VAT registration and number

Distance selling means online, by catalogue or advertisement sales, by a seller (entrepreneur/professional) based in an EU country to a private individual (final consumer) located in another EU state other than the seller’s country (Business to Consumer – B2C). This type of sales, as a general rule, is taxed according to the rules of the country where the seller is established.

However, when sales to private individuals (B2C) in a given country exceed the thresholds set by that country (ranging from 20,000 euros to 100,000 euros), then tax is payable according to the rules of the country of consumption. This involves registering for VAT in the country where the products are consumed, charging VAT at that country’s rate and complying with certain tax obligations in that country.

Online sellers are also required to register for VAT purposes in a given country when they choose to apply taxation at destination rather than waiting to exceed the thresholds set by each country. This option is particularly interesting when the country to which the products are sold has a lower VAT rate than the country where the seller is based in.
For further information on the distance selling scheme, please contact one of our experts.

E-Commerce sellers based outside the EU must register in those EU countries where they sell their products regardless of the thresholds or limits for distance selling. In other words, sellers that are not established in the EU must identify themselves and register in at least one EU country in order to sell their products within the EU, thus becoming subject to EU VAT, and must charge, collect and pay the applicable VAT. This is without prejudice to the need to obtain an EORI number from the first import of goods on European territory.

This scheme applies to cross-border telecommunications, television and radio broadcasting services or cross-border digital services to persons not subject to pay VAT.

In this respect, electronic services supplied to individuals are taxed in the country of consumption, which leads to the obligation to register for VAT purposes in each of the countries where these services are consumed, unless the service provider chooses to register for the MOSS scheme. If the company decides to make use of this scheme, it only needs to register for VAT purposes in one EU country, although the company must continue to charge VAT at the rate of the country of consumption.

This scheme is important because the MOSS system makes it possible to pay and settle in a single EU country the VAT charged to consumers (remember that companies must always charge VAT at the rates approved by each Member State where their services are consumed).

Typical example: An Italian company owner of an app that is downloaded by individuals or final consumers residing in Spain, Germany and France, must charge its customers the Spanish, German and French VAT, respectively, and that VAT must be paid by the company to the Italian Tax Agency (Agenzia Entrate) through its declaration under the MOSS system.

The services eligible for the MOSS system include, without limitation, the following:

• Website hosting
• Supply of computer programs
• Database access
• Apps or music download
• Online game
• Distance education

If one’s own products are stored in an EU country other than the country of establishment, the seller-owner of these products must register for VAT purposes in the EU country where the products are actually stored.

Other transactions that may give rise to the obligation to register for VAT purposes in a particular EU Member State, other than the one in which the supplier is established, include the organisation of conferences or fairs and work on certain goods over a long period of time.