020 3769 3785 Login Register
VAT Numbers Explained

European VAT Numbers: A Guide for Selling Online

Understanding EU VAT Numbers: A Prerequisite for eCommerce Success in Europe

vat concept illustration
EU VAT at a glance

What is European VAT?

When discussing European VAT, it typically refers to VAT applied to cross-border transactions. The EU operates a unified VAT system, emphasizing optional but highly recommended OSS/IOSS schemes. These schemes facilitate centralized filing for all cross-border transactions, particularly benefiting ecommerce businesses. To access OSS, VAT registration in at least one EU member state is required.

Reasons for becoming VAT registered

Who Needs an EU VAT Number?

An EU VAT number is crucial for online sellers for two main reasons:

  1. Storing stock in an EU Member State:
    • Online sellers must register for VAT in an EU member state where they conduct taxable activities. This is necessary for businesses storing stock in an EU country different from their country of establishment. This requirement applies to both EU and non-EU businesses.
    • Sellers using Amazon FBA or third-party logistics (3PL) warehouses in EU countries need EU VAT numbers.
  2. Paying VAT for Cross-Border Transactions via OSS/IOSS Schemes:
    • EU businesses selling cross-border within the EU must register for VAT in their own country to access the OSS scheme, simplifying the payment of cross-border VAT. This scheme is highly recommended as an alternative to individually registering in each EU country where sales exceed €10,000.
    • Non-EU businesses selling products directly to EU customers through their own website and fulfilled from a non-EU country, can benefit from EU VAT registration. While not mandatory, it streamlines order fulfillment and is advised for sellers with a high volume of orders. Registered sellers can collect VAT from customers, ensuring smooth delivery without customs hassles.
SimpleVAT SimpleVAT
VAT post-Brexit

What are the EU VAT Rules after Brexit?

Since Brexit, the UK is no longer part of the EU VAT system. This means new UK sellers may need to register for VAT in the EU under certain circumstances:

  • Distance Selling from the UK to the EU: If you're selling from your UK warehouse to EU customers and exceed the 10,000 EUR sales threshold, VAT registration in an EU country may be necessary.
  • Amazon FBA Operations: If you're using Amazon FBA and storing stock in EU countries, VAT registration in those countries may be required.
  • Facilitating Customs-Free Orders to EU Clients: To send orders to EU customers without customs involvement, registration in an EU state is necessary. This allows registration for IOSS, simplifying cross-border VAT payments and reduces hassle for the customer.
SimpleVAT SimpleVAT
Getting VAT registered

How to Get an EU VAT Number?

Obtaining an EU VAT number involves the following steps:

  • For EU Companies:
    • Submit an application to the tax authorities of the EU member state where registration is desired.
  • For Non-EU Companies:
    • Similarly, submit an application in the chosen EU country.
    • However, depending on the country, a fiscal representative may be required, adding complexity to the process.
eu tax authority building illustration
SimpleVAT SimpleVAT
Requirements for non-EU legal entities

Do US Companies Need a VAT Number?

No, US companies are not required to have an EU VAT number, unless they keep stock in an EU country. However, even if they’re fulfilling stock from abroad, US companies can greatly benefit from having an EU VAT number.

When a US seller sells to an EU customer, VAT is applied upon import into the EU. The manner in which this VAT is handled depends on whether the US seller is registered for VAT in the EU:

  • Not Registered for EU VAT: The product will be held at customs, and the customer will need to clear it and pay VAT upon receipt. This can be inconvenient for the customer and may lead to dissatisfaction if VAT responsibilities are not disclosed.
  • Registered for EU VAT and IOSS: With VAT registration in any EU country and enrollment in the Import One Stop Shop (IOSS), the seller can send orders to the EU without customs delays. VAT is collected with the order and later remitted to EU tax authorities via IOSS, streamlining the process for both seller and customer.
us and eu flags

E-Commerce Sellers

Selling on your website

Amazon FBA Sellers

Selling with Amazon FBA

Accounting Professionals

Accounting firms, CA, ACCA