Skip to content

How VAT impacts UK and US brands selling online into the EU

The European Union has long been a prime player in international trade; as one of the world’s most open, outward-focused economies, the EU’s single market has achieved a strong standing on the global stage, slowly creeping up on its two main rivals, China and the United States of America. The combination of Europe’s firmly established position within the global markets and the added convenience of online shopping has made the EU an attractive destination for expanding international brands.

If you have an Ecommerce business in the US, UK, or elsewhere you may be tempted – but daunted – by the prospect of expanding into Europe, but we’re here to help remedy that. In this blog post, we’ll look at how VAT affects UK and US brands selling online into the EU and what you can do to minimize the impact on your business.

The hidden costs of Ecommerce

The first thing you need to consider when expanding into new territories is the potential costs, namely VAT. Depending on the types of products you sell, your chosen Ecommerce platform, and your shipping methods, you may be required to charge VAT on goods sold to customers in the EU.

If you have been in business a long time, chances are you well-familiar with VAT, but for those who aren’t, here goes. Value Added Tax (VAT) is a consumption tax levied on goods and services at every stage of the production process. The end consumer pays the VAT when they purchase the final product or service. VAT is governed at a national level, with each country applying its own rate and rules governing the administration of VAT.

The VAT system was designed before the advent of Ecommerce and distance selling, which has resulted in an excessive burden for businesses that sell across multiple European countries. In order to address this issue, the EU has introduced a slew of new regulations and mechanisms.

Whilst these initiatives have gained broad support from Ecommerce businesses across Europe, a level of uncertainty and complexity associated with EU VAT management remains, especially for sellers outside the European Union who may not have fully caught up on these new rules. With all the complexity surrounding VAT, many Ecommerce businesses are turning to VAT management platforms to remove all the hassle associated with VAT.

Why use a managed VAT platform?

Regardless of where your business is based, if your business is involved in selling goods or services within Europe, you need to be aware of the fact that you must manage VAT. If you decide to manage VAT yourself, you have two options available to you. The first is to appoint an EU-based fiscal representative. This person would be responsible for ensuring that your business pays the correct amount of VAT to the authorities in each European country where you are selling products or services. The second is to register for one of the One-Stop-Shops (OSS), an online portal that allows businesses to file VAT returns and make payments in a single place.

With twenty-seven member states, EU VAT can be a complex and time-consuming compliance obligation for businesses. This is where managed VAT platforms like RedSky Europe come in.

Why use RedSky Europe’s Managed VAT Services?

Our exclusive VAT platform enables companies to trade seamlessly while saving valuable time and money. We offer complete registration across the EU and UK with a single fixed fee while managing all VAT obligations for every order you ship. Here are three reasons why you should use RedSky Europe for all your VAT needs:

1. We make sure you remain compliant.

The last thing you want as a growing business is to get hit with a hefty fine because you failed to meet VAT compliance. RedSky Europe takes care of all the paperwork and red tape, so you don’t have to worry about it.

2. You need not fear overpaying.

It can be surprisingly easy to overpay on VAT if you don’t have someone who is an expert managing it for you. At RedSky Europe, we make sure you don’t overpay on VAT by taking care of the entire process so you can focus on what matters most: running your business.

3. We maintain record retention for tax authority audits.

Part of being compliant is being able to provide records if the tax authorities ever audit you. RedSky Europe manages all the paperwork and record retention for smooth tax authority audits. If you ever need to provide records, we will have them readily available. 

RedSky Europe takes the hassle out of EU VAT

At RedSky Europe, we are on a mission to make it easier for ambitious brands to grow their business in Europe. In this endeavour, we have compiled all our knowledge of EU VAT in a comprehensive e-book that you can download for free at the end of the article.

Our VAT platform, meanwhile, eliminates the complexities surrounding EU VAT by managing all VAT-related activities and processing VAT for all EU member states.

RedSky Europe’s managed VAT service is the perfect solution for ambitious brands looking to grow their business in Europe. We take care of all the complexities of distance selling in Europe, so you can focus on what you do best – running your business.

If you want to learn more about EU VAT, download our free e-book and if you are interested in expanding your business in the European Union, visit our website to learn more about our services.