Selling in Europe provides opportunities to reach many countries from a single account, so it's important that you understand how the European Union applies Value Added Tax (VAT) to orders made online.
The VAT+
As described by the European Commission, the VAT in the European Union (EU) is a consumption tax assessed on the value added to goods and services. It applies to goods and service that are bought and sold for use or consumption in the EU. Although goods that are sold for export or services that are sold to customers abroad are normally not subject to VAT, imports into the European Union are taxed.
Value Added Tax is charged to the buyer as a percentage of the price of the goods sold. The seller of the goods transfers the collected VAT to the revenue authorities but can deduct the amount of VAT it has paid to other “taxable persons” on purchases for business activities.
Learn more about the Value Added Tax (VAT).
How is VAT charged?+
Registered VAT traders with a VAT number must show the VAT collected from customers on invoices. Customers will know how much VAT has been paid on the final product, and customers who are registered traders themselves will know the amount that can be deducted from VAT due to tax authorities.
VAT coverage and VAT rates+
European law requires a minimum standard VAT rate of 15% (or at least 5% for the reduced rate), and actual rates vary between EU countries and between types of products. Consult a particular country’s VAT authority for current VAT rates for the products you want to sell.
VAT on imports and exports+
When selling products into Europe or from one European member state to another, you should be aware that the tax rate can be different from country to country. If you transfer your own goods from one European country to another, or if Fulfillment by Amazon (FBA) transfers your goods from a fulfillment center into another country where your products were stored, the transfer may also be treated as a transaction subject to VAT. You are responsible for meeting any VAT obligations that apply, including VAT obligations in the Amazon marketplace locations, the country to which you are delivering or shipping your products, or any other countries.
Tip:
If you're selling in multiple Amazon European marketplaces, you may need to apply for a unique VAT number in each of the member states in which you sell. Please see the Other Resources for additional VAT information by country.
If you import products into the European Union, you may be obliged to pay VAT the moment the goods enter Europe—and in the destination country where you ship the goods. VAT is usually payable in the member state of import by the declarant. You will be liable for the import VAT at the time of delivery of the goods unless you have entered into an arrangement with your supplier for the import VAT to be included in the price of the goods, and for the supplier to discharge the obligation by making a payment to the relevant tax authority.
If you are a company not established in Europe and ship your products from a non-European country directly to a customer in a European country, or you ship your products into a European fulfillment center, please consult your tax advisor to assess any import and VAT obligations you may have.
Goods sold for export to customers outside of Europe may not be subject to European VAT.
External Resource: European Commission
Registering for a VAT number and filing VAT returns+
When you sell your products in Europe, you may need to charge VAT. You may need to request a VAT registration number, file VAT returns, and pay the VAT you collected from your customer to the tax authorities.
In most European countries, you can register online on the tax authority’s website for the country where you want to register. Most of these websites provide the VAT information in English. The website will usually provide an online form for registering or a PDF form you can download to complete and return by mail. If there is no provision for registering online, you can find out where to go to register for a VAT number. After you have submitted your request for a VAT number, you may also be sent forms to sign and return through postal mail.
Registering for VAT may lead to a number of associated compliance requirements, including the need to file reports and issue VAT invoices.
Registering for VAT in multiple countries+
Registering for VAT may be required depending on the level of your sales as well as where your inventory is stored. You should consult your tax advisors as to your VAT registration requirements based on your individual seller set up.
When you sell products to customers from your inventory stored in Europe, you may need to file VAT returns in the country from which you ship your products, and you may be required to file VAT returns in the country to which you ship your products (when exceeding the threshold for so-called “distance selling”). Please see the Other Resources for additional VAT information by country.
Distance selling of goods+
Distance selling is when you sell goods from one European Union country to customers in another European country where, generally speaking, these customers are private individuals without undertaking any business activity for VAT purposes.
The “distance selling threshold” is a value in Euros established by each country in Europe. If your sales that you ship from one country into another country are greater than that country’s threshold, you must register for VAT in that country. You are responsible to report, collect, and pay the VAT in that country.
Please note that the distance selling threshold is not a sum total of all your sales across Europe. Each European country has a distance selling threshold, and these thresholds vary from country to country. Consult with a tax authority for the country where you want to sell your products to verify the distance selling threshold.
VAT invoicing+
In many European countries, customers expect a VAT invoice. VAT laws in the country where the customer is located may require you to provide a VAT invoice, and customers’ expectations usually go beyond the law. In Germany and Italy, for example, customers often expect an invoice for high-value items.
Other resources+
| Europe | Taxation and Customs Union (English) |
|---|---|
| United Kingdom | Imports and purchases from abroad: paying and reclaiming VAT (English) |
| Germany | Federal Ministry of Finance (English) |
| France | Foreign companies: Your tax obligations in France (English) |
| Italy | Agenzia Entrate (Italian) |
| Spain | Agencia Tributaria (Spanish) |
Tax Webinars by Third-Party Tax Advisors
Third-party tax advisors have hosted webinars on tax issues that cross-border Amazon Sellers face. You can review the webinar recordings as well as materials from the webinars below.
E-commerce – 7 Steps to getting VAT right (presented by Accordance VAT): Recording Materials
International shipments and VAT (presented by Meridian Global Services): Recording Materials
VAT and international fulfilment options (MCI and EFN) (presented by Meridian Global Services): Recording Materials