Green Circle Talks about Cross-border】-What is VAT, cross-border people must know the VAT introductory knowledge!

More and more seller friends know that the European market has great potential, and the European station involves sellers need to pay value-added tax; then a lot of new stationed in Europe sellers are not very understanding of VAT. Green circle to seller friends organized a detailed list of VAT popularization.

What is VAT?

Similar to domestic VAT, VAT is VALUE ADDED TAX, which is a post-sale value-added tax (VAT) commonly used in EU countries, i.e. a tax on the profits from the sale price of goods. When the goods are imported into EU countries, import VAT has to be paid at the customs; after the goods are sold, sales VAT has to be paid, which can be offset with import VAT and then the remaining sales VAT can be paid to the tax office, and if there is any un-credited import VAT, you can apply for a tax refund. Overseas companies or individuals who place goods in the EU and sell them are required to apply for registration of a VAT number and to pay post-sale VAT.

How does not registering for VAT affect sellers?

1. If you do not use your own VAT number when exporting your goods, you will not be eligible for an import VAT refund;
2. If you are found to have borrowed someone else's VAT or if your VAT number is invalid, your shipment may be detained for customs clearance;
3. If you can't provide a valid VAT invoice to your overseas customers, they may cancel the order or even give you a bad review.
4. Sellers are unable to create shipments to FBA;
5. The sale privilege will be removed by Amazon;
6. In serious cases, they are directly blocked by Amazon and shut down the store.

When do I need to register my VAT?

1. EU sellers, as long as the annual sales exceed € 8.1W;
2. Sellers using FBA warehousing in any of the EU countries need to register the VAT number of that country;
3. Sellers participating in the Pan-European program, sellers' inventory will be automatically assigned to Amazon's seven warehousing and logistics centers in Europe, then sellers will also need to register for VAT in seven countries (UK, Germany, France, Italy, Spain, Poland, Czech Republic)