VAT (Value Added Tax) is a consumption tax applied to goods and services in EU countries. For entrepreneurs selling to Europe, VAT registration is essential both to comply with regulations and to build credibility with customers.
Europe is one of the most structured, expansive, and high-potential markets for e-commerce and digital services. However, one of the most important legal aspects entrepreneurs must consider when entering this market is VAT (Value Added Tax). Whether selling physical products or digital services, any entrepreneur targeting customers within the European Union must understand and comply with the VAT registration and reporting requirements.
In this comprehensive guide, we will explore how entrepreneurs can register for VAT in Europe (with or without a local company), country-specific thresholds, the OSS system, key procedures, and common compliance responsibilities.
VAT is a consumption tax applied to goods and services at each stage of the supply chain. Businesses are responsible for charging VAT on sales and remitting it to the relevant tax authority. At the same time, they can reclaim the VAT they pay on business expenses.
Here’s how the basic process works:
The seller adds VAT to the sale price
The customer pays the full amount (product price + VAT)
The seller files a VAT return and pays the collected VAT to the state
Input VAT (from business expenses) can be deducted from the amount due
This system is harmonized across EU countries, though each member state sets its own VAT rates, thresholds, and procedures.
Entrepreneurs are generally required to register for VAT in Europe in the following scenarios:
Storing and shipping physical products from an EU country
Selling digital services (e.g., SaaS, online courses) to EU consumers
Making direct B2C sales via platforms like Amazon or Etsy within the EU
Exceeding a country’s local VAT registration threshold
Using Amazon FBA programs in Europe
Participating in the EU OSS (One Stop Shop) VAT system for cross-border sales
Both companies and solo entrepreneurs may be obligated to register based on their business model.
Each EU country has a different annual sales threshold that determines whether VAT registration is mandatory. Examples include:
Germany: €0 – registration required from the first sale
Netherlands: €0
France: €35,000
Italy: €35,000
Poland (for cross-border e-services): €10,000
In 2021, the EU introduced the OSS (One Stop Shop) system, which allows businesses to register in a single EU country and manage VAT obligations across multiple EU states—particularly useful for small online sellers.
The OSS system simplifies VAT compliance for cross-border B2C sellers in the EU. Instead of registering for VAT in every country where sales occur, businesses can:
Register in one EU country
File a single VAT return covering all EU sales
Automatically allocate VAT at the correct local rates
Use the system for both physical and digital product sales
This is ideal for e-commerce sellers and digital entrepreneurs operating in multiple EU countries through a centralized system.
While procedures vary by country, the general steps to register for VAT are as follows:
Contact the Local Tax Authority
Complete the online registration form via the national tax agency’s website. Some countries offer English-language portals.
Provide Company and Identity Documents
These may include proof of incorporation, passport, business address, product details, and a business plan.
Receive VAT Number
Once approved, you’ll receive a VAT ID. This number must appear on all invoices and be used in tax filings.
Submit Regular VAT Returns
Depending on the country, VAT returns are filed monthly or quarterly. Payment of collected VAT must be made on time.
In some countries, foreign entrepreneurs may be required to appoint a local tax representative. It’s often advisable to work with a local VAT consultant or agency.
Some European countries offer simplified or faster VAT registration procedures for international sellers:
Estonia: Remote application via e-Residency
Ireland: English-speaking administration, straightforward process
Netherlands: Especially efficient for Amazon FBA sellers
Poland: Affordable local tax consultants, online-friendly process
Lithuania and Latvia: Digitally advanced and transparent systems
If you're planning to use the OSS system, registering through countries like Germany, Estonia, or the Netherlands is common due to administrative efficiency.
Monitor your sales volumes to know when registration becomes mandatory
Ensure your invoicing and checkout systems are VAT-compliant
Apply correct VAT rates by country and product type
Track collected VAT by jurisdiction and keep clean records
Late returns may incur penalties and interest
Consider using accounting tools or a professional to handle filings
VAT registration is possible even without forming a local company (e.g., with a Turkish-registered business)
If using Amazon FBA, you must register for VAT in each country where stock is stored
Shopify and WooCommerce sellers can use plugins to automatically apply correct VAT rates
Payments received through Wise or Payoneer should be tracked and matched with invoice records
If selling in multiple EU countries, choose one country to register under the OSS system and manage all sales from there
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