E-commerce on foreign markets - Earn money at local VAT!

If you have a company engaged in e-commerce and perform distance trading of goods to other countries, you can earn money to charge local VAT instead of Swedish.

 

VAT registration

The threshold refers to a threshold amount, excluding VAT. There is a table of the corresponding thresholds in the EU, and also a table of thresholds in the EU concerning exemptions for small businesses. In the listings you can see the turnover thresholds that apply in the different countries.

VAT Registration will occur when the thresholds are exceeded during the past 12 months ie. when your company sold products and / or services to consumers in another country with a value that exceeds the threshold, your company will become taxable in the country.

When you register your company for VAT in the country, such as Germany, you are entitled to only add the local German VAT of 19% instead of Swedish VAT of 25% on sales.

This represents a 6% profit for your business which can also be used to lower prices to the end customer, thus creating a competitive advantage!

In many countries, you do not wait until the sales exceed the threshold, you have the option to voluntarily register for VAT and thus faster apply the local VAT rate of your sales.

 

Many companies that Moms Finans has been in touch with regarding e-commerce haven’t been aware if that they can be required to register for VAT in another country.

It is very important to communicate that when your business become taxable in another country, the same principle as in Sweden,  you follow the rules and register your activities subject to VAT sales.

You shall not continue your sales as usual including Swedish VAT. Instead you should as soon as possible sign up for a local VAT number and add local sales tax on your sale. This is also in order to avoid a tax debt built up abroad, which at worst case can lead to high interest rates and penalties, you should, like the previous remit pay sales tax to the state.

The only difference is that you pay VAT to that country's tax authority instead of to the Swedish Tax Agency.

Contact us before you begin your e-commerce sales and we will help you sort out what applies to your business.

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