Dynamic growth in online sales may require sellers to register as VAT payers in various EU member states. Knowledge of the obligations imposed on taxpayers is vitally important for their business.
For example, whether you are based inside or outside the EU, if you sell products via Amazon, Zalando, Alibaba, or other e-commerce platforms you may be required to register for VAT purposes upon fulfilment of certain criteria.
Despite ongoing simplifications and further work by the European Commission on streamlining the VAT payment system for e-commerce, online sellers must carefully observe the thresholds in place in each EU member state. When they cross the threshold in a given member state, they must register for VAT there.
At KR Group we can monitor your VAT obligations. Our VAT team provides comprehensive VAT service for entities from the EU and outside the EU.
- Analysis of the need for VAT registration and tax risk.
- VAT, EORI and Intrastat registration.
- Filing local VAT and EU VAT declarations.
- Opening bank accounts in Poland.
- Deregistering for VAT.
- Ongoing support for VAT settlements.
- VAT reporting.
- VAT planning.
- Assistance in preparing invoices.
- Payment of VAT obligations.
- Amended declarations.
- Other services on an ad hoc basis.
- Representing clients during tax inspections.
- Tax agency for entities from outside the EU.
- Assuming the role of the client’s representative before the tax authorities.
In what situations must I register as a VAT payer?
Traders doing business involving e-commerce must register for VAT if they:
- Supply goods sold online to individual consumers
- Exceed certain tax thresholds for distance sales in a given country
- Move their own goods between warehouses within the EU
- Import goods.
What are the distance selling thresholds for retailers in the CEE region?
Limits (net sales in the tax year) on distance selling for retailers in the CEE region
- Poland PLN 160,000/EUR 38,250
- Czechia CZK 1,140,000/EUR 43,100
- Hungary HUF 8,800,000/EUR 28,600
- Romania RON 118,000/EUR 25,800
What are the tax obligations connected with internet sales?
When conducting online sales, sellers must bear in mind not only tax obligations in their own country, but also in the countries where they dispatch goods. It is essential to check whether it is necessary to register as an active VAT payer. When a seller is deemed to be a VAT payer, the seller must comply with all obligations set forth in the VAT regulations, such as issuing invoices and filing VAT declarations and other reports required in the given country. Non-compliance may be met with high fines or even imprisonment.
What happens when goods are sold and shipped to customers in another EU member state?
It is important when conducting distance sales to remember the VAT obligations in the country where the goods are delivered. Each EU member state has established its own thresholds for goods sold to individuals. In most EU countries it is EUR 35,000. After crossing the relevant threshold, VAT should be settled in the country of destination of the goods.
Example: A retailer from Italy selling clothing to Polish customers is required to register for VAT in Poland and comply with Polish VAT regulations once it has crossed the threshold for distance sales in Poland of PLN 160,000 (excluding VAT).
How do distance sales between different countries work in terms of VAT settlements?
In the case of distance sales, the supply of goods is regarded as domestic supply of goods. If goods are sold and shipped from country A to country B:
- Before crossing the threshold of sales in country B, transactions are taxed in country A.
- After crossing the threshold of sales in country B, transactions are taxed in country B.
In either situation, VAT is calculated according to the country where the tax point is located (before or after crossing the threshold), at the VAT rate applicable in country A or country B.