How does petapce calculate VAT for non-VAT registered retailers in another EU member state?
Brands operating on the Petspace platform may make sales to both VAT (value-added tax) registered and non-VAT registered retailers. If an EU located brand is supplying goods to a retailer in another EU country, and the retailer is not registered for VAT, the transaction is deemed to be a B2C (business-to-consumer) transaction for EU VAT purposes. This is classified as a distance sale and the brand is required to charge VAT on the sale.
Distance sales
As of July 1, 2021, EU brands that have distance sales of EUR10,000 or more are required to collect VAT based on the VAT rate in the country where the retailer is located. Prior to July 1, 2021, each EU country had its own threshold that applied to sales to non-VAT registered businesses in that country. You can read more about these changes in Articles 33 and 59c (1) (c) of the EU VAT Directive.
The local VAT that is collected must be remitted by the brand to the local tax authorities through an optional special registration scheme called the OSS (Union One Stop Shop) Scheme. If this optional scheme is not followed a local VAT registration will be required in each EU member state to which B2C supplies are made to retailers.
Brands that do not meet the EUR10,000 threshold may elect to opt into the OSS Scheme and collect VAT based on the applicable rates where the retailer is located.
How does Petspace calculate VAT on distance sales?
As a B2B (business-to-business) platform, the majority of brands on Petspace exceed or are expected to exceed the EUR10,000 threshold. Therefore Petspace assumes that all brands are registered for the OSS scheme and are required to collect VAT based on the “ship to” location for orders with non-VAT registered retailers in other EU member states. For sales to non-VAT registered retailers in other EU member states, Petspace applies VAT at the standard rate applicable in the retailer’s country. Petspace will then include the VAT collected on distance sales of goods in the brand payout, so that the brands may pay this over to the Tax Authorities via the OSS scheme. For the most current VAT rates in each country, please see here.