Last updated on: August 3, 2020
Most EU countries allow you to register for VAT online, through the local tax authority’s website.
In this article, we will provide all the information you need to know about EU VAT at ShopByLocals.com and how it affects you as a ShopByLocals’ client.
Please find all the VAT related topics and in-depth information below.
If your business on ShopByLocals sells goods in any EU country, you may be required to register for and collect Value Added Tax (VAT).
VAT in the EU is a tax on consumer spending. It is collected by VAT-registered traders on their sales within the EU territory, and passed on to the national tax authorities via VAT return filings. Most EU countries allow you to register for VAT online, through the local tax authority’s website.
In practice, the following three situations will normally trigger mandatory VAT registration:
- If you are an EU established seller and your business is trading over the legal thresholds defined by your home country you must ensure that you are registered for VAT. The thresholds vary between EU countries and are currently anything from 0 EUR in Spain to 85,000 GBP in UK. In practice, this means that you must register for VAT immediately if you are a Spanish business (no minimum threshold), whereas you are required to register for VAT as an UK seller only after you have made over 85,000 GBP sales within 12 consecutive months.
- If you are selling goods that are warehoused/pre-deployed in any other country than your home country, then you must register for VAT immediately in the EU country where your goods are located. There is no minimal threshold and this rule also applies for sellers from outside of the EU with inventory pre-deployed in the EU.
- If you sell a lot of goods located in one EU country to private buyers in another EU country (distance selling), you may also be required to register for and collect VAT in the country of your buyer if you exceed specific thresholds for that country. These range from 26,135 EUR for distance sales to Romania to 100,000 EUR for Germany.
Read more about VAT thresholds in individual EU countries.
It is mandatory that you display your VAT number on the ShopByLocals site in connection with your listings. This can be done by updating your business seller information page.
Failure to meet your VAT obligations is a serious criminal offence. If you do not appear to be meeting your VAT obligations on EU sites, your account may be blocked from selling and your active listings removed. You will need to update your account with a valid VAT number and contact us before we can remove any selling restriction.
Sellers’ VAT and TAX responsibilities
Seller is responsible for paying all fees and taxes associated with using ShopByLocals as a ShopByLocals seller.
Your tax-related responsibilities may include:
- Paying sales tax on ShopByLocals sales
- Paying income tax on ShopByLocals sales
- Informing overseas buyers about import charges
The Value Added Tax, or VAT, in the European Union is a general, broadly based consumption tax assessed on the value added to goods and services. It applies more or less to all goods and services that are bought and sold for use or consumption in the European Union. Thus, goods which are sold for export or services which are sold to customers abroad are normally not subject to VAT. Conversely imports are taxed to keep the system fair for EU producers so that they can compete on equal terms on the European market with suppliers situated outside the Union.
— Definition by European Commission
To reiterate that ShopByLocals.com adds Value Added Tax (VAT) to the invoices for clients located in the EU region. For instance, if your invoice amount is €22.50 and let’s assume your country’s current VAT rate is 20%*, then your total invoice will be of €27.00, including VAT. But, if you are based in a territory where VAT% is different from the Standard VAT Rates of the country (example: Azores, Akrotiri, and Dhekelia, etc.) then let us know at [email protected] ShopByLocals.com charges VAT rate based on your selected country and your invoice will also have subtotal and charged tax listed along with the grand total as shown in the image below.
EU business customers can get VAT exemption in the future invoices by adding the valid EU VAT number while buying. EU VAT number must be verified on VIES.
Note: Please be advised that providing us a VAT number will not update the previously paid invoices!
Unfortunately, no reimbursement can be offered against the VAT charge from previously paid invoices as you should supply EU VAT ID at the time of upgrading the account. However, you can get VAT exemption if you are an EU business customer with a valid VAT ID.
Customers from Denmark will receive VAT charge on their invoices regardless of having a valid VAT number as per the Danish VAT Act.
Customers from territories which are exempted from VAT charge should inform us by sending an email at [email protected]
If you are based in a territory where the VAT rate is different than the standard VAT rate of the country (for example Azores, Akrotiri, and Dhekelia, etc.), then let us know at [email protected]
We hope this article has answered any question you may have about VAT at ShopByLocals.com.
Here you can see an overview of ShopByLocals Global VAT, GST, etc.