You sell goods to individuals residing in various countries of the European Union
SHOULD YOU BE REGISTERED FOR VAT?IN WHICH COUNTRY(IES) ?
SHOULD YOU CHARGE VAT to your customers? which vat do you need to charge ?
When your company sells goods to individuals, you must register for VAT in a EU member State in two cases:
1 – When they import any goods from a non EU country or buy them in a EU member State, stores in this country, then sells them to individuals in that country. This is e.g. the case of Fulfillment by Amazon (FBA).
Sales of goods must then be charged with the VAT of the country of delivery. VAT collected on sales must be reported and paid to the administration of that Member State, after deduction of the VAT paid on imports or purchases.
An Indian company imports into France Indian handicrafts, stores them at Amazon, then sells them to individuals residing in France.
This company must :
- apply for an EORI number to proceed to imports into the European Union,
- register for VAT in France,
- appoint a French tax representative,
- charge its sales with French VAT.
2 – When the goods are shipped from one EU member State to individuals in another EU member State ( « distance sales »), some annual thresholds are applicable according to the different countries.
Annual distance sales thresholds are applicable by country of destination. These thresholds vary between Member States . Learn more
Exceeding the thresholds affects two successive calendar years. As long as the annual turnover of sales to individuals by country of destination is not exceeded both for the current calendar year and the previous year, it is the VAT of the country of departure that should be charged. Once the annual sales turnover is exceeded for a EU member State of destination, it is the VAT in the destination country which is to be charged from the sale, and affecting the following calendar year.
Finally, it is possible to take the option of the VAT registration in the destination country when the threshold for distance sales is not exceeded, e.g. to benefit from a tax rate lower than that applicable in Member State of departure.
A Romanian company manufactures wooden toys and sells them to individuals residing in the EU.
In 2016, it sells for € 50,000 toys to individuals residing in France. The distance sales threshold in France is of € 35,000 from 1 January 2016, it must charge the Romanian VAT on its sales up to € 35,000, and the French VAT on sales bringing turnover above € 35,000. The Romanian company must register for VAT in France as soon as the € 35,000 threshold is reached, to declare and pay VAT to the French administration.
In 2017, the amount of its sales in France decreased and is no more than € 30,000. Considering that the threshold for distance sales has been exceeded during the preceding year, it must continue to charge French VAT.
In 2018, the amount of its sales in France is still € 30,000. Considering that the threshold for distance selling has not been exceeded during the previous year, the company must charge Romanian VAT (returns of unsold goods to Romania do not trigger by itself any VAT registration liability in France).
The Indian company taken as an example in the case of registration 1, which imports and stores in France Indian handicrafts, decided to develop its sales in Europe and sell products from France to customers in other EU member States (Spain…) and in Switzerland.
In 2016, it has sales of:
- € 50,000 in Spain: The distance sales threshold in Spain being € 35,000, it must charge French VAT on its sales up to € 35,000 and the Spanish VAT on sales in excess of € 35,000. The Indian company must register for VAT in Spain from the time the € 35,000 threshold is reached, to declare and pay VAT to the Spanish administration.
- € 10,000 in Switzerland: as Switzerland is not part of the European Union, sales are considered VAT exempt exports of goods from France. However, the Swiss individuals will pay the Swiss VAT due on importations in this country.
Warning: sales of excisable goods (wine, spirits) are not concerned by the distance sales thresholds. A company that sells liquor from a EU member State to individuals in other Member State must charge all sales with VAT of the country of destination and therefore need to register for VAT in that member State as from the first supply of excise products.
WHAT CAN WE DO FOR YOU ?
ASSESS THE VAT OBLIGATIONS resulting from the transactions you make in France.
APPLY FOR AN EORI NUMBER in case of imports from a non EU country (*).Learn more
APPLY FOR A VAT REGISTRATION NUMBER in France and possibly in other EU member States depending on the case (*).Learn more
PROVIDE TEMPLATES with a view to gathering the relevant information for the purpose of periodical VAT returns.
REVIEW the purchase and sales INVOICES in support of operations;
CONSISTENCY CHECKS between the purchases and sales amounts;
COMMUNICATE THE identified ERRORS and advise on how to handle possible issues;
LIAISE with suppliers and freight forwarders to track corrective actions;
PREPARE THE VAT RETURNSLearn more
FOLLOW ANY PAYMENT of VAT due or receivable by you.
Act as a TAX REPRESENTATIVE on behalf of companies established outside the European Union that has not signed with France an administrative assistance agreement, and as a TAX AGENT for businesses established a EU member State.Learn more
PREPARE AND SUBMIT VAT REFUND CLAIMS on expenses of goods and services used for the business purposeLearn more
Assistance in drafting REPLIES TO REQUESTS FOR INFORMATION FROM THE TAX AUTHORITIES, we are present during tax audits, we ensure liaison with attorneys on the occasion of tax litigations ….
ANNUAL MEETING on the follow- up of the file.
REGULATORY MONITORING and analysis of the consequences on your reporting requirements.
ADVICE or administrative service (issuing invoices, applicable VAT, VAT rates, etc.)
(*) In case of VAT registration in several countries of the European Union, our European correspondents from the Tax Representative Alliance TRA can help you by offering:
- assistance with VAT registration and VAT compliance,
- one single contact, the Client Relationship Manager, who will coordinate the VAT registration and compliance with our correspondents in the different countries,
- online access to TRA extranet that allows you to upload and download documentation and data.
Do not hesitate to contact us for any assistance or question!