With Amazon’s continuous requirements for VAT policies, many cross-border e-commerce sellers, especially warehouse sellers in Europe, are confused. However, in terms of product transportation costs and goods storage, Chinese sellers do not have advantages compared to overseas sellers. In particular, goods entering EU countries need to pay customs duties and import VAT for customs clearance, and must declare sales and pay sales VAT on time. This has brought difficulties to many sellers. So, let’s learn how to minimize the VAT tax on Amazon Europe. ?
The 20% tax rate on the UK site makes many sellers feel unbearable. In addition to optimizing costs, tax costs can also be reduced through tax optimization programs, but if sales (tax included) exceed £230,000 for 12 consecutive months, the low tax rate can no longer be used. The low tax rate can enjoy a 1% discount in the first year, which is a low tax rate of 6.5%, and then calculated as 7.5%.
For example, to calculate the difference between a low tax rate and a normal tax rate: if the sales of an Amazon or eBay store can reach 4 million yuan (about 430,000 pounds) per year. If other factors are not considered and the standard tax rate is used, the sales VAT that needs to be paid is: {4 million/(1+0.2)}*0.2=4 million ÷ 670,000 yuan. The annual sales of each store are controlled within 230,000 pounds. Two stores apply for a low tax rate declaration. The tax rate in the first year is 6.5%. The two stores add up the calculation: 6.5% in the first year: 4 million × 6.5% = RMB 260,000, and returns to 7.5% in the second year: 4 million × 7.5% = RMB 300,000. Although this calculation is for UK VAT, it does not mean it can only be sold in the UK.
The above introduces the relevant knowledge on how to minimize the VAT tax on Amazon’s European station. If you place the warehousing in the UK, you can also sell remotely to Germany, France, Italy, Spain and other EU countries. , if controlled properly, it may not even be necessary to register in other countries, so reasonable optimization can help sellers reduce their tax burden.