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Top Tips on International Tax for Online Sellers 15/10/2014

www.meridianglobalservices.com

FOR ONLINE SELLERS :

It is important for sellers when selling online to be

aware of the risks faced from not being compliant

with international VAT.

Find out the 8 top tips for online sellers here

#1 Know what VAT is and how it applies to

your cross border sales

Goods imported into a country from another jurisdiction are subject to VAT.

Depending on your cross border business activities, your company may need to VAT register for VAT in an overseas jurisdiction, collect VAT and remit this to overseas tax authorities.

Take the time to consider if this applies to your business.

#2 Don’t lose out on recovering your import VAT

If you ship stock in bulk (or are considering this) either yourself or via a fulfilment partner, you will be charged import VAT on the goods as they enter the country.

This can be removed if handled correctly so don’t let it be a sunken cost.

#3 Know the Distance Selling Thresholds for the Countries Where You Sell

Distance selling is when a seller sells goods at a distance (e.g., over the internet, by telephone, by mail order) and delivers them from one EU Member State to customers (private individuals) in other EU Member States.

Each EU Member State has a distance selling threshold ranging between €35,000 and €100,000.

When a seller exceeds this turnover threshold in another EU Member State, they will have a liability to VAT register there and charge the relative local VAT rate on their sales.

#4 Know the Correct VAT Rates for the Countries Where you Sell

VAT rates across EU Member States

can differ widely from those in the

sellers’ country.

Distance sellers must apply the

correct VAT rate on sales in other EU

Member States. Make sure you

know the right rate.

#5 ‘Private’ Sellers on eBay, Amazon etc. Can Be Liable for VAT Too

With the boom in online sales, the number of private individuals selling items online has increased.

As these sellers do not consider themselves to be companies, many do not take into consideration their potential VAT registration liability in any country.

International taxation authorities now require many private sellers to account for VAT in their country due to the volume of sales and the way in which products are displayed and described. If in doubt, better to have it checked it out.

#6 Make Your Web-Store VAT Friendly

Since the seller’s website is the platform used for online

sales, it is essential that it is set up for international e-

commerce.

This means that it must be capable of showing different

currencies and the VAT rate to be applied on the

goods.

Better still, before a consumer purchases good, the full

selling pricing, including VAT, packaging and

transportation should be shown clearly before placing

the order.

#7 Make the Purchase VAT Friendly

If you ship direct from North America, your

customer is often forced to pay the tax to

the end courier.

This causes a lot of angst with customers as

the price paid and the perceived saving is

eroded and it causes high levels of returns.

Stop to think if it makes sense from a business

and customer point of view for you to

voluntarily account for VAT.

#8 VAT Register from Dollar One if You Sell Digital Services

Companies that sell digital services to

overseas customers (EU, CH, and Norway)

are responsible to account for VAT on the

prices paid by the end customer.

This means that if your business supplies

services electronically to private overseas

individuals, you need to make sure you are

complying with your overseas VAT liabilities.

For more information about our organisation, please visit www.meridianglobalservices.com

Meridian Global Services, Tallaght Business Park, Tallaght, Dublin 24, Ireland.Tel: +353 (0)1 4590 500 | Fax: +353 (0)1 4590 540

© 2014 Meridian Global Services.Published in Ireland. All rights reserved.