Online D2C sellers: your quick guide to European VAT registration and the One Stop Shop

Clare Daley
April 2, 2024
5 min read
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Online D2C sellers: your quick guide to European VAT registration and the One Stop Shop

Keeping up with value added tax (VAT) compliance can become more challenging as your company receives more international orders via your website, social channels and online marketplaces. 

 Whether you’re an EU business looking at neighbouring countries or an international brand branching out into Europe, Hooley Brown has compiled this quick guide to help you manage European VAT requirements.

Are VAT regulations different for EU and non-EU companies?

If your business is based in the European Union and you’re selling to consumers in other EU countries, you must be registered for VAT in the member state where you’re established.

You can then register for the EU’s VAT One Stop Shop (VAT OSS) union scheme, which allows you to calculate VAT due across all member states in a single return. This approach is advantageous for businesses with an income of less than €10,000 from goods sold to other EU member states during one tax year. 

If you’re a non-EU company, you can register for the VAT OSS non-union scheme for suppliers established outside the European Union that are selling to consumers in the EU.

When your export business inside the EU grows, you need to examine your sales channels and decide whether it’s time to register for VAT. If you sell via online marketplaces like Zalando, Bol, and Amazon, they’ve developed various schemes to help you comply.

Every EU country has its own VAT number, so you have the option to register for VAT collection separately in every end market depending on sales volumes and whether you keep stock in that market. However, joining the VAT OSS Union scheme is often simpler and more efficient in the start up phase, as you don’t have to register for VAT individually in every EU country you trade.

What is the VAT One Stop Shop scheme?

The OSS was set up in 2021 to manage VAT requirements for companies supplying goods and services to EU countries, including firms that are distance selling.

There are two programmes that could be relevant to your business:

IOSS: Before 2021, some companies selling goods in the EU were exempt from import VAT under the Low Value Consignment Relief (LVCR) scheme. LVCR was replaced by the Import One Stop Shop (IOSS) programme, which allows companies to collect import VAT on B2C orders at the point of sale, provided consignments are €150 or less and are coming from third territories or countries. 

Companies based outside the EU must appoint an intermediary to act on your half to be IOSS compliant.

OSS: Differing national VAT thresholds were replaced in 2021 by the OSS scheme, which sets a €10,000 VAT threshold for distance selling goods in the EU. Companies can register for the programme in one member state, saving up to 95% of the red tape associated with European VAT compliance.

Do any European countries have different processes for managing VAT compliance?

While the EU One Stop Shop takes care of most value added tax concerns, it’s worth noting that a few non-EU countries have specific requirements when it comes to registering for VAT. These countries include: 

Norway: If you sell goods in Norway, you must register for VAT when your taxable sales reach 50,000 NOK during any 12-month period. You can register with the Norwegian tax authority directly if you’re located in the European Economic Area (EEA). If you aren’t, you must appoint a Norwegian VAT representative.

Switzerland: When you’re selling in Switzerland, if your global revenue exceeds ₣100,000 or you’re on track to exceed this figure within 12 months, you need to register for VAT within 30 days of performing your first taxable transaction. Non-resident sellers must appoint a local tax representative and you may sometimes need to provide a bank guarantee.

UK: Companies selling goods to UK consumers must register for VAT if your VAT taxable turnover exceeds £85,000. You may wish to apply for a VAT number even if you don’t meed the threshold initially, as this will enable VAT deferment instead of having to pay VAT at the time of import. You can use the UK government’s online portal to register.

Let Hooley Brown manage your European VAT compliance

Even with schemes like the One Stop Shop, which are designed to simplify VAT compliance, keeping up with European tax laws can drain your resources.

Hooley Brown can help you manage the burden of regional VAT requirements by connecting you with in-market specialists and accountants who can help you register and pay the correct amount of VAT in all your end markets.  

Need expert help with selling compliantly in Europe? Drop us a line to set up a free, no-strings introductory call with our directors.

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