EU VAT Registration Requirements for Foreign Companies

Importing and selling goods in the UK and European Union requires compliance with customs, regulations and legal parameters. These regulations vary dependant on the country where the seller is looking to sell, and are becoming increasingly crucial for the many Chinese Amazon Sellers. Amazon, eBay, and other online selling platforms have changed the way that many companies operate within these legal parameters. Amazon does not allow companies to import goods with their name, or any of their subsidiary company names. If a company does choose to do this, they risk having the package, and the products returned to them or denied entry.

The EU is looking to standardise the VAT system to make it easier for foreign sellers, and businesses, looking to sell to consumers in the EU and to promote international trade and markets. Simply put, companies must be VAT registered if they are an EU based company or tax registered if they are a company outside the EU. VAT Compliance for overseas remote sellers is absolutely essential. A first step is a registration form, which is available in a plethora of languages for accessibility purposes. The supporting documentation required by the individual country is attached to this registration form, which includes:

  • Proof of tax registration in the home country of operation
  • A photocopy, or scan, of the certificate of incorporation as a company
  • Articles of association, or evidence that the company has this
  • Excerpt from the national register to prove the company actually exists
  • Proof of planned trade, which can be in the form of contracts or invoices
  • The letter of authority, if the company has appointed a local tax agent.

Regulations differ from country to country and also depend on the method of transportation or shipping. VAT requirements for different countries are outlined in detail below:

UK

The UK VAT is 20% and registering for this is absolutely mandatory if you meet any of the following requirements :

  • You or your company store your goods in the UK
  • You sell goods to UK based consumers
  • Your sales in the UK exceed £85,000 (or £70,000 if you are in a different EU country)

If you are located outside the EU, registering for VAT is mandatory, if you sell goods that are stored in the UK, or sold to UK based consumers.

Germany

VAT registration is almost always a requirement when doing business in Germany. There is a risk of severe punishment, and further implications, for companies who do not respect the rules surrounding German VAT, especially given the increase of fraudulent online companies and sales. Amazon sellers are required to register, to ensure their legitimacy, and to protect German consumers. An application must be completed in your local state or region, and then again with a German application form: often only available in the German language, so it is advisable to hire someone fluent in the language to assist you in completing it. This is also important because the German tax authorities are known to be strict, and very thorough, in the process.

France

French VAT requirements for external/overseas companies are strict as there is a zero dollar threshold, meaning that you have to register, no matter what. If you are an EU based retailer selling goods online (i.e. via Amazon or eBay), the threshold is only €35,000. The following documents are required to register for the VAT:

  • Your VAT certificate if you are registered for VAT anywhere else in the EU
  • Articles of association for the sake of proving legitimacy
  • A sample or excerpt from your company’s national trade register

Italy

In Italy, if you are a foreign company that is looking to sell products or services to Italian citizens, you may have to register as Italian taxpayers, especially if you are importing goods into the country. If the receiver is already Italian VAT registered, you may be exempt from this requirement. The following situations are when VAT registration is required:

  • If you are buying and/or selling within Italy to customers that are not VAT registered
  • If you are a supplier hoping to sell goods in Italy without a VAT registration
  • If you are looking to sell over the internet, you must not only register for VAT but also meet the distance selling registration threshold requirements
  • If you are looking to store goods in warehouses or facilities in Italy
  • If you are charging any sort of entry or admission fee to events in the country
  • If you are selling to individuals or businesses in Italy via online platforms such as Amazon or eBay

Various thresholds are dependent on whether you’re looking to sell a product or service, and what nature either of these may be.

Spain

Compared to countries like France and Italy, with more rigorous requirements, Spain has broader VAT rules. The use of the reverse charge is different to most other countries within the EU. VAT registration is required if you are:

  • Importing products into the country, even if you are sending them to another EU country as their final destination
  • Selling or purchasing goods in Spain to customers, or organisations, without a VAT registration
  • Selling products online that meet or exceed the Spanish distance selling VAT registration threshold
  • Holding or keeping products in a facility or warehouse in Spain (because this makes the holding area considered a permanent establishment)
  • If you charge an entry or admission fee to a live event in Spain

For more detailed information, call our specialist accountants, to discuss further requirements, or to clarify any issues you have about any part of the process, the conditions or your company’s obligations. It is also worth looking into assigning a legal representative to oversee that you are meeting your VAT requirements, both at the time of registration and on an ongoing basis, especially in an online world where there are also requirements set out by the selling host such as Amazon and eBay. These can be confusing and overwhelming for those not legally trained.

If you need further help with EU VAT registration, give our experienced advisers a call or fill in the form below for free and no obligation advice.

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