When is VAT registration in a foreign country required for online sales?

  • Last update: 10.07.2024
  • Published: 05.04.2022
  • Read in: 5 min

Do you want to sell abroad and are considering tax issues, especially when VAT registration is required in another EU country? We’re here to answer your questions!

A local VAT number in another EU member state is required for a business if:

  • The sales exceed the threshold of €10,000;
  • Exporting goods from an EU country to third countries and importing goods from third countries to an EU country;
  • Storing goods abroad;
  • Moving goods;
  • Conducting local sales in another country.

When is VAT registration in a foreign country required for online sales?

1. Exceeding the WSTO threshold

Local VAT settlements, which are possible after the registration process and obtaining a VAT number, are required for foreign sales within the EU when their value exceeds €10,000. This limit applies to the total sales of the enterprise in the EU, not in a specific country. This is the so-called distance selling threshold, about which you can read more in our article EU mail order sales limits in 2024.

VAT settlements in the countries of sale are necessary starting from the transaction that exceeds the above limit. However, it is worth noting that entrepreneurs can avoid this necessity by opting for the VAT OSS procedure.

2. Export and import of goods to and from third countries

Export and import are terms used for the transportation of goods from member countries to third countries and from third countries to member countries. They must be declared in VAT returns in the countries from and to which the goods are sent.

3. Storing goods in another member state

Another situation where foreign VAT registration is necessary is storing goods abroad.

According to Article 28e of the VAT Act, the place of supply of services related to real estate is the place where the property is located. This means that in the case of having a foreign warehouse, the country of its location is the country where storage must be declared.

It is also worth noting that the requirement to declare stored goods also applies to the use of external logistics centers, such as fulfillment services.

4. Moving goods

It is rarely mentioned that moving goods also needs to be declared for VAT purposes. Transfers of goods between warehouses in different countries are so-called non-transactional intra-community supplies/acquisitions of goods (WDT/WNT).

This situation occurs most often when selling on Amazon in the Pan-EU model, where goods are moved between EU countries.

In practice, when you send goods from Poland, for example, to Germany or another member state, you must declare an intra-community supply of goods (WDT) in the Polish VAT return, and an intra-community acquisition of goods (WNT) in the foreign VAT return.

To avoid potential disputes with tax authorities, you should:

  • Declare the same value of WDT/WNT in both countries;
  • Establish the value of WDT/WNT based on the production or purchase prices of the goods.
Need assistance with VAT? More than just registration?

Need assistance with VAT? More than just registration?

You’ve come to the right place! Contact us and our VAT Compliance specialists will be happy to help! Not only in matters of registration, but also settlements, declarations, and VAT OSS!

5. Selling goods in another EU country

The last issue when VAT registration in another country is required concerns local sales of goods. This means that if a seller stores goods abroad and sells them to consumers in the same country, they must settle such sales locally. VAT OSS does not apply here.

Is VAT OSS sufficient for sales in multiple EU countries?

If you ship goods exclusively from the country where your company is established, you generally do not need to register for VAT purposes in other EU countries. In this situation, you can use the VAT OSS procedure, which allows for VAT settlements on sales made to other EU countries in a single collective return filed with the Polish tax office.

Under the VAT OSS procedure, VAT is calculated at foreign rates (the country of receipt of goods) but is payable to the Polish tax office, which then forwards the tax amount to the counterparts in other EU countries.

However, if you want to learn more about this topic, check out our article What is VAT OSS? Changes to VAT settlements in the EU.

Possible penalties for failure to comply or late payments

If you fail to submit VAT returns on time or completely neglect this obligation, you may be fined and charged interest for late tax payments. For example, in France, penalties can amount to as much as 10% of the VAT amount, even if you are just one day late.

Additionally, sales platforms (especially Amazon) may block your account if you do not present proof of VAT registration despite the existing obligation.

Sometimes errors in payments result from misinterpreting reports generated by sales portals. Therefore, when selling abroad, it is worth considering using VAT compliance services. Companies offering these services take over your VAT-related obligations in each country where you sell and to which you sell. What exactly do they do?

  • Maintain VAT records;
  • Register your company for VAT in other countries;
  • Prepare and submit tax returns;
  • Assist in case of tax audits;
  • Help in obtaining tax refunds.

A significant advantage of working with such a company is that it handles all your transactions, seeing all the data at once. This allows them to interpret it correctly and avoid discrepancies in declarations.

How to simplify this process and ensure compliance?

To avoid mistakes and delays, it is worth working with experts who keep track of legal changes and have experience resolving inconsistencies with authorities. It is also crucial to meticulously collect all data related to the movement and sale of goods so that you can refer to them and calculate the appropriate amounts to declare.

How can we help you in this process?

First and foremost, we help you enter new markets and then decide when and in which country to register for VAT. We will indicate which documents you need and which of them you must translate (e.g., KRS extract or company agreement in the case of France) – in which we can also support you.

At a later stage, we stay in constant contact with the office, respond to letters, and help with explanations if necessary.

In summary, we take responsibility for ensuring that the data is correctly and timely delivered to the authorities, and you avoid the stress and risk of your income sources being blocked.

If this article has intrigued you and you are wondering if this is the right solution for your company, schedule a consultation with us! We will explain exactly how we work and what we can do for you.

Tomasz Połeć Tomasz is a co-founder of Taxology and a tax advisor (license No. 12104), with 15+ years of experience in Polish and international consulting firms. Leveraging his expertise from numerous tax reviews and audits, he offers proficient tax advisory services to e-commerce companies. He specializes in advising on VAT and CIT settlements in e-commerce and logistics.