What is VAT?
The Value Added Tax, better known as VAT, is a consumption tax levied on a product at each stage of the supply chain where value is added. This process includes tax added at each step from the production of the product to the point of sale.
VAT typically applies to orders shipped to customers in EU member states.
VAT vs. Sales Tax:
Unlike sales tax, VAT is added at each step of the production process. With sales tax, the entire tax amount is determined and charged after the product is sold. Since VAT is added at each stage of the product's value addition rather than at the point of sale, it prevents the identical product from being double-taxed.
What are the VAT changes?
There are two main changes for online sellers regarding VAT.
- There is a new EU-wide VAT threshold. Previously, the threshold ranged from EUR 35,000 to 100,000, depending on the EU member state. Now, the threshold has been replaced by a new EU-wide threshold of EUR 10,000. You can register in the One-Stop-Shop (OSS), where you can declare and pay the VAT due in other member states.
- The VAT exemption for the importation of goods has been removed, and as a result, all goods imported to the EU are now subject to VAT. You can register for the Import One-Stop-Shop, which was created to help facilitate and simplify the declaration and payment of VAT.
You can read more about VAT, the changes, and what you can do using the resources provided below:
| What is VAT? | https://ec.europa.eu/taxation_customs/what-vat_en |
| What has changed, and how does it affect you? | https://ec.europa.eu/taxation_customs/online-sellers_en |
| One-Stop-Shop | https://ec.europa.eu/taxation_customs/business/vat/vat-e-commerce/oss_en |
| Import-One-Stop-Shop | https://ec.europa.eu/taxation_customs/ioss_en |
What we recommend you do
Gooten is currently working to understand and implement the systems necessary for VAT. Given our distributed network of manufacturers, this is a complicated process, and we will keep you informed of any updates.
We strongly recommend that your business consult a tax expert to understand the impact of the VAT change and determine the necessary actions for your company.
Additionally, whenever you have an order with a VAT number, please reach out to our Partner Support so we can contact the manufacturer and add this number. Our system currently doesn't offer an option to enter this information when you submit an order.