E-commerce is not a straightforward business in terms of accounting. If you are trading in the EU, you will likely need to register for VAT in the EU before you need to register at home. The matter is complicated, and you will need to seek specialist advice, but here is some information to get you started.
Since the UK left the EU, VAT for e-commerce looks set to get more complicated, at least in the short-term. Entrepreneurs must stay up to date on current legislation and seek the appropriate guidance in each country they trade-in.
VAT in the UK
As a quick refresher, the current VAT threshold in the UK is £85,000. This is not per tax year or calendar year but is based on your turnover over the last 12 months. You must register for VAT in the UK if you have crossed the threshold or if you are going to do so in the next 30 days. You can also opt to register voluntarily at any stage in your business’ lifecycle.
If you don’t register once you hit the mandatory threshold, penalties will be incurred, usually as a percentage of your VAT due.
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VAT in the EU
As a general rule, non-resident businesses (i.e. those who registered addresses are outside of the country) must register for VAT immediately if they intend to trade in it or to store goods in it, but e-commerce falls under the EU distance selling guidelines.
EU distance selling VAT thresholds
HMRC describes distance selling as “if you’re selling goods or services through digital TV, by mail order, by phone or text message. This is called distance selling”. This also incorporates online selling. Whether you are selling a physical product or a digital download, if the sale is online, away from any premises you may hold, it is distance selling.
Below is a list of the current thresholds for each EU country for distance selling or e-commerce purposes online in the country or to store goods there:
EU distance selling VAT thresholds as of March 2020
| Country | EU distance VAT threshold |
| Austria | € 35,000 |
| Belgium | € 35,000 |
| Bulgaria | BGN 70,000 |
| Croatia | HRK 270,000 |
| Cyprus | € 35,000 |
| Czech Republic | CZK 1,140,000 |
| Denmark | DKK 280,000 |
| Estonia | € 35,000 |
| Finland | € 35,000 |
| France | € 35,000 |
| Germany | € 100,000 |
| Greece | € 35,000 |
| Hungary | HUF 8,800,000 |
| Ireland | € 35,000 |
| Italy | € 35,000 |
| Latvia | € 35,000 |
| Lithuania | € 35,000 |
| Luxembourg | € 100,000 |
| Malta | € 35,000 |
| Netherlands | € 100,000 |
| Norway | N/A |
| Poland | PLN 160,000 |
| Portugal | € 35,000 |
| Romania | RON 118,000 |
| Slovakia | € 35,000 |
| Slovenia | € 35,000 |
| Spain | € 35,000 |
| Sweden | SEK 320,000 |
| Switzerland | N/A |
Do I need to register for VAT in the EU?
Yes, if you have crossed any of the above thresholds. It does not matter if you are above the UK threshold. Each country’s requirements for VAT are viewed independently, which is why it is so essential to have accurate records and the right advice for every nation you conduct sales in.
How do I register for VAT in the EU?
If you are over or approaching a threshold you must contact an e-commerce specialist accountant in the country in question to ensure you register correctly. They will talk you through the process and register you as a non-resident trader for VAT purposes. Using multi-currency accounting software, such as Xero, will help you stay on top of your liabilities and remove the risk of penalties.
Next steps
As previously mentioned, VAT matters are complex and vary for different businesses. In order to have complete clarity, VAT should always be dealt with by a specialist accountant in that country. If you are looking for advice on your UK VAT liabilities, or on the general growth of your e-commerce business, get in touch with our team and we will be happy to help.
The best time to act is now.
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