International VAT and GST Services
As your e-commerce business grows and you penetrate new markets, it’s likely that you will need to register for international GST/VAT in foreign countries as your sales exceed the distance selling thresholds (where there is a threshold, some territories have none).
Outside the EU most countries have a form of Goods and Service Tax (“GST”), which is a tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services.
If you sell on marketplaces such as Amazon and eBay then, in some jurisdictions, the marketplace will be responsible for collecting and remitting taxes.
Whatever your mix of channels and jurisdictions we will be able to assist with registrations and returns in many countries. The flags below represent some of the countries we can assist with, but is not exhaustive (we can assist with all of the EU for instance)
The European Union
There are numerous options for dealing with VAT in the EU, dependant upon where you fulfil from and the value of your consignments and the nature of what you sell. We’ll take a look at each of these in turn.
The Import One Stop Shop (“iOSS”)
If you fulfil your consumer sales from outside the EU and your consignments have a value of less than €150 (this excludes any postage charges included in the sale value), then the iOSS will enable you to trade across all 27 E countries with one single return submitted and paid in one jurisdiction.
The One Stop Shop (“OSS”)
Like the iOSS the OSS allows you to register for VAT in one EU country and submit and pay to that one jurisdiction. There are two schemes – the Union and the Union. The Union scheme can be used when fulfilling from within the EU. You will still need a VAT registration in the country where you store inventory. The non-Union scheme can be used if supplying digitally supplied services to consumers in the EU.
Individual Country Registrations
There are circumstances where you may still need a VAT number registration in an EU country even if you are using iOSS or OSS. You will need registration in any country where you are storing inventory. For example, if you are using Amazon FBA services in the EU, you will most likely need multiple EU VAT registrations.
Each State is in a separate jurisdiction, with its own rules and rates of GST. It is however possible to register for multiple states on one site, using the Streamlines Sales Tax Registration System. However, not all States use this system.
The USA uses the concept of tax “nexus”. If you have nexus in a State, you are required to register. Like the EU, if you store inventory in a State, then you have nexus in that State. Each State also has its own economic thresholds, typically $100,000 or 200 sales.
Rates of GST vary from State to State from 2.75% to 7.25% but there can also be local county taxes ranging from 1 to 5 percent. Unlike the EU you cannot reclaim any GST on your costs.
There are also marketplace rules which require marketplaces like Amazon and Walmart to account for GST on your behalf.
There are two forms of registration in Australia – a simplified registration and a Standard Registration. The simplified registration can be used provided you are selling low-value goods (under A$1,000) and don’t have any GST to reclaim. You simply report the value of your sales and pay 10% GST. The registration threshold in Australia is $75,000.
There are also marketplace rules which make the marketplace responsible for collecting and remitting GST and these sales do not count toward your $75,000 registration threshold.
The rate of GST in New Zealand is 15% and the registration threshold is NZ$60,000. Marketplaces are also responsible for collecting GST on your behalf.
Like the States, Canada has a system of State jurisdiction, but with four different sorts of sales tax – GST and Harmonised Sales Tax (“HST”). Quebec has its own QST and provinces such as British Columbia, Manitoba and Saskatchewan levy Provincial Sales Tax (“PST”). HST is a blended federal/provincial sales tax that includes a 5% federal component and a provincial component of 8 or 10 percent.
The registration threshold is CAD 30,000.
In Japan, it’s Consumption Tax, is levied at 10%. The registration threshold is YEN 10m, based on the base year of two years prior to the tax year. Non-resident businesses will require a Japanese resident tax agent (a service we can provide).
The above countries are not an exhaustive list and we can assist with your sales tax compliance in many countries.
You may be interested in reading: Proposals for an Online Sales Tax
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