Value added taxes general principles
When selling and importing goods to and from another country, some considerations to taxation should be made. Here is a general guideline to get you started.
When importing / moving goods inside the EU, no actions need to be made. The goods can freely move within the EU.
When goods are imported from a non-EU country to an EU member country, the customs duties and taxes need to be paid to the country where the goods 1st arrive inside the EU. In case e.g. importing to Estonia, the customs duties and taxes would need to be paid to the Estonian authorities. There are some things to consider:
- Your company needs an EORI number. You may apply for this number from the local customs authorities where your company is currently registered in. If your company is registered in Sweden, you must apply for an EORI number from Sweden. This is usually a very simple and short process.
- When you import the goods to another country, you need to pay the local value added taxes (VAT) to the country in question. In e.g. Estonia the VAT rate is 20 % and when importing from outside the EU to Estonia, you need to pay the 20 % VAT to the Estonian authorities.
Please note: your freight company handles all customs duties and VAT payments on your behalf. You only need the EORI number.
Selling to another country
Online retail to consumers in another country is called "distance selling" within the EU. The basic princinple for VAT payments for consumers is that VAT always needs to be paid to the country where you are selling to. For instance, if you are selling to France, you would need to pay the sales VAT to the French tax authorities. However, there is an exception: if your sales volumes to foreign countries are below the minimum VAT threshold, you may pay the sales VAT to the country where you ship from. If you ship from e.g. Estonia, you can pay the VAT to Estonia.
The VAT thresholds per country are available from many sources by searching "VAT thresholds distance selling". The levels are commonly between EUR 10 000 - EUR 50 000 per year to one country.
There is also a rule that you can always voluntarily pay the VAT to the target country, even though you are below the threshold. If you e.g. stock your goods in Estonia and sell to Sweden, you can voluntarily pay the VAT to Sweden even if you are below the annual threshold of SEK 320 000.
Help from OGOship
In the above guide, we have given you the basic principles of VAT in distance selling. For more detailed advice, we may recommend you some local tax consultants to help you further. Please contact our customer support for more details.