As we are on-boarding more and more e-commerce clients we would like to announce that we’ve struck partnerships with local firms in the UK and Germany to report tax in these major markets.
As many of our clients doing e-commerce business via e-residency are targeting the biggest and the most lucrative markets in the EU (Germany and the UK), reporting VAT in these countries becomes mandatory once the VAT thresholds for distance sales are exceeded.
With these new partnerships we can satisfy the needs of these clients and provide a more complete service.
To clarify the VAT issue:
If the products never come to Estonian warehouse nor are sold in the Estonian market, then it’s likely that Estonian VAT will not be needed, as no taxable income is created in Estonia.
There are VAT thresholds in the EU for distant sales of physical products. If you are selling to a target market and exceed the threshold of that country (in Germany it’s 100 000€, in Sweden 35 000€, UK 100 000€ etc), then it’s mandatory to obtain and report VAT to this country. If the products never come to Estonia, and you are using, for example, Amazon fulfilment centre in Germany, then it’s advisable and probably necessary to obtain the VAT in Germany from the very beginning.
Hence, we always recommend to think through the product movements, to which markets you want to sell to, and clarify the needed tax matters as early as possible to minimise the chance of any problems occurring in the future.
Comistar provides business, legal and tax support for e-residency companies. Our core focus is on e-commerce companies, blockchain industry and affiliate marketers. We’ve been operating for 5 years and have helped more than 300 companies to get started in Estonia.