Expanding e-commerce beyond borders
All you need to know about VAT when selling online internationally
Over the past ten weeks, we partnered with InterCultural Elements to bring you a 10 part video series to give you a head start on expanding your sales to new territories. This week, in the final episode we turn our attention to cross border VAT and InterCultural Elements have bought in their specialist VAT partner to share some tips on keeping compliant. Jess Wragg sits down with Alex Wyatt to look at the potential pitfalls you might encounter with VAT when selling online internationally.
You can on the How to take your ecommerce business abroad playlist on Tamebay TV.
The number one pitfall with VAT when selling online internationally, according to Alex, is not knowing where your stock is – if you’ve shipped items into Amazon FBA in the EU, then under Pan EU FBA there are up to 7 countries they may store it in and if you’re shipping from those countries then you’ll need to register for VAT in each country. Alex shares an easy way to produce a report from Amazon to determine which of their warehouse in which countries your stock is currently stored in.
Also to note is that even if your stock is held within the UK, there are relatively low VAT thresholds in many EU countries (€35,000 is the norm but there are exceptions). If you cross these thresholds then you’re also obliged to register in these countries.
An important point is that if you’re a non-EU merchant selling into the UK or EU and have stock in any EU country that you automatically need to register for VAT and in this case there are no thresholds. An interesting tip for merchants outside the EU, is to start selling in the UK and/or Germany as these are the two biggest markets and they have the lowest cost of VAT compliance – for instance filing returns quarterly instead of monthly.
Watch the video to find out more:
Distance Selling. Please clarify your statement regarding thresholds present in EU countries: do they pertain to registration, to VAT payment, or to both?