EU VAT Process

EU VAT 

If you plan to sell in the EU, it is important to understand Value Added Tax (VAT) and how it may affect your business. 

According to EU law, all EU sales are subject to VAT Tax. As a business selling to other businesses, ShineOn is required to collect VAT on our base costs and shipping unless our merchants provide us with a valid EU VAT ID.

Put simply, this means that if ShineOn does not have a valid VAT ID for you on record we must collect a VAT Tax on some base costs and shipping.

To learn how you can register for a VAT ID, please choose one of the options below.

By selling in the EU and registering for an EU VAT ID, you will have tax obligations that you are responsible for. Registering for VAT with an EU state requires you to:

• Collect relevant VAT from each customer at checkout

• Retain sales reports and VAT data for filing to the tax authorities

• Remit and file taxes to the tax authority you registered with. There are deadlines for filing these, and failing to file on time will result in fines.

The details prepared in this article are for information purposes only. Always consult a certified tax expert for advice. ShineOn does not provide legal, tax, or accounting advice. 

Click on which applies to you:

• Sellers outside of the EU.
• Sellers inside of the EU.
• I already have an EU VAT ID.

I am not an EU citizen and I am selling in the EU.

EU tax regulations as of July 1, 2021 require sellers to charge EU customers VAT at checkout. You'll need to register with an EU tax authority for VAT so you can also setup the One Stop Shop (OSS) collection and filing.

If you are not an EU citizen and have no tax registration in an EU country at present, you can choose which country you wish to register in. We suggest the Dutch tax authority, and details are found below on how to register.

Registering with Dutch Tax Authority

To start with, all non-EU sellers will need to register with the Dutch Tax Authority to get a Dutch VAT ID. This allows you to register for the OSS system too.

Having a Dutch Tax ID means you'll be paying to, and claiming refunds from, a single EU tax authority. You do not need to register your business in the Netherlands Chamber of Commerce to register with the tax authority.

Registering - Click here for the form

Fill in the form and make sure that the following questions are filled in as follows:

• Questions 1b and 1c: “YES” (assuming that you are based outside of the EU)
• Question 5b: I purchase goods, that were produced in the Netherlands, and I ship them to private customers in other EU Member States
• Questions 6b and 6c: “YES”
• Print the form, sign it, add all the required attachments and send it (hardcopy) to:
  Belastingdienst
  Postbus 2892
  6401 DJ Heerlen
  The Netherlands

Documents not in English, German, or Dutch should be translated before sending.

The registration can take up to 10 business days. You'll receive a letter containing your VAT registration number.

You'll receive two other letters, one containing a username and the other containing a password. If you have received both, you will be able to sign in online here, where you can file Dutch VAT returns. 

Filing VAT Returns

VAT returns are usually filed quarterly, though monthly filing can help you to get refunds sooner. VAT returns for non-Dutch sellers must be filed within two months after the end of the concerning month/quarter. For instance, the VAT return for Q3 2021 must be filed before 30 November 2021.

Please note that in these returns, you can only recover the Dutch input VAT that you incurred on the invoices from parties supplying goods to you in the Netherlands.

This applies to non-EU sellers only. If you are based in an EU member state, you need to register for VAT with your local tax authority.

Registering for OSS

The OSS system is designed so that sellers only have to register with one EU country for VAT, allowing you to collect VAT for all EU sales and then submit a single filing & payment every quarter.

With your Dutch VAT username and password, you can register for OSS via the portal of the Belastingdienst. 

After that, you will be able to file OSS returns. Please note that in these returns, you can only account for local VAT due on sales to customers in EU Member States. 

The VAT returns must be filed quarterly. The deadline is one month after the end of the concerning month/quarter. For instance, the OSS return for Q3 2021 must be filed before 31 October 2021. 

This applies to non-EU sellers only. If you are based in an EU member state, you need to register for OSS with your local tax authority.

You may now proceed here.

I am an EU citizen and I am selling in the EU.

You'll need to ensure you're setup to collect VAT from your customers at checkout, to comply with EU VAT regulations as of July 1, 2021.

These can be done via the One-Stop Shop system, which can be registered and setup through your usual tax office in the EU state you're based in.

Shopify Setup

Shopify has a built in Taxes setting in your account.

When you have your Tax ID you can go to Settings > Taxes in Shopify Admin and enable tax collection for EU countries.

When a customer reaches checkout, the correct VAT will be calculated and added to their order total. EU customers are very familiar with this, and it would not usually be a reason they decide not to complete a purchase.

You can use the Reports in Shopify to export your sales data and tax reports. These will be needed when you come to filing & paying the taxes.

Services to Handle Taxes

This process can seem daunting for sellers, though with a little initial work, the system should run like clockwork. 

If you would prefer not to handle things yourself, for a moderate fee, there are tax services who can handle everything for you, from registering, setting up collection on your store, quarterly payments and reporting, and refunds.

Here are some that we have looked into briefly that we'd suggest to sellers:

• Hellotax - https://www.hellotax.com/
• TaxJar - https://www.taxjar.com/solutions/retail (also supports US)

 

I have an EU VAT ID

• Go to Settings > Account Settings and scroll down to Address Information section.
• Tick I would like to display a custom address on invoices. if not already ticked.
• Make sure your address and country here is correct for where you/your business is operating from.
• Enter your EU VAT Tax ID
• ShineOn will validate this information against the EU VIES database and other sources. If the details cannot be verified, sellers will be prompted to resubmit it.

If you needs to change verified VAT information, contact support.

While a seller does not have a verified EU VAT ID stored on their ShineOn App profile, EU VAT may be charged on the fulfillment costs for EU orders.

If you are a Non-EU Seller with an EU customer and do not have a valid EU VAT ID, ShineOn will charge you 21% VAT on base costs + shipping to EU customers.