We strongly believe that even such complicated topics like VAT regulations should be standardized. That’s why we decided to design our software with the departure country as default taxation place.



WHAT DOES THAT MEAN FOR YOU?

 

You’ll always pay your VAT in the departure country as long as you are registered in it. What we mean by departure country is the country where your goods are selling from. Due to this, your invoices should always include the VAT rate of the respective country and your VAT number.


NOTE: That applies only if you are below the thresholds limits for distance sales*.


*distance sales are B2C sales from one EU member country to another EU member country.



In the next paragraph we will show you how to issue your invoices to your customers to be fully compliant.


It’s imperative that invoices are done correctly from the content and format perspective.



NOTE: In order to calculate the payable VAT, you have to subtract output VAT from the input VAT.

input VAT-output VAT= payable VAT Read more on VAT here.




Our Software take the departure country of goods as taxation point. So if you are selling goods from country A to country B, you will have to pay VAT in A, unless:

  • You reached and skipped the threshold imposed in B
  • You are deciding to pay VAT in country B for all sales made in country B even if you are under the threshold; this is opting out from country A

So for example you are selling goods from Spain to France. You will have to pay VAT in Spain unless you reached the 35.000 EUR/year threshold in France or you are opting out from Spain, when if in one of this 2 situation you will have to pay VAT in France.


NOTE: Countries have different sales thresholds



Read more on thresholds here.



NOTE: If you are using Amazon FBA program you will store in different countries depending on the subscription you are using



HOW TO SET-UP YOUR INVOICE TO BE FULLY COMPLIANT


Currently there are 5 taxable transactions in EU, where VAT must be applied:

Supply of goods

Supply of services

Import of goods(issuance of invoice not necessary; B2B transaction)

Intra-community acqusition of goods((acquistion of goods within EU) B2B transaction)

Intra-community supply of goods


B2C sales (Business-to-Consumers)


The Invoice should always contain:

  • Your business full name, address and the international EU VAT number, this is the EU VAT number contained in the VIES database.
  • a unique and sequential identifying invoice number
  • the date the invoice is issued
  • date of transaction or payment if it's different from invoice issue date
  • your customer's full name and address
  • date of supply to the customer
  • a description sufficient to identify the supply of goods or services
  • the quantity of goods or services, with a unit price excluding VAT, and the rate of VAT per item,
  • the total amount of payable VAT
  • the total net amount payable (without added VAT)
  • the VAT rate applied(percentage)
  • total amount




Example of a correct invoice:






1.)unique  and sequential identifying invoice number4.)your full name and address and VAT number7.)description of goods and services10.)VAT rate(percentage)*
2.)invoice date5.) customer's full name and address8.)date of supply to customer11.)total amount including VAT
3.)date of payment if it's different from invoice issue date6.)quantity of goods&services with net value and VAT rate, VAT amount and gross value9.)total net amount(without VAT)



*as you can see there are products with different VAT rates even 0, in case of multiple VAT rates this should be visible on the Invoice




For further assistance, don’t hesitate to contact us: support@hellotax.com

Read more about EU vat rules (EN)

Read more about EU vat rules (DE)

Read more about EU vat rules (FR)