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

  • Last update: 05.12.2023
  • Published: 05.04.2022
  • Read in: 5 min

Would you like to sell products abroad? Are you thinking about tax issues? This article will tell you when is required VAT registration abroad and how this procedure works.

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

When is it required to register for VAT in another EU member state?

VAT registration is required when under the laws of a given EU country you make transactions taxable in that country, for example when you sell goods from the territory of that country.

In the case of e-commerce sellers, registration for VAT is usually required only when you store goods in a given country (for example when you use Amazon FBA warehouses). Registration for VAT makes it necessary to submit local tax returns (time limits for filing them depend on the laws in a given country).

It is worth remembering that registering for VAT in another EU country is not equal to starting up a business or opening a foreign branch.

Is VAT OSS enough when you sell products in many EU countries?

If you send goods solely from your country of incorporation, as a rule you are not obliged to register for VAT in other EU countries. In this situation, you can use VAT OSS , a procedure which makes it possible to account for VAT on sales to other countries of the European Union in one tax return submitted to a Polish tax office.

As part of the VAT OSS procedure, VAT is calculated in accordance with foreign rates (in the country receiving the goods) and is payable to a Polish tax office which then transfers the tax amount to tax offices in other EU countries. If the value of your sales to other EU countries does not exceed EUR 10,000 a year, you can pay VAT in accordance with the rates in your country of incorporation. As a result, you do not need to register for VAT abroad or register for VAT OSS.

Transfer of goods

It is rarely mentioned that the transfer of goods also needs to be declared for VAT purposes. This is because transfers of goods between the seller’s own warehouses in other countries are regarded as non-transactional intra-Community supply/acquisition of goods.

This situation usually occurs when you sell on Amazon using the Pan-EU model, in which goods are transferred between EU countries.

In practice, when you send goods from Poland to Germany, in the Polish VAT return you need to declare the intra-Community supply of goods, and in the German VAT return you need to declare the intra-community acquisition of goods.

In order to avoid potential disputes with tax authorities, you need to:

  • declare the same value of intra-Community supply/acquisition of goods in both countries
  • determine the value of intra-Community supply/acquisition of goods on the basis of the manufacturing price or acquisition price

If you use the Amazon FBA model to sell products, you can use our application, Taxology. It generates detailed reports on transferring goods from one warehouse to another and calculates the value of the intra-Community supply/acquisition of goods to be declared in each country.

What are the possible penalties for failure to fulfil your obligations or for late payments?

In case you fail to submit the VAT return within the prescribed time limit or fail to do it altogether, you may get a fine and be charged for late payment interest. For example, in France such penalties may amount up to 10% of the VAT amount, even if you are just one day late.

Moreover, sales platforms (especially Amazon), may block your account if you fail to present proof of VAT registration when you are obliged to do so.

Sometimes mistakes in payments result from a misinterpretation of reports generated by sales websites. Because of that, when you sell your products abroad, you should consider using a VAT compliance service. Companies that offer this service take over your VAT obligations in every country in and to which you sell your products. What do these companies do exactly?

  • keep VAT registers,
  • register your company for VAT in other countries,
  • draw up and submit tax returns,
  • provide assistance in case of audits carried out by tax authorities,
  • help you get a tax refund.

A big advantage of working with such a company is that it handles all of your transactions, which means that it can see all of the data at once. Thanks to it, the company can interpret your data correctly and avoid discrepancies in tax returns.

How can you simplify this process and make sure it is compatible with the law?

In order not to make mistakes or be late, it is worth working with experts who are up to date with legislative changes and have experience in correcting inaccuracies when dealing with tax offices. It is also worth carefully collecting any data related to the transfer and sales of goods, so that you can refer to them and calculate appropriate amounts to be declared.

How can we help you with it?

First of all, we will help you enter new markets and then make the decision when and in which country you should register for VAT. We will tell you which documents you need and which of them have to be translated (for example, in France you need a transcript from the Polish National Court Register and articles of association). We can help you with that as well.

At a later stage, we regularly contact the tax office, answer letters and help you submit an explanation whenever it is required.

To sum up, we take responsibility for correctly and timely submitting data to tax offices and you avoid stress and the risk of having your sources of income blocked.

If you found this article interesting and you are wondering whether this is a good solution for your company, make an appointment with us! We will explain in detail how we work and what we can do for you.

Tomasz Połeć Tax advisor nr 12104. Co-founder and member of the board of Taxology.