There are many advantages in mail order business, e.g. as a seller on Amazon. There is no need to rent a local store, no need to hire employees to sell goods there and you can react faster to trends and new products. But there are other challenges to master, such as the tax regulations for shipping. What do we have to pay attention to regarding VAT in the mail order business?
Antonia Klatt
Last Updated on 14 September 2020
What is the mail order regulation?
The tax-relevant issues in the mail order business are mainly determined by the so-called mail order regulation. It basically stipulates that mailings to private individuals in the European Union are taxable in the recipient country. Incidentally, mailings to entrepreneurs are generally easier to handle, as the reverse charge procedure is used here and the dealer is thus exempt from taxation. Instead, the buyer must pay the tax in the recipient country.
For the mail order regulation to come into effect, the dealer must actually ship the goods – it does not apply if the buyer collects the goods himself or commissions someone to do so. In addition, the shipment must begin and end in an EU member state.
The recipient may not be a person who would have to pay tax on an intra-Community acquisition. As a rule, these are private individuals or entrepreneurs who order goods for private use.
Special regulations apply to:
- Small entrepreneurs
- Farmers and foresters who pay tax according to average rate taxation
- Legal persons who order for private use
- Entrepreneurs who only carry out tax-exempt transactions, which do not entitle the customer to deduct input tax
The mail order scheme only applies to these persons if they have neither exceeded the acquisition threshold applicable to intra-Community acquisitions nor waived the application of the acquisition threshold. If a buyer uses a VAT identification number, it can generally be assumed that the purchase is a business acquisition and that the mail order regulation does not apply – unless the buyer is one of the exceptions mentioned or is making the purchase for private purposes.
What role do acquisition thresholds play for VAT in the mail order business?
Small entrepreneurs and the other groups of persons mentioned can also be treated as private individuals under certain conditions. This applies if they have not exceeded the acquisition thresholds set by the EU member states or if they generally waive the application of the acquisition threshold. If these persons exceed the acquisition thresholds, they are treated like entrepreneurs.
In this scenario, the sellers has to submit to the income tax in his member state and apply for a VAT ID. The acquisition thresholds vary from country to country. For example in Germany, it is € 12,500 and in France the limit is € 10,000.
| Country | EUR | Local currency |
| Belgium | € 11.200 | – |
| Bulgaria | € ~ 10.200 | BGN 20.000 |
| Denmark | € ~ 10.500 | DKK 80.000 |
| Germany | € 12.500 | – |
| Estonia | € 10.000 | – |
| Finland | € 10.000 | – |
| France | € 10.000 | – |
| Greece | € 10.000 | – |
| Ireland | € 41.000 | – |
| Italy | € 10.000 | – |
| Croatia | € ~ 10.200 | HRK 77.000 |
| Latvia | € 10.000 | – |
| Lithuania | € 14.000 | – |
| Luxembourg | € 10.000 | – |
| Malta | € 10.000 | – |
| Netherlands | € 10.000 | – |
| Austria | € 11.000 | – |
| Poland | € ~ 11.200 | PLN 50.000 |
| Portugal | € 10.000 | – |
| Romania | € ~ 7.000 | RON 34.000 |
| Sweden | € ~ 8.700 | SEK 90.000 |
| Slovakia | € 14.000 | – |
| Slovenia | 10.000 | – |
| Spain | 10.000 | – |
| Czech Republic | ~ 12.200 | 326.000 CZK |
| Hungary | 10.000 | – |
| United Kingdom | ~ 93.500 | 85.000 GBP |
| Cyprus | 10.251.61 |
However, the buyer of the goods may waive the application of the acquisition thresholds. This is assumed if he gives his VAT ID to the buyer. In this case, he must carry out the acquisition tax himself in his country.
What role do delivery thresholds play for VAT in mail order business like Amazon?
For online sellers, e.g. on Amazon, there are also other key figures to consider, namely the so-called delivery thresholds, also known as VAT Registration Threshold. Each European Union member state has its own threshold limit. These have to be considered when selling to private persons – or likewise to the entrepreneurs already mentioned, who are to be regarded as private persons.
If you as a German entrepreneur start selling products to private persons in France, you can easily pay tax on these sales in Germany. However, if your annual net turnover with these sales probably exceeds the French delivery threshold or has already done so in the previous year, you will have to pay tax on your sales in France.
To do so, you must be registered for VAT in France and apply for a VAT identification number. In the future, you will have to invoice and pay the VAT for your sales in France. This is the regulation that we have already mentioned, the mail order regulation.
All EU VAT Registration Threshold
| Country | Threshold Limit |
| Austria | € 35,000 |
| Belgium | € 35,000 |
| Bulgaria | BGN 70,000 |
| Croatia | HRK 270,000 |
| Cyprus | € 35,000 |
| Czech Republic | CZK 1,140,000 |
| Denmark | DKK 280,000 |
| Estonia | € 35,000 |
| Finland | € 35,000 |
| France | € 35,000 |
| Germany | € 100,000 |
| Greece | € 35,000 |
| Hungary | HUF 8,800,000 |
| Ireland | € 35,000 |
| Italy | € 35,000 |
| Latvia | € 35,000 |
| Lithuania | € 35,000 |
| Luxembourg | € 100,000 |
| Malta | € 35,000 |
| Netherlands | € 100,000 |
| Poland | PLN 160,000 |
| Portugal | € 35,000 |
| Romania | RON 118,000 |
| Slovakia | € 35,000 |
| Slovenia | € 35,000 |
| Spain | € 35,000 |
| Sweden | SEK 320,000 |
| United Kingdom | £ 70,000 |
As an entrepreneur, you have the option of avoiding the application of delivery thresholds. In return, you must declare your intention to do so to your competent authority and you are bound by this decision for two years.
Summary
Anyone who counts private individuals or entrepreneurs who shop for private use among their customers should always keep an eye on the delivery thresholds. They provide a clear indication of when you have to register for VAT in an additional EU country. If you disregard this regulation, you risk facing corresponding tax consequences.
With our FREE hellotax VAT automation tool, we always keep an eye on your sales and inform you in good time if you will reach a threshold soon and we will help you with the registrations – and this is only a small part of what we can do for you.
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If you keep an eye on the mail order regulations, you are on the safe side in terms of tax law in the online or Amazon mail order business and can sell your products throughout the EU. Use tools, such as our software, to automate as many tasks as possible and focus on what is really important.
