GLOBAL SELLING BLOG

Everything you need to know about VAT
to sell in Europe

One of the important steps in exporting to Europe is understanding VAT. In this EU VAT guide, learn about registration, documents required and different VAT rates across Europe.
DGFT export business
Millions of customers from across the globe visit the Amazon global marketplaces to explore and buy a range of products. In Europe alone, Indian sellers can export to nine countries – UK, France, Germany, Italy, Sweden, Spain, Poland, Turkey and the Netherlands. Reaching customers in these marketplaces across Europe can allow sellers the opportunity to grow their sales significantly and expand their businesses. To begin with, an understanding of Value Added Tax (VAT) is important for sellers to export to Europe. In this VAT guide, learn about the overview of VAT, what it means for your export business, and information on how to handle it.

What is VAT?

VAT stands for Value Added Tax – a tax that registered sellers and traders in Europe pay as a tax added to the products they sell in the region. This tax is then passed on to the national tax authorities when they file their tax returns. If you sell goods in any European country, you may be required to register for VAT in each country you sell in.

How does VAT work?

Most Indian sellers are liable for charging VAT on sales, paying VAT on items purchased, and disclosing this data to their taxation agency to process VAT returns. The basic principle is that businesses can recover the VAT they have paid on their purchases and charge VAT on their sales. While as a seller, you pay VAT to tax authorities, the customer pays VAT as part of the product purchase price. You will be able to recover VAT you have paid on your purchases and charge VAT on your sales if you are VAT registered.

• For instance, when a business exports product from any country to sell them in Europe, it usually pays VAT.
• Similarly, when the same business is selling products, it usually includes VAT in the selling price that is paid by the customer.
• Businesses then add and collate the total amount of VAT paid in each European country where they’ve registered to sell at regular intervals throughout the year (typically monthly or quarterly).
• They then forward this information to the local tax agency (e.g., HMRC in the UK), and the amount of VAT owed is either paid or refunded through returns.

What are the different VAT rates?

Actual VAT rates applied vary between European countries (the standard rate must be at least 15%) and between certain types of products. Before you sell in Europe via Amazon, you must know the different VAT rates across various states:

UK

20%

France

20%

Germany

19%

Italy

22%

Spain

21%

Turkey

18%

Netherlands

21%

Poland

23%

Sweden

25%

What is a VAT return?

Every VAT registered business or seller is obliged to file a VAT return for each relevant period. VAT filing is the process of preparing and submitting reports to tax authorities to provide them with information on your transactions in the specified period. This also provides them with the amount of VAT which you are due to pay (or receive in the case of an overpayment of VAT). A VAT return filed in European countries comprises information on VAT received from consumers, VAT paid to suppliers, and includes cross-border sales and acquisitions, imports, and exports.

What is an Import VAT?

Besides any customs duty levied, import VAT may also be payable on the import of goods into a European country coming from outside of the Europe. This is calculated on the customs value of the goods plus any applicable duties. Import VAT is usually recoverable via your VAT return online, provided you are registered for VAT in the country where the goods are declared to the customs authorities. You also need to be the ‘owner’ of the goods.

What is Tax Representation?

An Indian seller (a non-EU selling partner) will need to assign Tax Representation to register for VAT in various European countries that you want to export to. Tax representation is a process by which a person or a business works on behalf of a non-resident business in Europe for VAT.

Why sell in Europe with Amazon Global Selling?

Did you know that more than 3,400 products were sold per minute in Amazon European marketplaces in 2020? Across Europe, Amazon is one of the favorite ecommerce sites among customers. By exporting to Europe from India and selling on Amazon marketplaces, you can reach millions of customers without any incremental interments. Tap into our state-of the art logistics, powerful tools and world-class customer service to take advantage of the growing pan-European customer base.
Amazon marketplaces in UK, Germany, France, Italy and Spain have over 176 million (17.6 crore) monthly visitors. You can make the most of this by listing on Amazon.
If language is one of the barriers in exporting to Europe, then Amazon Global Selling takes care of that as well. You do not need to be fluent in any European languages with Amazon’s translation support and external translation providers. You can find a third party translation service provider from Amazon's list of service providers.
Take advantage of European peak periods by participating in sale events conducted according to the European holiday selling calendar like Easter, St. Patrick’s Day, Boxing Day and more.
After the purchase, the payments are straight-away transferred to your registered bank account. Amazon takes care of all the currency conversion without any deduction to support a hassle free selling.

Register your business

First, you must register your export business with Amazon Global Selling. You don’t have to be an existing Amazon India seller. The registration can be done online on Seller Central. You’ll need the following documents to register:
IEC
• ID proof (Aadhar, driving license or passport)
• Business address proof (Bank statement)
• Credit card (internationally enabled)
Amazon seller registration

List your products

Once you have successfully registered to sell globally on Amazon, you can list your products. Remember to follow tips on how to list your products include attractive pictures and descriptions that’s clear to international customers. You can also seek help from third party service providers.
How to list your products on Amazon

Ship & receive payments

Once a customer places an order, you can choose to deliver by yourself or you can opt for Fulfillment by Amazon (FBA). Under FBA, Amazon takes care of shipping, delivery, returns and customer concerns. Once a customer purchases your product, Amazon credits the money in your bank account in the currency of your choice.
Amazon FBA

Frequently Asked Questions

How often should I file VAT returns?
This depends on which European country requirements and selling partner's obligations in that country. Many European countries require returns to be submitted every month or every three months. Please consult a tax advisor to guide you further.
I sell products into an EU country from outside EU (I don’t have a business establishment in EU) and I do not store goods in EU. Do I need to register for VAT?
If you import goods into the EU for onward sale you will generally be required to pay import VAT (and possibly import duty) to the tax authority where the goods are imported. Please note you will be required to register for VAT if you store goods in an EU country.
Do I need a European bank account or company registration to be done in Europe to sell in European countries?
No. You can use your existing Indian company registration and bank account for selling on Amazon marketplaces in Europe. You can choose to receive your payments in INR or European currency.
Published on October 23, 2021.
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