All you need to know about VAT in one place
You should be able to find information related to existing regulations and how you might trigger VAT obligations. We will also highlight what steps you need to take to ensure VAT compliance and the solutions that are available for you to utilize.
What is Value Added Tax (VAT)?
VAT stands for Value Added Tax. It’s a tax that VAT-registered traders in Europe add to the price of the goods they sell, and pass on to the national tax authorities when they file their tax returns.
If you sell goods in any European country, it’s likely you may be required to register for Value Added Tax (VAT) in each country you sell in.
Remember, it is the responsibility of each AlphaDiscounters selling partner to ensure they are VAT-compliant and you should seek professional advice if you are unsure of your obligations.
The basic principle is that businesses can recover the VAT they have paid on their purchases and then charge VAT on their sales. While you pay the VAT to the tax authorities, the end consumer pays the VAT as part of the purchase price. You will only be able to recover the VAT you have paid on your purchases and charge VAT on your sales if you are VAT registered.
Selling partners with a VAT number in the respective European country should show the VAT charged, including the VAT rate and number to customers on invoices, where a VAT invoice is required. In this way, the customer knows how much VAT is due on the purchased product.
What are the European VAT rates?
Actual VAT rates applied vary between European countries (the standard rate must be at least 15%) and between certain types of products. In addition, certain European countries have retained other rates for specific products.
The VAT guidelines offer national governments freedom to set the number and level of VAT rate they choose, subject only to two basic rules:
- The standard rate for all goods and services.
- European country can opt to apply one or two reduced rates but only to goods or services listed in the VAT Directive.
Standard VAT rate is the rate that European countries apply to all non-exempt goods and services. It cannot be less than 15%, but there is no maximum.
VAT rates across EU member states
| Member State | Code | Standard rate |
| Germany | DE | 19% |
| Greece | GR | 24% |
| France | FR | 20% |
| Italy | IT | 22% |
| Spain | ES | 21% |
| Poland | PL | 23% |
| Czech Republic | CZ | 21% |
| Netherlands | NL | 21% |
Every VAT-registered person 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 relevant period and to provide 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 includes information on the VAT collected from customers, VAT paid to suppliers, along with cross-border sales, cross-border acquisitions, imports and exports.
How often should I file 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 three months. Please consult a tax advisor to guide you further.
Customs duty may be payable on the import of goods into a European country coming from outside of the Europe. The customs duty rate is determined based on the HS commodity code applicable to the product being imported, and may be influenced by the origin of the goods. The customs duties and import VAT is calculated as a percentage of the customs value of the goods. Please consult your tax advisor for further guidance.
What does Customs Duty mean for me as a Selling partner?
Goods imported from outside of the Europe, may have to go through customs checks. Customs paperwork/documentation (e.g. customs declaration) must be prepared and accompany imported goods. This documentation is the main source of information used by customs authorities to validate the custom duty/taxes payable. However, in some instances customs authorities may check the goods to determine how much customs duties and/or tax needs to be paid and may request further information, including to establish compliance of the goods with European regulations.
Import VAT may also be payable on the same importation of goods from outside Europe into a European country, in addition to any customs duty which is due. This is calculated on the customs value of the goods plus any applicable duties. Import VAT is normally recoverable via your VAT return provided you are registered for VAT in the country where the goods are declared to the customs authorities and are the ‘owner’ of the goods.
In many European countries, customers expect a VAT invoice. VAT laws in the country where you ship your goods from and where the customer is located may require you to provide a VAT invoice. The process for the issuance of a VAT invoice varies based on the country.
What does invoicing mean for me as a Selling partner?
All European VAT registered Selling partners are required to provide AlphaDiscounters Business customers with a valid VAT invoice for each order.
If you are a non-EU based Selling partner, you will be required to appoint a Tax Representation in some EU countries in order to register for VAT.
Tax representation is the process where an individual or business acts on behalf of a non-resident company for VAT purposes in the EU. Tax representatives in many EU countries are jointly and severally liable for the VAT debts of a non-EU based Selling partner.
As an online Selling partner, there may be a need for bank guarantees and extra fees to secure the use of a tax representative. These additional requirements are dependent on the country-specific requirements and the provider of tax representation services.
Do I need a VAT number?
Depending on the nature of your business, you will be required to register for VAT numbers in a European country as per the regulations. This depends on multiple factors, some of which are: place of business establishment, fulfilment model, and your annual sales.
VAT regulations across Europe
What are the various VAT regulations across Europe?
It is important for you to meet your VAT and tax obligations in all countries where your business operates. Please consult your tax adviser for guidance on how to meet your VAT obligations. While there are multiple factors involved in defining compliance requirements across the EU.