct, the VATGlobal service comprises:
• Automated alerts for all payments, including references and bank details for the payment.
• Local payment solutions (you pay VATGlobal and we ensure the tax office is settled on time)
• Online direct payment options using a secure app
Once you register for VAT in a foreign country, online sellers are required to file periodic VAT returns in the countries where they have VAT registrations. (This is usually a monthly or quarterly filing)
These are statutory declarations where all taxable transactions which took place in that period must be reported and any VAT liability or refund is calculated. Each country has a unique filing deadline which usually corresponds to the date that any tax liabilities must be paid.
Failure to submit a VAT return on time or late settlement of a VAT liability will result in penalties being imposed.
A VAT registered business may appoint an agent to prepare and file the VAT returns on its behalf. In some countries this may be a prerequisite, but even in cases where the company can file the return itself, it is recommended that an agent is appointed owing to the language issues and compliance and reporting complexities.
VATGlobal offers a comprehensive return filing solution:
• Automated extraction of sales data from Amazon seller’s portal or your accounting software where possible
• Dedicated account manager to support the entire filing process
• Declaration of imports and recovery of import VAT
• Preparation of all statutory filings
• Online submission of VAT returns
The VAT landscape in Europe and across the world is very daunting. The legislation differs between countries (even within the EU) and so do the compliance requirements.
Once you are VAT registered, the VAT compliance rules will have a significant impact on the commercial and operational aspects of your business, including your invoicing process and selling prices
It is therefore essential that you have the support of someone who is familiar with the laws and ideally has local language skills and knowledge to be able to give you practical and technical advice and support you as your business expands into multiple territories.
VATGlobal’s e-commerce solution offers a single, dedicated account manager who offers day-to-day support in all these areas, for all the countries where you are registered.
Your account manager will have client service experience and technical VAT knowledge.
Their job is to understand all facets of your online business and offer the below support:
• Initial ‘on-boarding’ of your business to explain the detailed commercial and operational impact being VAT registered will have
• Detailed technical guidance on VAT treatment of all your sales and purchases
• Advice on invoicing procedures, returned goods, exchange rates and pricing
• Be available by telephone and email to provide ongoing support on all compliance related issues
Our premium e-commerce package includes the following features:
There are several other companies who offer VAT services, but it is important to understand that that service includes and what gaps you will need to fill on your own or by using another agent.
*Not all competitors will offer this, it will be up to the seller to prepare and submit the VAT registrations