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VAT in european dropshipping

By
Jussi Korhonen
on 2/5/19, 5:58 PM 609 views

A company starts dropshipping business in EU. The company is registered in Finland and holds a webstore which has a catalogue from a Spanish distributor.

A client (individual person) from Germany places an order through the company's webstore and the product is then shipped straight from Spain to Germany.

Which country's VAT should the company charge in this case? If the recipient country's distance sale threshold is exceeded, the company has to register for VAT number in the recipient country, but what about before the threshold is exceeded?


0

Tero Juola

--Tero Juola--
2534
| 2 2 2
Tallinn, Estonia
--Tero Juola--

23 YEARS OF EXPERIENCE IN E-COMMERCE | CONSULTANT | ARCHITECT | CERTIFIED MAGENTO; SHOPIFY & ODOO EXPERT

Business-oriented international IT consultant and E-Commerce expert with success in leading demanding, complex IT projects in world-class companies including Oracle, Sun Microsystems, CapGemini, Tieto, S-Group, Vaimo, Siili Solutions. Strong international experience from working with the international clients and establishing E-commerce projects covering over 65 countries. Excellent business skills and ability to consult and acquire new customers. Expert with leading E-commerce technologies, specifically Magento.

Established Magento based online retail for multiple product categories and covering over 65 countries.

Responsible for 3 out of 5 Finland’s biggest online stores WebSphere Commerce project architecture
including product information and catalogue management.

Together with sales team, led acquisition of the 3rd biggest Bank and Insurance Company in Finland, provided technical solution, consultation and project management. 

Provided technical solution to virtualise desktops for Eastern Finland Healthcare District.

Led mainframe migration to Unix/Java platform for the S-Group, enabling more than 100 million loyalty card
transactions monthly, and becoming one of the biggest IT projects ever in Finland. 

Finnish citizen, fluent in English, with basic knowledge in Swedish, Italian, Spanish, German.

Recognised for leadership skills, commercial understanding, teamwork, creativity and clarity of communication.

Tero Juola
On 2/5/19, 6:38 PM

The Spanish company who does dropshipping to consumers within EU is responsible for VAT in dropshipping sales. Spanish VAT is applied to sales up to Germany VAT sales annual limit. After that the Spanish company has to register in Germany for VAT, do monthly reporting and pay the VAT to Germany according Germany's VAT rate.

The Finnish company who sells these dropshipped merchandise to the customer in Germany charges VAT from sales and deducts the VAT charged by the Spanish company. Finnish VAT is applied to sales up to Germany VAT sales annual limit. After that the Finnish company has to register in Germany for VAT, do monthly reporting and pay the VAT to Germany according Germany's VAT rate.

Consider to register the company in EU country where the VAT is lowest.

Consider to have a logistic partner in Germany who receives the merchandise from the Spanish distributor and sends them to consumers. This is a much easier to handle VAT wise. Then the Spanish distributor does not charge VAT from your company. Your company charges the VAT from consumers and reports and pays it to local tax office up to Germany VAT sales annual limit. After that the company has to register in Germany for VAT, do monthly reporting and pay the VAT to Germany according Germany's VAT rate.


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Asked: 2/5/19, 5:58 PM
Seen: 609 times
Last updated: 2/5/19, 6:56 PM