The question of intra-community VAT often arises for sites selling services or products in several European countries.
Indeed, several possibilities are available to the seller, depending on thresholds, but also on the margin optimization strategy.
Thus, a French site selling products to private customers located in another member state of the European Union may choose to apply French VAT at the rate of 20% or VAT of the buyer’s country, provided that it do not sell for more than 35,000 euros per year in this country (this amount of 35,000 € being in effect since January 1, 2016).
There are therefore three scenarios:
– less than € 35,000 in sales and application of French VAT
– less than € 35,000 in sales and application of VAT in the buyer’s country
– more than € 35,000 in sales and compulsory application of VAT of the buyer’s country
Remember that in the event that a merchant wants to use the VAT rate of the buyer’s country, he must first register for this with the tax authorities of the country concerned. This means that a merchant selling in several countries may have to register in each of these states and will then have to make the declarations and payments specific to each. That is to say as many constraints as there are countries.
If the threshold of € 35,000 for annual sales in a country is not reached, a merchant established in France may sometimes have an interest in registering in the state in which he is selling, and sometimes it will be the other way around.
Indeed, if he sells a product 100 euros including tax throughout Europe, then with French VAT (at the rate of 20%) he will have a sale price excluding VAT of 83.33 € while for sales using the rate of intracommunity VAT Poland of 23% it will have a sale price excluding VAT of € 81.30.
We see it with only three points of difference, the merchant’s margin will be reduced by 2 € for a product sold for 100 € including tax.
Conversely, by taking advantage of the Luxembourg VAT rate of 17%, its sales price excluding tax will be € 85.47, i.e. an increase in its margin of € 2.
This is why a trader selling in several European states has every interest in correctly calculating the VAT according to each state in which he sells, whatever its volume in order to optimize his margin without changing his price. final sale.