VAT Preparation: Selling Online from the UK into the EU

Hi everyone! Thanks so much for joining this webinar today. We're going to be talking about key considerations for selling online from the UK into the EU. This is a super important topic for ecommerce businesses when they're branching out into cross-border sales, especially when you're trying to stay VAT compliant. On this webinar, we're really hoping that will provide some clarity and practical steps to help you if that's where you're at right now.

About A2X & 1stopVAT

I'm really delighted that we're joined by Ruta from 1stopVAT. Ruta brings a wealth of knowledge and expertise in VAT compliance and international ecommerce. We're really excited to be able to have her on this webinar, and she's going to share some of her knowledge with us today.

So for those of you who don't know, my name is Elspeth. I'm the UK Go-to-Market Manager at A2X. I'll give you a really quick overview of A2X if you're not familiar. A2X is an accounting software that automates the reconciliation of sales, fees, and taxes from all the different ecommerce platforms like Amazon, Shopify, eBay, Etsy – all the big ones. We send your data through to QuickBooks, Xero, and Sage (if you're in the UK) and also NetSuite. We simplify financial reporting, give you organized transactional data to the right places on the P&L and the Balance Sheet, and we give you categorized summaries that match back to the amount that hit the bank. We try and streamline the process and make it as easy as possible for you.

So without further ado, I'm going to hand over to Ruta. Ruta, why don't you introduce yourself, tell us a bit about yourself, your background, and what you do at 1stopVAT?

Okay, so hello once again. I am Ruta. I'm currently, I guess, almost five years at 1stopVAT. I am the head of indirect taxes. So 1stopVAT is the VAT compliance company that is helping ecommerce businesses to deal with all VAT, sales tax, and GST matters all over the world. So it means that if any seller has issues or questions about taxes, indirect taxes, these questions can be raised to 1stopVAT, and we can help you with that – starting from VAT consultancy, then VAT registrations, and, of course, compliance.

Alright, so in terms of an agenda for today, we're going to try and cover six main points, and then we're going to follow up with some Q&A at the end. Six main points to cover are:

Agenda

Ecommerce – we're going to do just a general overview of distance sales of goods and electronically supplied services (ESS). Then we'll focus a little bit more specifically on distance sales of goods in the EU. We'll do a quick touch on sales of ESS, because that may be impacting some of you if you're selling digital products. We'll talk about VAT registration and the reporting process in the EU. We'll try to give you some first steps for selling online from the UK to the EU if that's where you're at and that's the direction you're going in as a business. Then, right at the end, we'll just talk quickly about how 1stopVAT and A2X can help.

Distance Sales of Goods and ESS (Electronically Supplied Services)

So Ruta, first of all, maybe you can start by giving us a brief overview of distance sales of goods and services in the EU.

Yes, sure. So I guess most online sellers have faced or somewhere encountered the term "distance sales," but maybe not everyone fully understands what it exactly means. In simple words, distance sales are the sales made by the seller without physical contact with the final customer. In most cases, distance sales are sales made online, via online shops or via marketplaces. Distance sales can be of both types – they can be physical products or digital products as well.

When I am using the term digital goods or digital products, it means that we are talking about the sales of downloads of pictures, documents, videos, cloud-based software, or anything that is not touchable but is reachable and downloadable online.

Distance Sales of Goods in the EU

That's a great overview of distance sales, Ruta, especially for ESS or digital goods. What do online sellers need to know about selling physical goods from the UK to the EU?

Yep. So if we will focus and start talking more about distance sales, about sales from the UK to the European Union especially, the main thing that the business has to know is how they will move the stock or the products to the final customers. In some cases, businesses decide to import stock in bulk into one or another European country, store the goods there, and then move the goods after the order is confirmed to the final customer. But in that situation, every business has to know that before the stock is moved to the European Union, the business has to be registered as a VAT payer in the country where the stock will be imported.

Of course, besides VAT, the business has to get registered with the EORI number. What does this mean for the business? Without that number, once the products are imported into the European Union, there will be no possibility to reclaim paid import VAT, and in some cases, this might be quite a significant amount of money.

To conclude, if the business decides to hold stock in the European Union, it means that the business has to be registered as a VAT payer in the country where the stock is and be ready with the EORI number if the goods are imported from outside of the European Union.

Another type of business decides to just do the sales directly from the UK to the final customer in the European Union. If we are talking about small products with a value not higher than €150, it means that the seller has to be registered in the IOSS scheme in Europe and apply the appropriate VAT rate depending on where the final customer resides. This means collecting VAT before sending the goods to the final customer.

For the final customers, this approach is really appreciated because the customer knows the exact value of the product, and no extra charges will be paid to customs once the product arrives in the European Union. But of course, the main rule is that the product’s value should not be higher than €150. If the value is higher, then it means it is the decision of the seller whether the seller is the importer or whether the customer is the importer, and they then have to deal with all the customs procedures in order to receive the product.

What Is OSS (One-Stop Shop)?

So you've mentioned the IOSS registration. Can you talk about that a bit more?

In general, talking about IOSS, we have to start talking about OSS, which is actually One-Stop Shop. This is how it should be named if we use the full naming of the scheme. This scheme is used by sellers who are doing distance sales in the European Union. This scheme actually helps the sellers deal with VAT compliance all over the European Union with a single registration.

What does it mean? If we take an example, let’s say a UK-based established company decides to hold stock in Germany and, from Germany, move all the products to the final customers in any European country. So, the seller registers as a regular VAT payer in Germany because the company holds stock in Germany. Additionally, they register for the OSS scheme in Germany as well.

The company can then leave any concerns about having to be registered or having to deal with VAT in other countries because OSS registration will cover everything. So, if a UK business sells products to Spanish customers, or the goods are sent to Poland or France, VAT should be collected according to the customer's country. But that will be reported in a single OSS return once a quarter.

For the sellers, this OSS scheme truly simplifies all the matters when we talk about EU VAT.

There are several OSS schemes. The first one is Union OSS. That Union OSS will be the one that I have just mentioned in the example. If, let’s say, a UK-established company stores goods in Germany and decides to deal with all the European VAT in a simplified manner by using OSS, that company will be registered for the Union scheme.

If, let’s say, the UK-based business is doing sales of digital products – let’s say the UK business is doing sales of online games or videos to European customers – it means that the UK business has to, or rather can, register for the OSS scheme but under the non-Union scheme. The non-Union scheme is used only for digital sellers to deal with VAT in the European Union.

Then the third scheme is Import OSS. This scheme will be applicable for businesses who import low-value goods to the final customers in the European Union. Low-value goods mean goods with a value that is not higher than €150.

That's a great overview of One-Stop Shop and the different schemes that are available. Thanks, Ruta.

Selling via a Marketplace (e.g., Amazon)

At A2X, we work with online sellers who sell on Amazon, which is a marketplace, and also with sellers who sell on Shopify, where they have their own online store. Could you tell us how VAT liability works for sellers who sell via a marketplace versus an online store?

Quite a lot of businesses are doing business via marketplaces. In this situation, when we talk about online businesses that are doing sales via marketplaces into the European Union, this means of sales can actually be one of the solutions to avoid dealing with all the VAT matters. In several types of sales, the seller will not be responsible for VAT, but the platform will be.

If we take this scenario, let’s say a UK-established business is holding stock in Germany and is doing sales via Amazon or any other platform to final customers in the European Union. It means that the VAT liabilities go to the marketplace. This means that the UK business does not have to deal with VAT on the sales that are made via the marketplace.

As well, if a UK business does sales via Amazon and the goods are low-value goods shipped directly from the UK to EU customers, the business does not need to deal with IOSS or any VAT scheme in Europe. The marketplace will take all the VAT liabilities.

Selling via an Online Store (e.g., Shopify)

A totally different situation will be if the seller decides to do the sales directly via an online shop. In this case, all the liabilities go directly to the seller. Once again, if the seller decides to hold stock in the European Union in any country, it means that the business must be registered as a VAT payer without any threshold.

If I am a UK business holding stock in Poland, Germany, Spain, or France, I must be VAT-registered in all these countries without any threshold. This is really important because businesses often forget this or find incorrect information online about thresholds in one country or another. For non-resident businesses in the European Union, there is no VAT registration threshold in such situations.

If the sales are made in the European Union from the countries where the stock is held, the seller has the liability to collect VAT at the VAT rate of the country where the product will be sent. For example, if the product is sent from Germany to Spain, the sale should be taxed with Spanish VAT. If the product is sent from France to Italy, the sale must be charged with Italian VAT. It is the seller's liability to apply the proper VAT rate and remit that VAT to the appropriate tax authority.

If the sales are made via an online shop directly from the UK and the product is a low-value product sent directly to the final customer, the seller still has the liability to collect tax at the moment of sale. The tax rate must be applied based on the destination country within the European Union. For example, if the seller from the UK sends goods directly to Spain, Spanish VAT must be applied at checkout.

In these situations, I guess all the sellers will find benefits if they do sales via a marketplace.

How to Prepare for Sales via Marketplace (e.g., Amazon)

Thanks, Ruta. So for sellers who sell on a marketplace, it sounds like Amazon or eBay – marketplaces like that – a lot of the VAT liability is taken on by the marketplace. But that doesn't mean that it's all taken care of. Maybe you could tell us, what are some things that marketplace sellers need to do to properly prepare for VAT?

Definitely, as I have mentioned several times already, but I am repeating this because from my experience, this is the most common mistake that businesses make. They start doing sales and importing goods into the European Union without proper preparation.

Once again, if the business decides to move goods into the European Union, the VAT registration will be mandatory at once, before that stock is moved into the European Union.

As well, if the seller decides to do sales via a marketplace such as Amazon and uses FBA programs, it means that the stock will be held in five or six different European Union countries. So, the business has to be prepared to have five or six different VAT registrations and to prepare to deal with compliance in each and every country.

Another thing that businesses have to be prepared for before doing sales via a marketplace is to perfectly understand what type of product the business is selling. Why is this important? Because the rates in the European Union differ. Despite the fact that the European Union has a VAT directive that regulates how countries can set up VAT rates, in each and every country, the VAT rate differs for different types of products.

So let's say if a business decides to sell baby clothes, in one country the VAT rate will be a reduced rate, and in another country, it will be the standard rate. You have to choose the proper product type and rate when you set up your online Amazon account.

Also, when we talk about account setup, you have to provide Amazon with all the exact details about your business and exact details about your VAT registration in the European Union. Your VAT registration documents have to show the same company name and the same company address as you have on your company incorporation documents.

If there are any differences in the wording, from what we know from experience, let’s say your business is named “Ruta LTD,” but on the German VAT certificate, your business is named “LTD Ruta,” it will be treated as not the same company. Your code will not be treated as valid, and you will be blocked from sales in that market.

You have to be really careful how you are setting up your account and what details you are providing to Amazon, as it will impact how successfully you start your sales. Sales blocks are really frequent when we talk about sales in the European Union if something is wrong with the setup.

Why is this so? Because last year, the European Union implemented the DAC7 directive. Marketplaces are now responsible for ensuring that all marketplace sellers and merchants are VAT compliant. That’s why marketplaces are checking every detail of the merchants.

As we’ve already discussed, every business has to understand and know the rules. This means that if sales are made via a marketplace, the VAT liability goes to the marketplace for B2C sales – sales to final customers. However, we all know that it might happen that one or another product is bought by a business.

If a business orders your product, you, as the seller, will be responsible for reporting such a sale on your regular European VAT return. Amazon or any other platform will only deal with B2C sales made via the marketplace.

So, I guess with that, we can conclude about sales via marketplaces. I’m not sure – maybe, Elizabeth, you have something extra to add on that?

No, yeah, we see so much of that now. We see Amazon – a lot of the transactions will fall into the Marketplace Facilitator Tax, and we split those out for sellers so that they don’t overpay their VAT. But there will always be some cases, particularly if they’re selling high-value goods, where there will always be some VAT that they’re responsible for remitting.

It’s also super helpful, and we also find the settings in Shopify really helpful for sellers. They allow you to collect VAT at the arrival rate in the country you ship to, which, again, if you want to sell cross-border with Shopify, is a really useful feature that they offer to sellers.

Yeah, it’s a big one now, and it does help sellers because, if the third party is going to take that burden off your hands, that’s good. But you’ve just got to be aware that it isn’t every case. As you’re saying, there are situations where you’re still responsible for remitting that EU VAT.

Sales of ESS (Electronically Supplied Services)

Okay, so from the sales of goods via marketplaces and online shops, maybe we can quickly jump to the sales of electronically supplied services. This is actually like maybe the smarter term for digital sales of digital goods or digital products. If you try to Google something, you can easily search for digital goods or products, and you will find the same information. But in the European Union, officially in documents, you will find the term "electronically supplied services."

So, it’s good for sellers to know that because I really spotted that when you gave us that information. We do call it something different, so that’s really helpful.

Here, maybe the main thing the business should know when they do sales of this type of product into the European Union is that, for non-European businesses, there will be no threshold. It means that from the first sale of your app, application, or software to a B2C customer in the European Union, the business – the seller – is liable to collect VAT according to the country where the customer resides.

So, it means that if a UK business sells some kind of app – maybe a dietary app – to a customer in Spain, it means that Spanish VAT has to be applied. In these situations, actually, there is only one case where the business does not need to charge European VAT. This is when the customer provides a valid VAT registration number in the country where that business is established. This is the only case where the seller can use zero VAT on the sales of digital goods.

Just to mention, as we already talked about marketplaces, if you are doing sales of digital products into the European Union via a marketplace, the marketplace is liable for the VAT, not the seller. The marketplace takes responsibility for the VAT.

Let’s quickly jump into the global situation. Not only in the European Union are digital products taxable, and in most cases, when businesses are doing digital sales, they are doing it globally, often without limitations. Keep in mind that not only the European Union has these regulations requiring non-resident businesses to be registered for VAT and to collect VAT where the customer resides.

Currently, 103 countries have implemented this type of law that VAT has to be collected if the business is doing sales of digital products to that country. Also, keep in mind that each country’s VAT registration thresholds differ. There are quite a lot of countries that do not have a VAT registration threshold. Be careful and do not make significant sales to those countries if you are not VAT-registered or are not tracking the threshold. I guess this is the main advice when we talk about electronically supplied services.

Good advice. As we already started discussing, it will be relatable whether we talk about sales of physical goods or digital goods when it comes to the registration process. Businesses have to be prepared, as registration processes really differ in each country.

VAT Registration & Reporting Process

If we talk about the European Union and a business has the liability to have standard VAT registration, it means that each country’s requirements will be different. I guess everybody knows that countries have different languages, which means your documents have to be translated into the native language.

There are several countries, and maybe I can name Spain as an example. It is quite difficult to get registered there, and you have to prepare a lot of documents. Not only are translations needed, but the documents also have to be apostilled or notarized. The registration process usually takes around two months, and it is quite a lot of documents that will be needed for you in order to start VAT registration.

In Germany as well, registration is quite popular because of the stock and, of course, the market. However, the registration process also takes around two months.

And that's something you guys can help with as well, right? You do that on behalf of clients?

Yes, definitely. Because for businesses that actually have to focus on how to make higher sales or focus on the proper product, there is no time to prepare for the VAT registration. I guess it is almost impossible to understand each and every country's laws and regulations and the process of how the registration works. Not every country has digitalized registration processes. In some countries, you can do everything online, but in others, you have to prepare paper forms, sign them, send them by post, and wait for a response – also by post. You cannot call, you cannot email.

To deal with that, definitely, 1stopVAT can help in order for businesses to focus on their successful expansion into the European Union.

Of course, if there is no need to have standard VAT registration, and the business needs IOSS or OSS registration, the situation is totally different. The registration is truly simplified, no specific documents are required, and the registration does not take as long as standard registration.

OSS is not only simplified compliance but also a simplified registration process, and its return is simple as well. I've looked at one or two, and they seem quite straightforward. Like I said, some in-house finance teams could do those themselves in some cases, but yes, for sure.

And always, maybe as well a tip for businesses – if you decide to get registered in one country or another, you can choose the country where you will be registered for OSS. Always, you know, you can ask your service provider – I don’t know if you will be dealing with 1stopVAT or with another company – to do the registration in the country you prefer, where you understand the language, and etc. It will be easier for you to understand what is named in the return or maybe to take over in-house all the compliance if, in some cases, it will be needed.

It will be easier for you, let’s say, to take over Irish OSS returns compared to an Italian one. We do have quite a few opting for the Republic of Ireland for the One-Stop Shop.

Yep. So, actually, these are the main things. Just keep in mind that there are different registrations and different terms. As we already discussed, you have to be prepared and VAT-registered before your sales into the European Union. Keep in mind that it will take time to register, so you have to be prepared before your first sales into the European Union.

Yeah, that's really good, good, good inside information on the process.

First Steps: Selling from the UK to the EU

Okay, so we wanted to make this really useful if this is you starting out for the first time with EU sales. We’ve kind of compiled a checklist of all the steps that you’ll want to take when branching out into the EU. Ruta, I think you’re going to walk us through this, and I think this is going to be really helpful for some of our listeners.

MH: So, it will be, I guess, like a summary of everything that I’ve already mentioned.

Yeah, so I guess first of all, always, if there is no good product, there will be no sales. Of course, first of all, it is always the most important – the product. The product that you’re going to sell into the European Union.

Before doing the sales, you definitely have to do the research to see if there are any specific regulations in the European Union. Depending on the type of your product, you can understand what VAT rate will be applicable for one product or another. Maybe one product will be exempt in one country, and maybe in another country, it will be taxed at the standard rate. Standard rates differ quite significantly. Let’s say in Denmark, it’s 27%, and in Luxembourg, it’s 17%. Every business has to know that because the setup of the accounting systems or the setup of the marketplace accounts will require that information.

Another step is definitely to decide how you will be doing the sales – whether the sales will be made via platforms such as Amazon, eBay, or any other one, or whether you will do the sales directly via your own online store. Why is this important? Because, as we already talked about, if you’re doing sales directly via your own shop, all the VAT and any tax liabilities will be on your business. You will be the one who is liable for the collection and the remittance of the collected VAT. If you decide to do sales via a marketplace, quite a lot of VAT liabilities will be transferred to the marketplace.

The next step is to decide whether your goods will be stored in the European Union or whether you will move goods directly from the UK to European Union customers without storing the goods. Why is this important? Because it determines whether you need standard registrations in the European Union or whether you can deal with a simplified OSS system in the European Union.

Once you’ve answered all the previous questions, you should already know that in one or another country, you definitely have VAT liabilities. If you cannot detect that, you can definitely contact 1stopVAT, which can help you understand where you have liabilities and deal with all the registrations to smoothly go through the process and remain compliant in any country that you need.

This is truly important because if you are not compliant and are doing sales via a marketplace, your accounts will definitely be suspended sooner or later. It is quite difficult to unblock them once they are blocked due to a request from the country. Germany is especially active in blocking marketplace accounts.

Of course, even if you do sales via your own store, you still have to be compliant because countries are tracking the sellers. I think that definitely no business prefers to be penalized.

The fifth step is to properly prepare your online store or marketplace account with the proper VAT rates, set up the types of products, the shipping country, etc. This is truly important for successful sales into the European Union.

Last but not least, every business has to deal with a proper accounting system. You have to prepare for that and properly set it up. A2X can definitely help you with that, and maybe Elspeth can give more details on that point.

Yeah, I’d love to underline what you just said about getting it right in Shopify, Amazon, and all these platforms that you’re using. If you get it right in the source transactions, you’ll be in a great place when it comes to actually filing your VAT return. Particularly if you’re using A2X – if you set it up right in Shopify, get it collecting based on the EU country that you’re shipping to, then A2X will automatically detect that and split out those transactions. We split your EU VAT liability from your UK VAT liability, and you’ll be all sorted.

But a really important part of this process – step number five – is making sure your listings are all correct. I find that Amazon, I don’t know if you find the same thing, Ruta, but Amazon is really good at it. They have a lot of systems and checks and balances in place, but with some of the other platforms, you’ve got to do a little more work on the seller side to get it right.

Do you see that too, Ruta?

Yes, of course, because we are receiving quite different types of reports. Definitely, let’s say if the account is set up properly and the seller has activated, let’s say, a tax compliance tool, the reports are really user-friendly, and you can find all the information about your sales. All the sales are taxed properly according to all the rules and everything.

Other platforms definitely do not have such user-friendly reports for the sellers and for the tax compliance companies.

Absolutely. Okay, so we’re going to have just a quick touch on how A2X and 1stopVAT can help you in collaboration with each other. We do quite different things, so we’ll touch on those, and then Ruta will just tell us a little bit more about 1stopVAT.

How A2X Helps with VAT Compliance

But really quickly, on the A2X side, we’re all about accurate accounting. We’re about getting the right information into your accounting system and doing it quickly, so it eliminates all of the manual processing time.

The good news about A2X – and I always find the relief when I talk to UK accountants and bookkeepers – is that we have a whole suite of VAT functionality. We’ve been working on this since, I think, 2019 when we introduced that VAT functionality, and we’ve been refining it through the years.

We can split sales by jurisdiction or taxable jurisdiction. Ruta talked a lot about marketplace tax, where Amazon has been required to collect and remit the VAT on your behalf. We can separate that out for you. We often find that sellers are over-remitting VAT in some regions because they’re not accounting for the fact that Amazon has already done some of that for you. So we’ll split that out automatically.

We can split sales by tax rate and different product types. We’ve talked about different rates for different products – that’s all taken care of.

If you wanted to, say, use 1stopVAT for your EU VAT returns, we could split all of your EU VAT from your UK VAT. You could continue as usual, doing your UK MTD VAT return, but use the services of 1stopVAT to remit the EU returns.

We’re really focused on compliance in terms of VAT. We give you journals that match back to the amount that hit the bank and feed through to your Making Tax Digital tax return. They also streamline your returns and audits.

One of the great things I always like to tell people about A2X is that the data goes into your accounting system, whether that’s Xero or QuickBooks, and it’s there – it’s always, always there. Attached to every journal that we send is a raw data file that goes down to the order level. So, should you ever have an investigation, you’ve got the data right there. You don’t even have to go back to A2X – it’s there where you need it, when you need it, ready.

We handle multi-marketplace, multicurrency transactions. You can sell across the whole world – you can sell on Amazon Saudi Arabia, Amazon North America, and the whole EU region. We will be able to pull that data in and translate it all into sensible accounting data.

We also give you breakdowns on fees. This has been a really big issue for Amazon sellers, particularly since they changed the rules on Amazon fees on August 1 of last year. We’ll split your fees out. For example, Amazon is a really good case study. Usually, UK advertising has a different VAT rate than EU advertising, and we’ll split that all out for you and automate the process so you don’t have to spend lots of time scratching your head over it.

As I’ve mentioned before, we post these VAT-inclusive entries through to Xero, Sage, or QuickBooks Online. It’s already there for you to remit your VAT returns or give the information to your third party to handle the EU VAT returns.

Just a quick overview of how it works, since some people haven’t seen this:

When Amazon pays you or Shopify, you receive that one amount that hits your bank feed in Xero or QuickBooks – whichever you’re using – and you’ll see it come through. We do see sellers that will automatically reconcile that whole number to sales, but that isn’t a correct reflection of the actual accounting data that’s gone through that settlement. That number that hits your bank will be made up of many different transactions. It could be sales, shipping revenue, or reserve balances – a big one. Oftentimes, the marketplace is reserving a balance and carrying it forward, and you need to account for that on your balance sheet. There will also be multiple types of fees and the VAT or other sales tax that you then need to remit.

What we do is break that all down for you into a journal or an invoice, depending on which accounting system you use. We take all the manual processing work out for you. You don’t have to do an Excel spreadsheet, and it matches back exactly to the amount that hits the bank. We’re always looking for that green match on the bank feed. Job done, it’s reconciled for that period.

Then that automatically feeds through if you use the standard settings to your UK VAT return. Any EU VAT will be isolated on the balance sheet, ready to be remitted separately on one of these returns that Ruta has told us about.

That’s how A2X can support you with your EU VAT and your UK VAT, but I’m going to hand back to Ruta now, and she’s going to tell us about some of the services 1stopVAT can give you to help with your EU VAT returns.

How 1stopVAT Can Help with VAT Compliance

Yes, so, as our company name says, we are focusing on VAT. Currently, 1stopVAT has a lot of expertise in VAT compliance, submitting VAT returns in many countries all over the world. Statistically, annually, we are submitting around 12,000 returns – not only in the European Union but globally.

Our clients are actually expanding together with us. If our clients need VAT registrations in one or another country, we expand with them. We can offer services in new countries as needed for our clients.

We deal with any size of client, starting from really small ones that are not doing a lot of sales, up to unicorns that are doing sales of physical products, digital products, software, etc.

To remain competitive in the market, we offer services for any type of business and any type of data that our clients provide to us. As Elspeth already noticed and noted, Amazon is a simplified report. It is maybe the easiest way to deal with VAT calculations, but we can also deal with any type of reports our clients provide to us.

We can be very flexible for any type of client. The main services that we offer include VAT consulting. We can always discuss your situation – whether you have already started and have penalties or have received letters from one or another authority. We can discuss how to handle it, how to deal with it, what process to choose, and what steps to take.

If you are now only planning expansion into the European Union or any other country, we can advise you on what tax liabilities will apply to your company. Of course, if there is a need for VAT, sales tax, or GST registration for your business, we can handle that as well.

And of course, going forward to deal with all the VAT returns submissions, providing you with all the payment details, and helping you to be fully compliant in any country that is needed for your business.

That’s brilliant, and that advice piece is so important as well, isn’t it? That people can just come and ask a question when they have it – it’s so helpful.

Yes, okay, so we’ve got a few questions here. I think there’s maybe one that I’ll answer, and then there are a couple that it would be great if you could answer, Ruta.

Q&A

Is it enough to have an OSS scheme in Europe to cover all EU VAT liabilities?

So, this is a good one, just to clarify this point, actually, because I think you touched on this. Will it be enough to have a One-Stop Shop scheme registered – I’m assuming in Europe – to cover all EU VAT liabilities?

Yes, it is a really frequent question, and actually, no, it is not enough to have only one registration. Maybe it will be enough for IOSS only in the cases where we talk about the import of low-value goods into the European Union directly to the final customers. But in any other cases, it will not be enough to have OSS registration.

If you’re storing goods in Germany, for example, you’d need a mixed approach to your VAT registrations, wouldn’t you? Because a lot of people seem to store in Germany or Poland.

Yes, it will not be enough, and standard registrations will be needed as well.

Yeah, that makes sense. Okay, how about this one:

How many different VAT service provider companies do I need to stay VAT compliant in Europe?

Yeah, so actually, I’m quite happy to say that it will be enough to deal with only one provider. Let’s say if a business chooses 1stopVAT, as our company acts as a single point of contact. This means that, despite the country in which you have VAT liabilities or need to be compliant, you can contact and deal with one assigned manager for your company, and you will be able to handle all the cases all over the world. So, it is fully enough to have one service provider.

If they had, like, a North American Shopify store or Amazon North America, you’d be taking care of that as well rather than referring them on?

Yes, of course. It’s the same regardless of whether it’s the USA or Canada – it doesn’t matter.

Okay, that’s good to know. Okay, so a couple of quick ones – these are questions we get quite a lot from A2X.

How does A2X handle multicurrency?

What we do is always create our initial entries in the home currency. So, say it’s a Polish settlement – it’ll be in Polish currency. Then we push it through to the accounting system, and each of the accounting systems has its own multicurrency feature. We use that feature to convert it back to the amount that hit the bank, and we usually give you a prediction of what that conversion amount will be.

So, it works really well if you’re a UK company selling in North America, Canada, or all over the EU with different currency rates, as long as you’re using multicurrency in your accounting system. It works well.

Does A2X connect with all Amazon marketplaces?

Yes, it does. We’ve even got some customers, as I mentioned earlier, on Amazon Saudi Arabia, North America, Canada, Mexico, Brazil – we’ve got you covered with the Amazon marketplaces.

Common VAT mistakes when selling from the UK to the EU

I think this one's for you, Ruta, if you can take one more because I think this is actually a really good one and kind of sums up what we've talked about. I think your insight and some of your stories might be helpful from your experience. What are the most common VAT compliance mistakes UK sellers make when selling in the EU, and how can we avoid these pitfalls?

I guess the most common is that businesses are starting to import goods in bulk to the European Union without the registration where the import will be cleared and without EORI number registration. So what does it mean for the business? They are losing the possibility to claim paid import VAT.

For example, in France, if the business is already registered as a VAT payer before the import of the goods, it means there will be no need to pay import VAT at the moment of importation, as the VAT will only be reported on the VAT return. For businesses, this can save cash flow, so it’s really a good thing. But this is something that new businesses expanding into the European Union often don’t know about. They’ve already made the imports, so it means they’ve lost that part of import VAT.

Another mistake is not doing VAT registration when it is needed. It’s not possible to start selling without it. Most of these mistakes happen with platform sellers. Businesses aren’t ready to be registered in five different countries. They decide to use Amazon FBA and hold stock in each and every country that is part of that program, but they are not registered. They want to start selling, they’ve imported the goods, but the registration takes two or three months, and they cannot start the sales. The stock is already there, but the sales cannot begin.

Another common problem is incorrect setup of the platform account. Sometimes the VAT is not collected when sales are made, not via a marketplace, but via their own online shop. Incorrect VAT rates are applied, or VAT is not collected at all, despite the fact that the company may be registered in one or another country.

I guess these are the main problems and mistakes businesses make when starting their expansion into the European Union.

Yeah, that makes sense. So definitely do your research before you branch out.

Get in Touch with 1stopVAT

Okay, all right. If you do want to talk to 1stopVAT for some more help with your VAT returns in the EU and planning how you’re going to branch out, please get in touch with them. You can email them at info@1stopvat.com, and they’ll be really happy to talk to you if you want to chat.

Yeah, always. And just to mention, it’s also possible to use our website and fill out any request form. Feel free to use any method that is proper for you.

Get in Touch with A2X

Yeah, that’s brilliant. And with A2X, you can contact us in various ways. I’m on LinkedIn if you want to chat with me – I’m Elspeth Cordray. You can email me at elspeth@a2xaccounting.com, or you can talk to our main chat, which is available 24/7, at contact@a2xaccounting.com.

Check us out on the website, get a free trial, and give it a go.

The last thing is just to say thank you, Ruta. It’s been really helpful hearing you today and your perspective on this and what you can do to support businesses that are selling in the EU. I just want to say a massive thank you for taking the time out and sharing your expertise with us.

Thanks a lot for the invitation and for the webinar. It was interesting for me as well. I really, really appreciate it, and hopefully, we’ll work together a little more in the future this year.

Thank you, everyone. Thank you for coming, thank you for attending, thank you for sending your questions, and have a great afternoon.