VAT Rules for Ecommerce in Europe

📦 1000 orders, 1 wrong VAT rate = €4,000 lost. A German marketplace seller ships items worth €100 gross per unit to Sweden – but accidentally applies the German instead of the Swedish VAT rate. Sounds like a small mistake? In the end, it results in more than €4,000 in lost VAT – all due to a 6% difference in tax. 👉 That’s why VAT in cross-border selling isn’t just a bookkeeping issue – it’s a matter of strategic planning. In our latest article, including a full overview of VAT rates across the EU (plus the UK and Switzerland), we teamed up with our partner Taxdoo to highlight what sellers must keep in mind for 2025. Here are 5 practical takeaways: ✅ 1. OSS is no silver bullet The One-Stop-Shop (OSS) reduces effort – but only for B2C sales without foreign inventory. If you use FBA in Poland or also sell B2B, you’ll need additional VAT registrations. ➡️ Tip: Map out which countries are affected by your fulfillment setup early on – and register where needed.  ✅ 2. Marketplace = VAT responsible? Only sometimes. If a Chinese seller sells via Amazon to Germany, Amazon collects and remits the VAT. But: A German seller with inventory in Spain who delivers to Spanish customers remains fully responsible – even if Amazon handles fulfillment. ➡️ Tip: Always clarify: Who is VAT-liable in each case – the marketplace or you as the seller?   ✅ 3. Reduced rate or standard rate? It can make or break your margin. Example: Children’s books in France are taxed at 5.5%, not 20%. If you apply the wrong rate, you risk margin losses or tax audits. ➡️ Tip: Regularly match your product categories to target market VAT rates. Tools help, but in-house tax knowledge is key.  ✅ 4. New EU rules = new opportunities & risks Since 2025, EU countries can introduce two new VAT rates below 5% – e.g. for hygiene or educational products. At the same time, tax benefits for environmentally harmful products are being phased out. ➡️ Tip: A clean, compliant product assortment opens up tax advantages – and helps mitigate risk.  ✅ 5. Harmonised? Not really – the patchwork remains Denmark? No reduced VAT rates at all. UK? 0% VAT on children’s clothing.  Poland? Frequent changes.  Without a clear, country-specific VAT logic, things get messy – and risky. 💡 The takeaway for sellers: If you’re looking to scale your marketplace business across Europe, a solid VAT strategy is non-negotiable. OSS helps – but it doesn’t replace understanding your products, platforms, and target markets. 👉 Dive into the full article with more examples and practical insights: https://lnkd.in/dM_Trd6r  How have you set up your VAT processes? And what was your biggest learning moment?

🔍 VAT in marketplace selling – an underestimated risk factor? Anyone selling internationally on marketplaces knows the pain: different VAT rates, new EU rules, OSS procedures, platform responsibilities. Sounds dry – but it’s crucial for margin, pricing, and scalability. 👉 In our latest article – including a full overview of all VAT rates in the EU (plus the UK and Switzerland, check it out here: https://lnkd.in/dprFpRsk) – we teamed up with our partner Taxdoo to show what cross-border sellers need to know in 2025. Here’s a preview of the 5 key points: ✅ 1. OSS can simplify things – but only with the right strategy The One-Stop-Shop (OSS) allows you to report all EU B2C VAT centrally via your home country. Sounds easy – but OSS doesn’t apply to B2B, to inventory stored in other EU countries, or to all types of services. If you get this wrong, you’ll end up right back in reporting chaos. ✅ 2. Marketplace = VAT responsible? Not always. Marketplaces like Amazon, eBay or Kaufland are only liable for VAT in certain cases – e.g. non-EU sellers or imports under €150. In most other scenarios, the seller remains responsible. And even when the marketplace collects VAT, you’re still responsible for showing the correct gross price. ✅ 3. The wrong VAT rate can be expensive Charging 19% instead of 25% – or applying the standard rate instead of a reduced one like 5.5% – can cost you. Either you’ll owe VAT retroactively, or your prices will be too high to stay competitive. VAT mistakes aren't minor accounting errors – they’re profit killers. ✅ 4. New EU VAT rules from 2025 bring opportunities – and duties Since January, EU countries can introduce two new reduced VAT rates under 5% – a possible pricing advantage. But at the same time, VAT breaks for environmentally harmful products will phase out. Sellers should regularly reassess their product range from a tax perspective – especially in electronics, automotive, or energy. ✅ 5. It’s still a patchwork – despite the EU framework There’s little harmony here: Kids’ clothing is taxed at 0% in the UK, Denmark has no reduced rates at all, and in France, books are taxed at 5.5%. Selling across borders means you need solid tools, expert advice – or airtight internal tax processes. 💡 This shows: VAT isn’t just a bookkeeping issue – it’s a strategic lever (or stumbling block) for profitable marketplace growth. If you want to scale internationally, your tax setup needs to be bulletproof. 👉 Full article with all examples and practical advice here: https://lnkd.in/dprFpRsk What’s your biggest VAT headache in cross-border selling?

Why US Shopify sellers get slammed with VAT penalties when selling to UK/EU customers. If you're a US-based Shopify seller shipping to the UK or EU, here's what no one tells you: You must register for VAT and charge it at the point of sale on goods worth £135 or less to UK customers, and €150 or less to EU customers. Unlike Amazon or eBay, Shopify is not responsible for collecting and remitting VAT. You are. Here's where most US sellers mess up: - Thinking they can ship from the US without VAT registration - Not realizing that holding stock in the EU triggers immediate VAT registration requirements - Missing that all orders to EU customers now require VAT (the €22 exemption was abolished in 2021) - Recording Shopify payouts as pure revenue when VAT is included - Not understanding that non-EU sellers need to register for IOSS (Import One Stop Shop) to collect VAT at checkout Then there's the operational nightmare: Different VAT rates for each EU country (17-27%). UK threshold of £135 vs EU threshold of €150. Import duties on higher-value orders. Reverse charge mechanisms you've never heard of. The result? Customs delays, additional VAT assessments at the border, and penalty notices from HMRC. Here's how to fix it: → Register for IOSS if selling to EU (allows single VAT return vs individual country registrations) → Register for UK VAT if shipping goods to UK customers → Configure Shopify tax zones properly for each region → Use A2X to separate VAT collected from actual revenue → Choose DDP (Delivered Duty Paid) incoterms to handle import costs upfront → Work with an accountant who understands cross-border e-commerce Most importantly: get compliant before you ship, not after. Without IOSS registration, shipments get stopped at EU borders for valuation checks and additional VAT assessments. Looking for VAT help for your cross-border Shopify store? Book a call with me right now before you end up paying all your profits in penalties. (Link in bio) #Bookkeeping #Accounting #Accountancy #Shopify #VAT