Registering for local VAT

In the EU, the threshold to register and collect VAT depends on the country in which your business is based. There is an exception for EU businesses that are established in one EU country and sell physical goods and digital products to private individuals in other EU countries. When you register for VAT, you will receive a VAT identification number. Businesses should include their VAT ID number on their sales invoices and collect the customer’s VAT ID number when selling to another VAT-registered business.

Registering for VAT OSS for European businesses

European businesses who sell to private individuals in multiple EU countries can register for the VAT One Stop Shop (VAT OSS) Union scheme.
If you sign up for VAT OSS, you don’t have to register with each EU country where you sell goods or services remotely. If you are based in an EU country, you can register with your home country’s VAT OSS portal. You will remit all the VAT that you collected to your local tax authority, who will then distribute this VAT revenue to other EU countries on your behalf.

Registering for VAT OSS for non-European businesses

All non-EU-based businesses selling digital products to private individuals in the EU may register for the VAT OSS non-Union scheme. These businesses can choose any European country to register for VAT OSS. When a non-EU business registers for VAT OSS, it is allocated a unique VAT ID number in the format starting with EU.

To calculate VAT on a transaction, you need to determine three things: the customer’s status, which country’s VAT to collect, and the correct VAT rate.

Given that the tax rates vary significantly based on the buyer’s location, the government wants a record that confirms where the customer was when they purchased digital goods.
This extra layer of documentation limits the possibility that businesses or individuals could commit tax fraud by either charging or paying the wrong tax rate.

Submitting a VAT return is the key to ensuring compliance. Even if you have no VAT to pay or reclaim, you need to file your returns on time. You will need to report two types of VAT: the amount you charged to your customers (output VAT) and the amount of VAT you paid to your suppliers (input VAT).
If you opted for OSS registration, you must submit a quarterly OSS return in your country of registration. This return must be submitted in addition to any domestic VAT returns that you may have to file.