{"id":60453,"date":"2018-10-19T00:00:00","date_gmt":"2018-10-19T00:00:00","guid":{"rendered":"https:\/\/blog.hellotax.com\/blog\/taxation\/distance-selling\/eu\/"},"modified":"2022-01-31T16:13:07","modified_gmt":"2022-01-31T15:13:07","slug":"distance-selling-in-europe","status":"publish","type":"post","link":"https:\/\/hellotax.com\/blog\/distance-selling-in-europe\/","title":{"rendered":"Distance Selling in Europe: Definition, Example, Exceptions"},"content":{"rendered":"\r\n

Online selling and mail order services have been increasing ever since. People all over Europe order millions of packages every day on Amazon, and of course, many of these orders are transborder sales. As a seller, distance selling in Europe may result in tax duties. In this article, we will explain everything you need to know about Distance Selling in Europe.<\/p>\r\n\r\n\r\n\r\n

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What is Distance Selling in Europe?<\/h2>\r\n\r\n\r\n\r\n

Aside from establishing a business or storing goods in another country, exceeding the EU-wide threshold for cross-border B2C distance sales can also trigger VAT registration obligations.<\/p>\r\n\r\n\r\n\r\n

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UPDATE: Starting from the 1st of July 2021 a Europe-wide unform delivery treshold of 10,000\u20ac was introduced and replaced the previous country-specific thresholds. This had several consequences for online retailers. The \u20ac10,000 threshold is cumulative across all EU countries. For example, if you sell goods from Germany to Spain (\u20ac5,000), France (\u20ac5,000), and Poland (\u20ac1,000), you exceed the threshold and must apply the local VAT rates in each destination country. You must either register for VAT in those countries or use the One Stop Shop (OSS) scheme.<\/strong><\/p>\r\n\r\n\r\n\r\n

Distance Selling Threshold Limits in Europe<\/h2>\r\n\r\n\r\n\r\n

Selling from the country you are VAT registered in is fine until you reach the threshold within one calendar year. Previously, country-specific thresholds applied. Since 1 July 2021, a single EU-wide threshold of \u20ac10,000 applies for distance sales under the OSS scheme. Additionally, from 1 January 2025, an optional SME VAT exemption scheme introduces a \u20ac100,000 threshold for eligible small enterprises.<\/p>\r\n\r\n\r\n\r\n

Reaching the annual threshold limit <\/a><\/strong>for distance selling leads to various VAT duties. That’s why reaching this limit should not be missed to avoid problems (and penalties) before they even happen.<\/p>\r\n

This is an old table that does not apply anymore but It has been left here for the record:\u00a0<\/p>\r\n\r\n\r\n\r\n

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Example for Distance Selling from Germany<\/h2>\r\n\r\n\r\n\r\n

You are an online seller based in Germany and sell to several European countries. The products you sell online to the Netherlands are worth 50 000\u20ac. This was previously not a problem.<\/p>\r\n

Previously, Germany\u2019s domestic threshold for local VAT registration was \u20ac100,000. However, this no longer applies for cross-border distance selling. Since July 1, 2021, once total EU-wide B2C sales exceed \u20ac10,000, VAT must be charged based on the customer\u2019s country<\/p>\r\n\r\n\r\n\r\n\r\n\r\n

If your total cross-border sales within the EU exceed \u20ac10,000, you must charge VAT based on the customer’s location. To simplify compliance, you can register for the OSS, enabling you to report and pay VAT for all EU sales through a single registration in your home country.<\/p>\r\n\r\n\r\n

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Book a free consultation<\/h3>

Our VAT experts are happy to help you. Book a free consultation today!<\/p>\n

Free consultation<\/a><\/div><\/div><\/div>\n\r\n\r\n\r\n

Distance Selling exceptions for B2C and B2B in the EU<\/h2>\r\n\r\n\r\n\r\n

Distance Selling Exception B2C: If your total cross-border B2C sales of goods and certain services within the EU remain below \u20ac10,000 in a calendar year, you may apply the VAT rate of your home country to those sales. Once this threshold is exceeded, you must apply the VAT rate of the customer’s country.<\/p>\r\n\r\n\r\n\r\n

Distance Selling Exception B2B: For B2B sales, the reverse charge mechanism<\/strong> usually applies. If the buyer has a valid VAT number, no VAT is charged on the invoice. Instead, the buyer accounts for VAT in their country. Distance selling thresholds do not apply to B2B transactions.<\/p>\r\n

What counts as distance selling?<\/h2>\r\n

Distance selling includes any sale where the buyer and seller are not physically present together<\/strong>, and the order is made remotely. Covered channels include:<\/p>\r\n