Starting in 2020, more and more American sellers are flooding into the European market, and VAT has always been a problem for new European sellers. As a UK licensed accounting firm, Amb is committed to exporting knowledge to help sellers understand and master European taxes. What is the difference between "country of shipment" and "country of arrival" when applying VAT? Below, follow the small series to learn.

Country of shipment principle

Taxes would be levied in the country from which the goods were shipped, using that country's tax rates. (Germany as an example)

1. From Germany to Germany, Germany tax;

2. Shipments from Germany to other EU countries, excluding other EU countries that exceed the remote sales quota, are taxed in Germany. (Countries that exceed the remote sales quota pay taxes in other countries)

3. Other EU countries that do not have tax numbers send them to Germany and pay taxes in Germany.

Receiving country Principle (receiving country Principle)

Taxes will be levied in the destination country of the shipment, using that country's tax rate. (Germany as an example)

1.From Germany to Germany, Germany tax;

2.Other European Union countries send to Germany, are taxed in Germany;

3.From Germany to other EU countries without tax number, tax in Germany. (For countries exceeding the remote sales quota, the country where the registered tax number is located shall declare and pay tax)

How I choose a more favorable declaration principle depends on:

• The rate of
• The single amount
• Where the goods are stored
  
  

For example: Germany and France are normal declaration, registered VAT, a large amount of inventory in Germany, but the order is more in France, this situation on the choice of shipping country tax to be cost-effective; Because Germany has a 19% tax rate and France has a higher 20% tax rate than Germany.

* Note: If an individual seller cooperates with multiple tax agents, the tax method should be unified, otherwise, it will cause double tax.