E-commerce EU VAT or European VAT is a consumption tax, which is applied to all goods and services purchased and sold for use and consumption in the EU countries.
With regard to the European VAT payment system, attention shall be drawn to the following contents:
- traders registered for VAT purposes in a EU country, once received the identification number, shall indicate on the invoice the VAT collected from customers, thus allowing the customer, if also registered for VAT purpose, to have knowledge of what to deduct, as well as allowing the consumer to know the amount of tax paid on the final product.
When selling in Europe, the tax rate may vary from country to country and in some cases transfers of goods from one country to another may be considered a transaction subject to VAT.
In the case of importing products into the European Union, the tax may be requested when the goods enter Europe and also in the country of destination of the goods. Contrary, products exported outside the European Union and intended for non-resident consumers may not be subject to payment of European Union VAT.
- those who wish to sell in Europe, in addition to the opening of a VAT number, are required to complete the European VAT declaration and, where necessary, to pay the VAT collected from costumers on transactions.
In the case of e-commerce (distance selling), registration for VAT purposes may also be required in each EU country, in which the business is carried out.
In the latter case, for the purpose of evaluating the obligation of VAT identification, reference shall be made to whether of not a “ceiling”, established by each European country, has been exceeded. If sales made from one country to another exceed the ceiling made by the country of the destination of the goods, the trader shall register for VAT in that country, in which the trader will be required to declare, collect and pay VAT.
E-commerce EU VAT: what's new in Italy in 2019
Article 13 of the Growth Decree 2019 has introduced a new measure that weights on providers of digital platforms and in particular on the VAT communication system for e-commerce websites.
Indeed, the aforementioned provision states that any person dealing with e-commerce that aims at facilitating the distance selling of imported goods or the distance selling of goods within the European Union shall transmit within a month following each quarter the supplier's data and in particular:
- the name or complete personal data, the information of residence or domicile, the tax identification code where existing, and the email address;
- the total number of units sold in Italy;
- at the choice of the taxable person, for the units sold in Italy, the total amount of selling prices or the average selling price.
If the taxable person does not demonstrate that the tax has already been paid by the supplier, he is considered to be liable for tax payment for the distance selling for which he has not transmitted, or has incompletely transmitted, the data existing on the platform.
In other words, a mere quarterly communication obligation has been introduced for digital platforms, in order to induce them to collaborate to bring out the VAT data related to distance selling.
This provision has been added to other VAT reporting requirements, including the “esterometro”, with the ultimate aim to prevent tax evasion.
In addition, all marketplaces are required to provide the tax authorities with data, such as personal data, fiscal code, number of sales made and so on, related to those who sell goods on the Internet.
All this allows the Revenue Agency to verify that the sellers correctly pay VAT and direct taxes.
E-commerce EU VAT: how do I sell on Amazon EU?
Even if E-commerce EU VAT is improperly discussed, those who are willing to sell their products on a European Marketplace shall proceed cautiously, especially if they decide to sell through Amazon.
It is important to know all the local laws in force regarding cross-border sales and EU imports, including the regulation on product conformity measures and environmental or health and safety requirements.
To give an idea of what is here claimed, selling on an Amazon Marketplace implies having the prerogative to better manage the expectations of buyers, in the way that follows:
- for orders managed by the seller and shipped from outside the marketplace in which the product is offered, the "country of origin" shall be indicated in the seller profile;
- a longer order fulfillment time shall be provided in order to compensate for shipping time from the sender's country;
- make sure that the sale price of the product is inclusive of all taxes, including VAT.
Also, offer customer support, better manage returns, use Amazon logistics and provide payment methods in detail.
E-commerce EU VAT: legal and tax services
The Arnone & Sicomo Law Firm brings together a team of professionals, lawyers specialized in tax and criminal law, who are able to assist customers in any type of procedure that may involve them in VAT evasion.
Most of the time, the sanctioning proceedings result in criminal complaints that force foreign companies to defend themselves before the Italian criminal and tax courts. Our lawyers scrupulously examine each individual case, in order to seek the best possible solution to the case and try to minimize the risks connected to Italian sanctioning proceedings.
Have you received a provision from the Italian Revenue Agency regarding VAT evasion?
Have you been reported for omitted VAT declaration or unfaithful VAT declaration?
Do you need a legal opinion on the correct VAT obligations in regard to the European e-commerce? Contact us.