For cross-border e-commerce, if you want to set up overseas warehouses abroad, such as in the EU countries, then from the moment of establishment, you need to register for VAT in the country where you are located. For example, sellers on the Amazon platform UK said they received a call from Amazon UK, requiring them to provide a VAT number in the background of Amazon UK before June 30. This requirement is actually implemented for sellers of overseas warehouses.
Take the UK as an example. When goods enter the UK, they need to pay import taxes. After the goods are sold, merchants can refund the import VAT and then pay the corresponding sales tax based on sales. There are generally three VAT rates in the UK. The first is a standard rate of 20% levied on most products and services, the second is a low rate of 5% levied on some items such as household electricity and heating, and the third is a zero rate levied on items such as daily necessities, children’s clothing and unprocessed food. The VAT actually paid by the seller is the amount after deducting the import VAT from the sales VAT.
For the UK, all sellers who use local warehouses in the UK to ship their products need to pay VAT. That is to say, when the goods are sold, the actual storage location of the goods is in the UK, not imported into the UK by individual British buyers, and they are subject to VAT. For those merchants whose goods are not located in the UK but are only released in Europe, they are not subject to VAT, such as postal parcels sent from China to Europe. For express delivery companies that use overseas warehouses, VAT is an unavoidable payment.
How should companies with overseas warehouses complete VAT payment to avoid unnecessary troubles? After all, if sellers do not pay VAT in time, they will be punished by the local General Administration of Customs to varying degrees, including fines, goods seizure, and reporting to the platform. Taking the UK as an example, eligible tax collection objects need to register a VAT account before they can pay VAT. This VAT number is unique, and the overseas warehousing service company used by the tax collection object cannot pay on its behalf, nor can it use the VAT number provided by the company providing overseas warehousing services or other individuals as its own VAT account. After receiving the VAT number, the tax collection object can declare it on time according to the declaration period provided.
There are also some minor issues that need attention. For example, if the company changes its name, if the company’s certificate code remains unchanged, the VAT number can continue to be used. If the certificate code changes, the VAT number cannot be used anymore; the same VAT account number will be associated when used with different accounts on the platform, etc.