VAT Compliance for e-commerce sellers – accurately manage VAT across the EU. E-commerce is one of the fastest-growing industries worldwide. Online stores are attracting an increasing number of customers each year. However, to keep up with the pace of development in the e-commerce industry, it is crucial to correctly handle VAT and EU VAT. Professional accounting firms offering VAT Compliance services can provide assistance. What is VAT Compliance, what are its benefits, and why should one consider outsourcing VAT Compliance?
Settlement and VAT record-keeping for the e-commerce sector pose significant challenges. Factors contributing to this include the diversity of regulations across different countries where online sales are conducted, fluctuating tax rates, documentation and reporting obligations, frequent legislative amendments and regulatory changes, as well as the threshold determining the sales limit beyond which registration and VAT settlement are required in a given country. Therefore, for e-commerce entities, a comprehensive VAT Compliance service may prove to be a beneficial solution.
What is VAT Compliance for online sellers?
VAT Compliance comprises a set of principles and procedures that must be adhered to by businesses engaged in the sale of products or services subject to VAT taxation. It comprehensively defines the approaches through which companies report, settle, and remit VAT to the appropriate tax authorities.
For e-commerce sellers, leveraging VAT Compliance entails the correct calculation of VAT on international transactions, compliance with local tax regulations in countries where they conduct sales, thus ensuring the accuracy of settlements and enabling them to focus solely on managing their business operations.
The scope of VAT Compliance services includes, among others:
- Collecting, storing, and archiving transaction-related documents;
- Verifying customers’ VAT numbers;
- Proper VAT calculation on purchases and sales;
- VAT and EU VAT registration and deregistration (including for entities outside the EU);
- Regular preparation and submission of VAT and EU VAT declarations;
- Preparation of documentation for VAT refunds;
- Monitoring INTRASTAT thresholds in individual countries;
- Registration and VAT settlements within the VAT-OSS procedure;
- Tax advisory services and VAT and EU VAT optimization;
- EORI system registration for e-commerce sellers;
- Late registration for EU VAT and retrospective VAT settlements;
- Handling inquiries and representation before tax authorities throughout Europe.
The VAT Compliance service within e-commerce accounting constitutes an essential and highly beneficial tool for all e-commerce entities. It extends beyond VAT reconciliation, encompassing a comprehensive set of solutions and tax advisory services in the e-commerce industry. Utilizing VAT Compliance is advantageous at every stage of online store development, both during its establishment and VAT registration, as well as in later stages, during expansion into international markets and the initiation of sales in new countries.
VAT Compliance: Obligation to register as a VAT taxpayer in another EU country
A company operating an online store is obligated to register for VAT in the EU in a country other than where it is headquartered if it meets one of the following conditions:
- Achieves sales above a specified limit and is not registered for the VAT-OSS procedure. Effective from July 2021, the distance selling threshold for individuals within the VAT e-commerce package is 10,000 euros net for all EU countries annually.
- Stores goods in a country other than its country of origin, even if it’s a rented warehouse or under models like Amazon FBA.
Amazon FBA and VAT registration and declaration in VAT Compliance
Amazon FBA (Fulfillment by Amazon) is an innovative service that enables online store sellers to outsource the logistics and warehousing process. However, it also entails meeting specific tax requirements, including those addressed within the VAT Compliance service.
Therefore, registering for VAT in the country where the e-commerce entity operates is necessary for the Amazon FBA service. Depending on the location of the Amazon warehouse, the e-commerce entity should register as a VAT payer in the country where the goods are stored within Amazon FBA. The registration process varies by country, making it beneficial to utilize the VAT Compliance service, where professional offices and tax experts handle it. It’s also worth noting that this process can take anywhere from several weeks to even several months depending on the country, hence planning ahead is advisable.
Comprehensive VAT Compliance service for e-commerce businesses – Benefits
By utilizing the VAT Compliance service for e-commerce, a company achieves numerous benefits. The most significant ones include:
- Assurance of the correctness and timeliness of tax settlements related to VAT.
- Cost optimization.
- Convenience and time savings.
- Peace of mind and the ability to focus on running and growing the business.
- Dedicated customer care.
- Experienced tax advisors with knowledge in both the e-commerce industry and European markets.
- Integration with the accounting and sales systems of the e-commerce entity.
- Automation of data and accounting document retrieval.
- Extensive reporting for accounting and e-commerce needs.
- Comprehensive service, including VAT registration and settlements in Poland and Europe, VAT OSS procedures as part of the VAT e-commerce package, payroll and HR services, online sales reporting, and Intrastat.
- 38 offices throughout Europe.
- Full responsibility of a professional accounting office for VAT and EU VAT settlements.
- Client portal – remote, 24/7 real-time access to documents in the cloud.
- Customer Information, providing ongoing updates on the latest legal and tax changes.
VAT Compliance – choose a professional accounting office! Why choose amavat®?
E-commerce transcends borders, and companies in this industry offer their services and goods worldwide. Therefore, when entrusting tax matters to an external entity, it’s worthwhile for them to have international contacts, be members of relevant business organizations, have a network of offices and specialists throughout Europe, and possess international certifications confirming their skills and potential.
VAT Compliance is an essential element of conducting e-commerce business. Implementing this service will help avoid many legal and financial problems, ensure the correctness of VAT tax settlements, and ultimately translate into business development and gaining customer trust. Therefore, it’s worth using the VAT Compliance service by collaborating with a professional accounting office.
Such an office is amavat®! We have 7 years of experience in the e-commerce market and a network of 38 offices throughout Europe. We have a professional team of tax advisors for the e-commerce industry and offer comprehensive VAT Compliance service.
With amavat®, you can focus on running your e-commerce business, knowing that all accounting and tax matters will be properly handled. Our knowledge and experience allow us to take care of your finances, providing you with peace of mind and time to do what you do best – grow your business!
If you are running an e-commerce business and are looking for a comprehensive and unique VAT Compliance service, we invite you to contact our experts: Contact – amavat®.
We are an independent member of HLB. THE GLOBAL ADVISORY AND ACCOUNTING NETWORK.