6 VAT Essentials for Online Retailers


A recent paper by the multichannel e-commerce platform Channeladvisor, researched in collaboration with Meridian Global Services, sets out six points for cross-border online retailers to consider as they attempt to keep on top of varying VAT rates, distance selling thresholds and other country-specific information.

Distance selling thresholds are the sales turnover, between €35,000 and €100,000 depending on the Member State, that is used to determine when a retailer’s sales to customers in that Member State trigger a liability to register for VAT in that country and charge the corresponding VAT rate on its sales.

Distance retailers whose turnover exceeds the distance selling threshold need to ensure that their invoices comply with local legislation which is a legal requirement in most EU Member States. There are also varying VAT rates in different Member States according to different product categories: e.g. books in Romania are sold at the standard VAT rate whereas in Ireland they are exempt. Distance retailers are legally obliged to charge the correct VAT rate for products sold to customers in different Member States.

The requirement to submit Intrastat declarations, for the purposes of collecting statistical data is also triggered by a different turnover thresholds depending on the Member State involved. Fines can be levied against retailers who fail to comply with a legal requirement to submit Intrastat declarations.

While “private” sellers on marketplaces generally consider themselves to be exempt from VAT, those sellers who exceed VAT registration turnover volumes or who display or goods in a particular manner, may find themselves subject to VAT regulations both within their own Member State and in other Member States to which they make sales.

Once registered, distance sellers should make sure that they conform to Consumer Protection Laws within the EU, which require the full selling price, including VAT, packaging and transportation, to be shown clearly before placing the order.

Source: E-commerce Facts