What is VAT?
Value-added tax, or VAT as most commonly known, is a consumption tax that is added to a product’s selling price whenever there is value added at each stage of the supply chain. This includes from production to the point where the product is sold. VAT is the consumption tax used in Europe, and many other countries around the world. Sales Tax and GST are the equivalents elsewhere.
Every country defines its own VAT rate with there being standard VAT, reduced VAT, as well as some products/services being zero-rated or exempt from VAT. Each VAT rate has its own definition, and each country interprets these rates onto products/services in their own fashion. Each country’s tax office regulates tax compliance, and if in breach of tax compliance, impose a variety of penalties such as fines, goods being held up at borders or operations being shut down.
Import VAT is required to be paid when clearing goods into the EU. Import VAT is often referred to as the “admission cost for free circulation within the EU”. A VAT obligation will often arise in the importing country and/or the fulfilment/distribution location.
VAT for E-Commerce
If you run an e-commerce business that sells goods or services via your own website or an online platform (such as Amazon or eBay), staying ahead of rapidly changing VAT legislation can be enormously challenging. The EU’s new e-commerce laws came into effect from the 1st of July 2021. The legislation is complex and impacts every online seller with customers in the EU, but with a basic understanding of the implications of these changes, it can be quite simple to make the practical changes required to adapt.
Whether you are drop shipping, having your orders locally fulfilled or going the FBA (Fulfilment by Amazon) route, VAT will need to be accounted for.
Vatglobal & zee
Are you hearing terms like Fast Lane, OSS, IOSS and other complicated jargon that you wish someone would handle for you? Between Zee and Vatglobal, we have a solution to assist you in expanding into and navigating around the global e-commerce industry.
vsuite is Vatglobal’s cloud-based technology platform to assist companies in dealing with their VAT compliance. Built by leading VAT industry experts, software developers, designers, product specialists and compliance consultants; it is compiled of three core modules:
1. vfile, an automated filing tool to help you prepare and submit your VAT returns, ECSLs and Intrastats in a more secure and efficient manner; combined with a next-generation workflow tool to help you track your VAT filing deadlines, with optional cloud-based file storage.
2. vlearn, an innoVATive content portal to help you improve your VAT compliance knowledge and access important legislation and case law.
3. vship, a tech-driven, international freight service that caters for a user’s individual needs. Managing the shipments is only the beginning: using Vatglobal and our network of partners, vship will help provide an end-to-end, outsourced solution including customs clearance, import VAT reclaim and tax compliance services as well.
Our internal structure is built for businesses like yours – check out for more information on selling into the EU.