Do I need to have VAT on the European site from the beginning? What is the VAT strategy for cross-border sellers?

If you are doing cross-border e-commerce in Europe, you will definitely come into contact with VAT. Many domestic merchants are relatively unfamiliar with VAT. After all, there is no similar tax in China. However, since you are doing business in Europe, you must understand it. So, do you need to pay VAT when you start doing business in Europe?

Does the European site need to have VAT from the beginning?

Yes.

What is the VAT strategy for cross-border sellers?

1. Which types of sellers need to register for VAT?

Cross-border e-commerce sellers need to ship goods to the destination country in advance and then store them in local warehouses. For example, sellers who use Amazon FBA or local overseas warehouses to ship goods, as well as sellers who ship goods through remote sales and exceed the remote sales threshold of the country where they sell, all need to register for VAT tax numbers in advance.

2. Application period

On a quarterly basis, the frequency of VAT declaration in the UK is once a quarter; for companies registered in the UK, there will be a threshold of 85,000 pounds, and sales exceeding the threshold will be taxed at 20%;

Germany's VAT is relatively complicated, with more declarations, once a month; and there are time limits, it needs to be completed on the 10th of each month, and the annual declaration needs to be completed before May 31 of the following year;

VAT declaration in France is similar to that in Germany. The difference is that France is stricter on tax agents, and they will be held jointly liable if there is any problem. Therefore, sellers need to declare and pay taxes in a timely manner.

3. Application method

There are generally two ways to declare VAT:

Zero declaration: During the declaration period, if the seller does not sell goods in the corresponding country, he or she can choose zero declaration.

Normal declaration: If the seller has sales business in this country during the declaration period, normal declaration should be selected.

4. Who should cross-border sellers report VAT to?

Generally, when sellers register for VAT, they will look for relevant tax agents to help them with quick and professional VAT registration and declaration.

However, the current tax agency market is full of mixed fish and dragons. In order to prevent novice sellers from falling into traps, Xiaohua recommends that everyone should carefully identify and avoid unreliable tax agents taking advantage of the situation. Of course, you can also cooperate with our Huaju Tongchuang platform. Whether it is price or professionalism, our resources and services can allow everyone to feel at ease to do their business.

4. What happens if I don’t register for VAT?

Sellers need to know that if they do not follow the policies and regulations, the consequences can be very serious. According to the EU VAT Directive 2006/112/EC and Amazon’s official announcement, sellers who do not register, declare, or pay VAT will be subject to the following penalties:

Import VAT will not be refunded to you; the goods will be seized and customs will not clear them for you; your Amazon account will face huge fines

5. What should I do after VAT is issued?

Upload the VAT number to Amazon backend; declare on time; after Amazon platform withholds the tax, you still need to upload the sales report for declaration.

If you want to do cross-border e-commerce in Europe, you must register a VAT number. Don't use someone else's, otherwise there will be a lot of trouble and risks. After registering your own VAT number, you don't have to worry about paying taxes, otherwise your store will be closed because of this problem.

Recommended reading:

How do I contact an Amazon account manager? What is an account manager?

What does Amazon European VAT mean? In what situations does Amazon need to register VAT?

How long does it usually take for Amazon Europe to conduct a KYC audit?