How does VAT work for E.U. orders?

VAT (value-added tax) is a tax that European Union (E.U.) retailers are required to pay for purchases for their store. Petspace will facilitate this charge and its remittance to brands under certain circumstances, as explained below.

Please note: VAT laws differ for business to business (B2B) and business to consumer (B2C) relationships. All transactions on Petspace are B2B transactions and retailers will have VAT registration. If you have any questions about how to facilitate direct to consumer orders not on Petspace, we suggest contacting an advisor to assist with those transactions or the marketplace you are conducting business through.

Do I need to register my business for VAT?
Brands are required to obtain VAT registration in E.U. countries for B2B transactions if at least one of the following criteria is met:

– Brand has a business entity in the E.U. member country
– Brand has fulfillment logistics within an E.U. member country (ie. warehouse or fulfillment center where you will ship orders from)
– Brand plans to ship products to themselves within the E.U. before fulfilling orders to E.U. retailers

If you meet at least one of the requirements above, you must register for VAT in all countries where you meet this criteria. If this criteria is not met, you likely do not need to be VAT registered for B2B transactions in those specific E.U. countries.*

All E.U. brands are required to provide their VAT registration status. You may add your VAT information in your Account Settings at any time. If you do not have a VAT number and do not meet your country’s threshold for registration, please select the “I don’t have a VAT number” checkbox.

*You are responsible for determining if you need to be VAT registered in each country you sell your products. Please consult your tax advisor for VAT implications for your business.

How does VAT apply to my orders?
VAT will be applied to your orders based on where you (the brand) are shipping the products from at the point of sale. There are three different types of orders you may receive on Petspace:

Domestic orders: Supply of goods from a brand in one E.U. member state to a retailer in the same E.U. member state. See example:
– Brand ships goods from the Netherlands to a retailer in the Netherlands

Intra-Community Supply: Supply of goods by a brand from one E.U. Member State to a VAT registered retailer in another E.U. member state. For a full list of E.U. member states, you may reference this article on the European Union’s official website. See example:
– Brand ships goods from Italy to a retailer in Netherlands

International order: Supply of goods from a brand outside of the E.U. to a retailer in an E.U. Member State. See examples:
– Brand ships goods from U.S. to a retailer in the Netherlands
– Brand ships goods from India to a retailer in the Netherlands
– Brand ships goods from U.K. to a retailer in the Netherlands (U.K. is no longer an E.U. member state due to Brexit)

Please note: If you are fulfilling orders from the E.U. to a non-E.U. retailer, Petspace will not collect VAT. These retailers will be charged customs and duty at the border.

Domestic shipments:

For any products that brands are shipping domestically, as long as the brand is VAT registered, Petspace will collect VAT from the retailer at checkout and then remit this VAT payment to the brand as part of their order payout. The standard VAT rate of the retailer’s country will be added to the invoice.

If the brand, however, is located in another E.U. country but shipping the products from the same country as the retailer, Petspace will check to see if the retailer’s country allows for reverse charge. If the retailer’s country allows for the reverse charge mechanism, Petspace will not collect any VAT on the order and indicate on the invoice that no VAT was collected due to reverse charge. It will then be the brand and retailer’s responsibility to complete the reverse charge on their VAT invoice.If the retailer’s country does not allow for the reverse charge mechanism, Petspace will collect VAT at checkout and remit this VAT to the brand as part of their order payout.

Intra-Community Supply:

With intra-community supply, Petspace will not facilitate any VAT charges for VAT registered retailers. Petspace will note on the invoice that the order is considered intra-community supply for their records. The retailer is responsible for accounting for this transaction on their returns.

If the retailer is not VAT registered, Petspace will charge the VAT rate of the retailer’s country. You can read more about this here.

International shipments:

For any products a brand ships from outside the E.U. to an E.U. member state, VAT charges