If you sell and send goods to another country in the European Union, you will more than likely be required to charge value-added tax. More precisely, you have to register your company at the rate applicable in that country and charge VAT to your customers on invoices. It is important to pay attention to the fact that Europe VAT rates and thresholds are not equal, which means that they vary from country to country. While the imposing taxes have to be adopted by unanimity, various compromises have been made with regards to the applications of the rates and thresholds. If you are a vendor, this is what you need to know about the value-added tax system in the European Union.
VAT rates in the EU
As mentioned before, countries in the EU enjoy a great deal of flexibility when it comes to value-added tax rates that they implement. However, member states are subject to some rules. They have to have a standard rate for all goods and services and, most important, they have to apply reduces ratios to the goods and services listed in the VAT Directive. The lowest rate that a country can apply is 15%, which is the minimum standard. When the reduced standard is charged depends largely on the asset that is provided. What is important to keep in mind is that the EU VAT rates are the highest ones and they consequently affect when you set the retail price. Equally important is keeping in mind that the standards can change at any time and you have to apply the changes immediately. For some supplies, you will not have to charge the value-added tax, of which mention can be made of education and medical services.
VAT registration and thresholds
VAT registration takes place in the EU country. If you do not reside in the EU member state, then you will most likely face what is called a nil registration threshold. In other words, the criterion is nullified. On the other hand, if you have an online shop, you should know that there are distinctive thresholds. The great news is that there is no registration threshold if you sell into another member country. For the different VAT thresholds, you should look up the list published by the European Commission. Why would you want to register? Well, the financial gains are a good motivation, but so is the image that you make for yourself. If you do not register, you are basically transmitting that you are not making profit, namely that you are a small company.
Consider getting help
It is clear from what was presented above that the situation is a little bit complicated for business. This is the reason why it is necessary to get help is that regulations change all the time and not complying with the regulations can be costly for your company. What you can do is get in touch with specialized assistance services. The point is that you should make sure to get as much information as possible.