VAT Rules & Thresholds

To help reduce the administrative burdens, and to encourage them to start trading across Europe, there are national VAT registration thresholds set by each country and VAT throughout the EU follows-up the same application.

If a foreign company is selling below the relevant VAT threshold to each country, it does not need to VAT register in that country.

VAT Application & Rules

To simplify the administration and process of the rapidly growing, cross-border 'distance' selling industry, the EU implemented a Distance Selling regime which enables EU member states' to sell to individuals within the EU using their own local "home/domestic" VAT number & rules - up to the VAT threshold of that country. The initiative is to encourage free trade within the EU economic zone.

Whereas if a company within the EU sells to individuals in countries outside the EU there will be no VAT applicable on the transaction, and vice versa when a company outside the EU sells to an individual within the EU - no VAT is applicable.

Once an EU company reaches the VAT threshold for another EU country and registers for VAT accordingly, then any further transaction to that country would be charged at the VAT rule for the product within the destination country.

Please note: We do not permit non-EU countries selling within their own domestic country.

Scenario examples (click to enlarge):

Annual EU countries distance selling VAT threshold

VAT registration in additional EU member states.

After hitting the VAT threshold for any EU country it is the retailers responsibility to complete their non-resident VAT trader registration in the applicable country. After completion of the registration they must inform Fruugo of their new registration status in that EU country and supply the VAT number so the VAT profile of the account can be be updated.

Once VAT registered in a new country, the retailer must ensure they meet EU VAT compliance. They will also be required to submit VAT returns to the respective country(s).

Movement of goods Intrastat Filing

In addition to VAT returns, retailers once they hit the Intrastat threshold will be required to complete separate Intrastat filings in which they detail the movement of good from their domestic state to the customers state. The Intrastat filing regime is a replace for the former customs reporting on the movement of goods inside the EU and should be done monthly to document the dispatching of goods across the EU member state's borders.

Intrastat Document Content

Intrastat documents require details of all dispatches (sales) of goods to other EU countries, plus the arrivals (purchases). The details required for each transaction are:

• Description of the goods.
• Commodity code of the goods.
• Quantity and value of the goods.
• Delivery terms.
• Country of departure and arrival (using country codes).
• Any shipping costs

Annual EU countries intrastat threshold