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Technology, love it or hate it, means everyone can reach customers across the globe. No longer is it just for the larger, national companies. There are many things to consider including shipping costs, currency conversion and securing finance to name a few, but don’t let that hold you back.

Let’s look at how selling products or services in the EU will impact VAT.

The EU has created the ‘distance selling’ regime to help simplify the increased responsibility to retailers.

So what are the rules?

Retailers can sell to private individuals in EU countries under their local VAT number and their home rate. So, for example, as a UK retailer you should sell products to Italy at the UK VAT rate of 20% instead of the Italian VAT rate of 22%.

However, if you are selling frequently into the EU then you need to be aware that each country has its own ‘distance selling threshold’. When this threshold is exceeded your business will have to become VAT registered in that country and adhere to their rules.

To give you an idea, here are the annual thresholds for some of the most common EU countries:

  • Germany and Netherlands – €100,000
  • Italy, Spain, Belgium, Poland, Ireland and France – €35,000

These thresholds are usually for a calendar year, and once exceeded you will be expected to apply for a VAT number in that country straight away.

 

 

 


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