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Delivery thresholds and sales tax:
Mail order in Europe
If the delivery threshold is exceeded, noticed or unnoticed, various tax tasks arise, such as the need to register for sales tax. The currently applicable regulations will be changed on July 1st, 2021 and a uniform delivery threshold of € 10,000 will then apply for all of Europe.
Last Updated on February 26, 2021
What is a delivery threshold?
The annual delivery threshold is a limit value that is individually set in each European country. If this is achieved, various tax tasks arise.
This limit value can be reached through cross-border shipping (distance selling) to the end consumer within the EU within one calendar year can be achieved - depending on how much is sold.
Dealers who sell from one country to another must register for sales tax when they reach the delivery threshold in the target country. This also means that there are ongoing tasks such as advance VAT returns.
Gross or net?
When it comes to the delivery threshold the net sales of imported goods decisive.
If the net turnover remains below the respective limit value within a calendar year, no sales tax registration is required. In this way, smaller companies and online retailers do not have to deal with the additional bureaucratic and administrative effort.
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If the delivery threshold is reached, or it can be assumed that it will be reached within the calendar year, a VAT number must be applied for in the destination country and regular tax tasks, such as B. Advance VAT returns,at.
All delivery thresholds in Europe
Every country in Europe can set the delivery threshold itself. In most countries this value, measured over 12 months, is € 35,000.
All delivery thresholds at a glance:
When is the delivery threshold considered exceeded?
There is no single delivery threshold in Europe. The height of the delivery threshold differs depending on the nation and it is important to know how high it is where. The basis for reaching the delivery threshold is the annual net turnover that the retailer achieves with sales in the respective country. As long as the net sales in the country concerned fall below the delivery threshold there at the end of the year, the dealer pays tax on his corresponding sales in his own country. As soon as the delivery threshold is exactly reached or exceeded, the retailer must register there for sales tax.
In addition, he or she will have to pass on advance sales tax returns or tax returns to the tax offices concerned in the future, for example. Anyone who neglects this, whether consciously or unconsciously, can expect severe penalties.
Delivery threshold in Germany
In the event that you are a retailer outside of Germany, the German delivery threshold is relevant for you. As long as you generate five-digit sales with sales to customers in Germany, you will be taxed as usual in your country. However, as soon as you reach the magic threshold of € 100,000 and thus six-figure amounts, you have to register for sales tax in Germany. That's roughly the equivalent of $ 108,000.
In addition to VAT registration, pre-registrations, regular tax returns and more are now also required in order to be able to continue trading legally. If you fail to complete these tasks, you can expect corresponding penalties.
Delivery threshold in Austria
If your turnover as a foreign dealer in Austria corresponds to the usual uphill and downhill drive there, this is initially irrelevant from a tax perspective: But only until the Austrian delivery threshold of € 35,000 and $ 38,000 is reached. If this amount or more is implemented in one year, you as an entrepreneur have to register for VAT here and carry out your other related tasks.
These include, among other things, the submission of advance sales tax returns, as well as regular tax returns.
Delivery threshold in France
If you are a retailer based in Germany, for example, and sell products to France, the French delivery threshold applies. This is here at € 35,000. If your turnover falls below this at the end of the year, you tax your sales yourself as usual in Germany. However, as soon as you turn over € 35,000 or more with customers in France, a VAT registration is mandatory here. In US dollars, that translates to about $ 38,000.
This is accompanied by the obligations to register input tax or to submit tax returns on a regular basis.
Delivery threshold in Italy
When we hear Italy, we think of sun, good food and the sea: the traditional country is relevant for retailers for other reasons, after all, it is a potential sales driver. If the Italian delivery threshold of € 35,000 is achieved here, the sales are taxed as usual in their own country. However, if the turnover climbs to € 35,000 or $ 38,000 or more, a VAT registration is required for foreign dealers.
After the VAT registration, input tax returns and tax returns, which must be submitted annually and provide information about the sales generated in Italy, also follow.
Delivery threshold exceeded - what now?
Exceeding the annual limit value for distance selling - and that without valid registration - can lead to fines.
In addition, more and more online platforms, including Amazon and eBay, are placing value on it Dealers with valid tax numbersand ask for proof. One of the reasons for this is that more and more countries are making the operators of the respective platforms responsible for the tax compliance of active traders.
For example, Amazon sellers must apply for the F22 form to the tax authorities and then submit it to Amazon as evidence. Traders without a valid registration run the risk of being excluded from the platform!
example: The annual delivery threshold in France is € 35,000. So if a dealer in Germany sells goods to France within a year and the net turnover is € 30,000, no action is required. If the turnover increases in the following year and amounts to € 40,000 net, then the delivery threshold has been exceeded and at the time when the excess was evident (i.e. shortly before the € 35,000 limit was reached), VAT registration is mandatory.
Which tax applies?
It is important to mention that once you are registered for tax in the destination country, you will also have to pay sales tax there. That means that yourself if necessary, the applicable tax rate can change.
Waiver of the delivery threshold
It is possible to waive the application of the delivery threshold in a certain country. That means, however, that you can regardless of the first turnover must take care of a valid VAT number in the country of destination.
This is possible in every member state of the EU, but of course also leads to the associated obligations. The waiver itself must at the responsible tax authority requested so that it is still clear where taxes are paid.
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Various documents are required for this application, but in some countries this is even done informally. Sometimes, however, the specifications are also more extensive.
In Poland, for example, the application to waive the delivery threshold is only possible with the so-called VAT-21 form and the tax authorities there will also require proof of tax registration in the country of origin.
Can I do without at any time?
As is so often the case, the timing of the waiver depends on the country in question. In principle, the waiver applies for the entire calendar year as well as the following. This 2-year rule must be taken into account - the waiver as such can be requested at any time.
When does it make sense to do without?
So when should a retailer decide to waive the delivery threshold? The answer is quite simple: if the Tax rate in the country of destination is lower than in the country of origin and the dealer is already registered for tax purposes in the country of destination.
Why? Because as soon as you are registered for tax on the spot, the local tax rate applies.
How long does this waiver last?
That is different and can vary from country to country. In principle, the waiver of the application of the delivery threshold according to Section 3c (4) UStG always applies to two calendar years.
In addition to the individual delivery thresholds, there is also the so-called acquisition threshold. This takes place at so-called. other sales tax final consumers Application. Up to this threshold, companies can annually acquire goods from the Community territory without becoming taxable for the purpose of the acquisition.
However, as soon as they exceed the threshold, they must apply for a sales tax identification number and pay the acquisition tax to the responsible tax office.
This means that this tax number can also be used for future business. As a result, the foreign tax no longer has to be paid, since the supplier is selling as intra-Community supply can process tax-free.
What is an intra-community delivery?
An intra-community delivery is a tax exemption under sales tax law. Accordingly, cross-border Deliveries within the EU is exempt from sales tax in the state from which the broadcast is being made.
From the perspective of the purchaser, the intra-community delivery leads to a intra-community acquisition. This is to ensure sales taxation in the acquiring country. The purchaser has to pay the purchase sales tax and can deduct this as input tax at the same time (if he is entitled to input tax deduction).
What is the mail order regulation?
According to the Sales Tax Act, sales tax should, if possible, always be paid according to the country of destination principle. That means in the country to which the goods are being sent.
Destination principle:Shipments to private individuals within the EU are taxable in the recipient's country.
Solutions: Delivery threshold exceeded
Of course, an overlooked delivery threshold or a missing VAT number puts you in front of tasks and possibly even penalties. In the end all sales must be correctly taxed. If that's not the case: don't panic!
It is important to make up for the omissions as soon as possible and to pay any fines immediately. In order not to lose sight of the delivery threshold and to be able to take action in good time, it is advisable to choose a suitable service provider.
Hellotax offers a tool for online retailers, automation software that monitors delivery thresholds in real time and sends notifications to the retailer in good time.
In this way, at least a future failure to take tax measures can be avoided and the necessary tax registration can be carried out directly in the control software can be done with a few clicks.
It is important to observe the delivery thresholds if you are or want to become part of the Europe-wide mail order business. In addition to setting up a company and storing goods in a country, the Reaching the annual threshold finally also to a mandatory registration of the VAT number.
This system is quite complex and, if necessary, the delivery threshold can be disregarded or adjusted and therefore does not apply or you can do without it in advance. What makes sense in this context has to be decided from company to company.
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Dealers with net sales that exceed these delivery thresholds should get in touch contact service providers and use tools to automate this area of your business and to ensure tax compliance in the EU.
It is important to note that a tax registration is also always included ongoing duties and obligations in the country of registration goes hand in hand.
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