What is needed from sellers to set up in France?
As a seller, you need a VAT registration in the country that your goods are stored in (in this case France) and Bezos will need to know your French VAT number.
Before 1st July 2021, B2C sellers will also need a VAT registration in any country where their sales exceed distance selling thresholds.
After 1st July 2021, the distance selling threshold is abolished and B2C sellers dispatching their goods from a single country will no longer be required to register for foreign VAT and complete multiple VAT filings in countries where they are selling. Instead, they may opt to simply complete and file a new OSS (One-Stop-Shop) filing alongside their regular domestic VAT return that will list all their pan-EU sales. The seller then remits the VAT due to their home VAT authority, which then forwards the taxes to the appropriate countries. Non-EU sellers may also apply to use the OSS regime, and just need to nominate any single EU state to register and file in (i.e. France).
Non EU sellers (sellers who are non-resident in the EU) may also use the OSS simplified filing. They must first register as a ‘non-Union’ taxpayer with the tax authority of any EU member state. They can then file quarterly OSS filings like any EU e-commerce seller. There is a requirement to file a regular domestic VAT return in at least one EU member state. VAT incurred on imports may be declared in the OSS, too.
Bezos has established a network of partners that can assist you with getting VAT registered, as well as calculating the VAT to be charged on your sales to EU customers, and filing subsequent VAT returns. Please contact your Key account manager or email email@example.com for more information.
Charging VAT to EU customers
Before 1st July 2021
Before 1st July 2021, the EU VAT regime ‘place of supply’ rules require sellers to charge the VAT rate of their customer’s country of residence – known as the destination principle. For EU cross-border sales this means sellers have to VAT register in each country where they are selling goods.
Currently, to reduce the burden on small sellers, the EU operates a special VAT registration simplification for e-commerce, known as distance selling thresholds. This is generally only available for sales from a sellers’ domestic stocks.
EU distance selling thresholds until June 2021:
€100,000 per annum: Germany; the Netherlands; Luxembourg; UK which is still in the EU VAT regime (£70,000).
For all other members of the EU it is €35,000 per annum or local currency equivalent.
After 1st July 2021
From 1st July 2021, this registration threshold simplification will be withdrawn. Cross-border sellers will have to charge the VAT rate of the customer’s country of residence from their first sale and remit it to the foreign tax authorities.
The OSS filing is in addition to the regular domestic VAT return. Firstly, sellers will charge VAT at the rate of their customer’s country of residence. They can use the delivery address of their customer to identify the country of residence. Then determine the correct VAT rate, as well as applying reduced or nil VAT rates, according to the varying rates and goods classifications of each member state of their customers.
Consequences of selling in the EU
What will this mean for a typical seller?
To show how this will affect a typical EU seller, let us look at the VAT filing obligations for an example seller today, and after the July 2021 reforms.
Eurotrade GmbH, established in Germany, sells online to consumers across the EU. It holds most of its stock in Germany, from where it ships. However, it holds some stock in France for speedy delivery to its French consumers.
Eurotrade GmbH annual sales, and VAT obligations are as follows:
1 – Before 1st July 2021, above the Distance Selling Threshold so must foreign VAT register; post-July 2021 may close this registration
2 – Before 1st July 2021, below the Distance Selling Threshold so report sales under German rules; post July 2021 switches to foreign VAT, reported via OSS
3 – Before 1st July 2021, holding stock in foreign country so must VAT register there; post July 2021 must remain foreign VAT registered in France
Brexit – the effect for UK and EU sellers
The UK left the EU VAT regime on 31 December 2020. This means UK sellers are now non-EU sellers at the same time as the introduction of the July 2021 e-commerce reforms. UK resident sellers will have to register in one of the EU states to file a ‘non-Union’ OSS return. UK sellers will still be able to close any EU VAT registrations if they are not holding stock in those states.