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Accounting for and completing European Vat Returns

How to fulfil EU Vat Obligations when selling directly to individuals in EU states

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I am a bookkeeper and I have a client who is expandig into Europe through Amazon but with Amazon being the selling platform so the sales are effectively B to C. We understand that the company needs to register for vat in each of the EC countries where Amazon has a warehouse holding our stock, and also in each coutry where the supply exceeds that countries threshold for vat. We have been advised that we will need to complete vat returns in each country, does anyone know of a specialist who can help with this? My client uses Sage but not multi currency, so sales will be converted into Sterling on Sage then will need to be converted back into Euros for the returns. Also advice as to how we account for the sales on the UK vat return would be much appreciated.

Thanks in advance for any help

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21st Jun 2019 12:24

In general it is holding stock in a country that creates the obligation to register for VAT in that country. So sending goods from UK directly to a retail customer in Germany is subject to UK VAT and is accounted for as if it were a domestic sale.

Likewise, goods going from a Spanish warehouse to a retail customer in Portugal are subject to Spanish VAT.

Your client will need to register for VAT in the countries where amazon are holding his stock. Many countries have english-language forms but the processes may not be a simple as a quick online registration as here. For example, for Finland, I had to provide a notarised copy of my passport and various other documents. Belgium required a local bank account (that was some years ago and may have changed). And of course, he will have to submit periodic VAT returns for each registration.

In terms of UK VAT accounting, moving goods from UK to a warehouse in, say Netherlands,needs to be accounted for a ‘sale’ from the UK warehouse to the NL warehouse – so a zero-rated UK VAT transaction and Dutch acquisition accounting (reverse charge). And included on EC Sales list and Intrastat (if above the threshold).

Don’t forget that VAT registration thresholds are lower in most other EU member states. And there are changes coming in which will make amazon responsible for collection output tax. (See story here at https://www.accountingweb.co.uk/tax/business-tax/france-steps-up-vat-fra...).

And finally, Brexit may completely change all of this.

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to paul.benny
21st Jun 2019 12:39

paul.benny wrote:

So sending goods from UK directly to a retail customer in Germany is subject to UK VAT and is accounted for as if it were a domestic sale.

Isn't there also an obligation to register for German VAT if such sales exceed the EUR 100,000 threshold?
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to Wanderer
21st Jun 2019 12:48

I defer to your specific knowledge - most of my experience is B2B sales. There may well be wrinkles like this across other jurisdictions.

I hope the OP and client get the message that cross-border stock makes VAT complicated and needs a willingness to invest in advice and ongoing compliance - which in turn needs to be justified by the earnings in each member state.

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to paul.benny
21st Jun 2019 13:02

paul.benny wrote:

I defer to your specific knowledge - most of my experience is B2B sales. There may well be wrinkles like this across other jurisdictions.

It was really a question. It's what I believe to be the case but was hoping that you would confirm it! (Maybe someone else will?).
OP if I'm right also note that the equivalent threshold for most other countries is EUR 35,000
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By kas
21st Jun 2019 13:22

Thanks for the info. Just to clarifying re "In terms of UK VAT accounting, moving goods from UK to a warehouse in, say Netherlands,needs to be accounted for a ‘sale’ from the UK warehouse to the NL warehouse – so a zero-rated UK VAT transaction and Dutch acquisition accounting (reverse charge). And included on EC Sales list and Intrastat (if above the threshold).", as we are just moving stock to the Amazon warehouse rather than selling to Amazon, do we need to record this as a sale to Amazon and quote their vat number on the EC sales list?

What is the best method to submit vat returns in each country, is this something that I / my client can do or is it better to employ a specialist to do this? Are there companies that can provide this service?

Thanks again

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to kas
21st Jun 2019 13:54

The "sale" when moving from UK to NL is from your UK registration to your NL registration - nothing to do with amazon. It would be the same process whoever owns the NL warehouse So you would quote your NL VAT number on your UK sales invoice.

I've no experience of third parties providing this kind of service. Could you do it yourself? Depends how much time you are willing to devote to learning (and your client is willing to pay for) - and whether you feel you have the skill and intellect to be able to work it all out for yourself.

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By NH
21st Jun 2019 13:41

If using FBA they will need to register for VAT in each country where stock is held, the last time I looked into this a few weeks ago that means 7 different countries (you do not get a choice where Amazon decide to fulfil from).
You can use EFN FBA where the stock is fulfilled from only one country but the Amazon fees are much more than FBA.
I would strongly advise against trying to do this yourself, from our experience it is a very painful experience especially if you do not speak the language and anyway in certain countries like Spain you are obliged to have a local representative.
The 2nd thing we always advise clients is to speak to Amazon first, they often have promotions where they will cover the 1st years fees when you start using FBA, their preferred supplier at the moment is VAT Global but expect fees of 4000 to 5000 euros per year.

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By kas
21st Jun 2019 14:06

Great, thanks so much for your help, I'll speak to my client re your replies

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By Matrix
21st Jun 2019 17:12

Try https://www.simplyvat.com/

If you refer them to your client then you get a referral fee. My Amazon client has not exceeded the threshold in any country yet so I have no experience and also would try and not be involved (I only do the UK returns).

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