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Imported from Asia to the EU, or selling cross-border? In this guide, we explain what importers, Amazon sellers, and cross-border e-commerce companies must know about the Value Added Tax (VAT) in the European Union.
We also collaborated with Alex Wyatt from SimplyVAT and Dr. Matthias Oldiges from KMLZ, two of Europes leading experts, to create this comprehensive VAT guide.
This is covered
- VAT calculations for European importers
- VAT rates in EU member states
- How and when to pay VAT
- VAT registration for EU companies
- VAT registration for non-EU companies
- VAT when dropshipping products
- VAT when selling products online within the EU
- VAT registration when selling from overseas to the EU
- VAT when selling on Amazon
What is Value Added Tax (VAT)?
The VAT is a consumption tax in the European Union. In B2C transactions, VAT is always included in the price. If you, for example, buy a product online from an EU based online store, the price you pay includes VAT.
The seller can then subtract the VAT paid on imports, from VAT added on top of the sales price.
Below follows an example:
- Sales: $10,000 (Including VAT, 20%)
- Expenses: $5,000 (Including VAT 20%)
This allows us to make the following calculation.
- Sales VAT: $2,000
- Paid VAT: $1,000
- Total: $2,000 – $1,000 = $1,000
Thus, I would need to pay a VAT of $1,000. If I’d spent more on VAT than I added on top of my sales, I would instead get money back from the state.