If you are selling goods to consumers in other EU countries via the internet by Fulfillment by Amazon (‘FBA’), then you will probably need to VAT register in the countries of your customers. But the good news is that you will not have to set up any foreign subsidiaries to trade.
NOTE: there is currently no such concept as a single EU VAT number for FBA sellers of goods to consumers. You will have to consider VAT registering in each of the 28 member states of the EU separately. There is an initial experiment with a single EU VAT registration for providers of e-services to EU consumers since the start of 2015. This may be extended to goods and FBA sellers at some point in the future.
When do you need to VAT register in another EU country?
If you are already VAT registered in your home country, then you won’t need to immediately register for VAT in the countries of your customers to sell to them. The European Union, which sets the overarching rules for VAT in the 28 member states, has set VAT registration thresholds for foreign FBA sellers. If you are selling below these annual thresholds in a particular country, then you don’t need to register there and you can charge the VAT under your own domestic VAT number.
You can check these distance selling VAT registration thresholds here.
Once you exceed the threshold in a particular country, you will have to VAT register in the target country as a non-resident VAT trader. Under the EU’s Single Market rules, this enables you to sell in a given EU state without the need to set up a local company. However, you still need to charge the local VAT rate and remit it to the local tax authorities because the EU has not harmonized its state tax regimes.
In addition to needing a VAT registration for exceeding the distance selling thresholds, you will also require one if you are storing goods in a foreign Amazon warehouse prior to sale to local consumers. Read our section on VAT on foreign Amazon warehousing. An example of how distance selling thresholds work. For example, if you are based in France with a French VAT registration number, you sell your goods to French consumers at 20% French VAT.
If you start selling to Germany and Spain, and your sales are below their registration thresholds, then you sell to the consumers there at 20% French VAT and pay the collected VAT to the French tax authorities. Once you go over the country limits (Germany €100,000; Spain €35,000 per annum) you must register your French company with the tax authorities in Germany and Spain. They will give your French company German and Spanish VAT numbers. In tax terminology, you have become a ‘non-resident’ trader or entrepreneur. You must then start charging your German and Spanish consumers 19% and 21% VAT, respectively, and remitting it to the local tax authorities.
- Any non-EU business selling goods within the EU will need to register in the country in which they hold goods,
- Any EU business that has breached their local VAT registration threshold will need to register locally,
- Any EU business that has breached the distance selling threshold in another EU member state will need to register in the destination country in which the threshold was breached,
- Any non-resident EU business storing goods in, and selling goods from another EU member state will need to register in the country where the goods are held.