Distance selling refers to intra-community sales destined at non-taxable persons (individuals, associations, etc.). An e-commerce company that carries out intra-community sales must respect the VAT thresholds defined by the European directive. In the event of exceeding the threshold, the e-merchant has to invoice the VAT of the destination country. Specific VAT rules have to be applied in case of these operations.
The regime of distance selling is applicable if three conditions are met:
The e-commerce companies can sell to non-taxable persons in the European Union member countries by applying their national VAT rate, until the threshold defined by the destination country is reached. The threshold corresponds to the amount of distance sales turnover made over the year in the destination country.
Example: the company A is based in France and sells costume jewelry on its website to the customers in Belgium. If its annual turnover without tax in Belgium is inferior to 35 000 €, the company charges with the French VAT rate. If, however, this threshold is exceeded, the company charges with the Belgian VAT rate.
It is important to note that certain products do not have the same tax benefits in all countries. It is crucial to check the VAT rates of the destination country and to identify whether the product concerned should apply a reduced or normal rate.
The regime does not apply to the deliveris:
VAT amount, export, deduction, tax administration, intra-Community VAT number, intra-Community acquisition, exemption, payment of VAT, reverse charge VAT, VAT exemption, general tax code, due, deductible, provision of services, taxable, tax on value added, VAT return, reverse charge, VAT in France, French VAT.