Hey!
It’s Hannah from Printful’s marketing team!
Let’s take a look at what VAT is and how it affects your Printful store.
Before we get started, keep in mind that this isn’t professional tax advice and we strongly
advise you to consult a tax specialist to find out your specific obligations.
Dealing with taxes might seem like a daunting task at first.
But there’s no need to worry, it’s a process you only have to understand once and there
are plenty of resources to help you get started.
What is VAT?
VAT stands for Value-Added Tax.
VAT applies to almost all goods and services that are bought and sold in the European Union.
It’s placed on each stage of the supply chain.
That’s why fulfillment, sales, shipping, and services all have VAT applied to them.
There are two main things you should keep in mind.
1.
Printful charges VAT for all orders shipped to an address in a European Union member state.
The VAT rate Printful charges you for these orders depends on whether you’re registered
as a VAT payer in one of the EU countries and have submitted a valid VAT ID to Printful.
If you have submitted a valid VAT ID, the VAT charge for you is 0%.
For example, you’re registered as a VAT payer in France, have submitted a valid VAT
ID to us, and a customer from Italy buys a product from you.
In this case, the VAT charge for you will be 0%.
One exception is if you’re registered as a VAT payer in the same country as Printful
and the order is shipped to the same country where it’s fulfilled.
In this case, specific countries' VAT rates will apply.
We’ll cover this later in the video and give examples as well.
If you haven’t submitted a valid VAT ID, we’ll charge you VAT for all orders fulfilled
and shipped to the European Union.
Note that for orders fulfilled outside the EU and shipped to an end address in the EU,
VAT will apply if the Printful product price in the order is below 150 euros (approx.
183 dollars).
In that case, the VAT rate of the destination country will be used.
So, let’s say your customer from Germany orders a product that is fulfilled in one
of our US facilities.
So for this example, we’ll use Germany’s 19% VAT rate.
If you have a valid VAT ID, then the VAT rate will be 0%.
If the product price is greater than 150 euros, Printful will not charge VAT, but your customers
will have to make customs clearance and pay VAT on the border.
The formula Printful uses to charge you VAT is: (our fulfillment price of the product
- discounts + shipping price + services) multiplied by the destination country’s VAT rate.
The exceptions are if you are also a registered VAT payer or if you’re registered in the
same country as Printful.
For example, if you’re registered as a VAT payer in Latvia and the orders are fulfilled
in Latvia, the Latvian rate will apply.
But if the order is shipped to other EU countries, Printful will charge a 0% VAT rate.
2.
Since VAT is added to each stage of a product's production and sale, VAT applies to shipping
too.
So, for example, your customer buys a shirt that’s fulfilled in one of our fulfillment
centers in Europe and it’s shipped to one of the EU countries.
Printful will charge you for the fulfillment price, the shipping price, and the VAT rate.
The VAT rate depends on the shipping destination and whether you have a valid VAT ID.
You can see the VAT rate for each country here, I’ll leave a link to it in the description
below.
Keep in mind that you might be liable to collect VAT from your customers on all your orders
shipped to the European Union.
This means that Printful charges you VAT for all orders shipped to the European Union.
Let’s say that a customer from Estonia buys a product that’s fulfilled in one of our
US fulfillment centers.
Printful will charge you for the fulfillment price, the shipping price, and Estonia’s
VAT rate of 20%.
In this example, VAT will be charged only if the product price in the order is below
150 euros (approx.
183 dollars).
If you’re liable to collect VAT, you should charge your customers VAT on all orders shipped
to the EU from all of our fulfillment centers.
Similar to how Printful calculates the VAT charge, you should also calculate how much
you charge your customer.
For this situation, the formula is: your retail price of the product + the shipping and service
price multiplied by the VAT rate.
The VAT rate depends on the country where the order is shipped to.
Keep in mind that in order to collect VAT from your customers you must register as a
VAT payer in one of the EU countries.
Each country has its own VAT rate which you can find on this page, you’ll find the link
in the description below.
Let’s say that you’re a registered VAT payer and a European customer buys a t-shirt
from you and wants it shipped to an address in Germany.
Your retail price for this shirt is 20 dollars and the shipping cost is 5 dollars.
So in this case you would add up the retail price and shipping price and multiply it by
the VAT rate in Germany which is 19%.
So you would add $4.75 in VAT to the amount you charge your customer.
Now, whether you’re liable to collect and remit VAT depends on your location and sales
volume.
Once again, we advise you to consult a tax specialist to find out your specific obligations.
That said, there are four scenarios in which VAT rates may have to be applied:
1.
You're based in the EU and haven't reached the domestic sales threshold for your country.
Each country has a set VAT threshold, which represents the total value of everything you
sell or supply annually.
And when your sales reach that number, you need to register as a VAT payer.
For example, the domestic sales threshold in Germany is 12 500 euros.
If you reach that number, you need to register as a VAT payer in Germany, collect and remit
VAT.
I've added a link where you can learn your country's threshold in the description below.
If your sales fall under your country's domestic sales threshold, you're not obligated to register
as a VAT payer, and you don’t have to charge your customers VAT.
But you might think about raising your retail price to make up for Printful’s VAT charge.
You’re not obligated to submit a valid VAT ID to Printful, but you can if you want to.
If you decide not to submit a VAT ID, we’ll charge VAT for orders shipped to the European
Union.
But if you do decide to register and submit your VAT ID to us, our VAT charge for you
will be 0%.
Printful will always charge you VAT in these 2 cases:
1.
If you're registered as a VAT payer in the same country as Printful and that country
is the fulfillment location.
For example, if you’re registered as a VAT payer in Spain and an order to your customer
is shipped from our Spain fulfillment center, Spain’s VAT rate will be applied.
2.
If the order is fulfilled in the same country where it’s being shipped to.
For example, if you’re based in Italy but the order is fulfilled in Spain and shipped
to an address in Spain, then Spain VAT rate will be applied.
2.
You’re based in the EU and have reached your country’s VAT threshold.
Let’s say you’re liable to charge your customers VAT on all orders shipped to the
EU countries, collect and remit VAT.
For this example, we’ll imagine that you’re based in Germany.
The domestic sales threshold for Germany is 12 500 euros.
If your sales have reached that limit—you must register as a VAT payer in Germany, collect
and remit VAT, as well as submit a valid VAT ID to Printful.
Once you submit your VAT ID, we’ll charge you a 0% VAT rate.
However, we’ll still be obliged to charge you VAT on orders that are fulfilled in the
same country they’re shipped to.
If you don't submit a VAT ID, just like in the previous case, we will charge VAT for
orders that are shipped to European Union.
3.
You’re based in the EU and have reached the distance selling threshold.
You need to keep an eye on the distance selling threshold.
Just like each EU country has its domestic sales threshold, there is also an EU-wide
threshold of distance selling which is 10 000 euros.
Once your sales reach the distance selling threshold in Europe, you can register in The
Union OSS to declare and pay VAT for all supplies of goods and services in a single electronic
quarterly return.
The Union One-Stop Shop is the electronic portal businesses can use to comply with their
VAT obligations on e-commerce sales within the EU.
To find out more about what OSS is, check out this resource.
Find the link to it in the description.
For example, you’re based and registered as a VAT payer in France and you’ve reached
your country’s domestic sales threshold.
Let’s say you also sell to customers based in Germany and your sales there have also
reached the distance selling threshold.
So now you also have to register in Germany as a VAT payer as well.
You need to collect VAT on orders going to Germany which you can calculate by using the
previously mentioned formula: your retail price of the product + the shipping and service
price multiplied by the VAT rate.
When using the formula, keep in mind that instead of using the 19% VAT rate of Germany,
you have to use the VAT rate for the specific country to which the order is getting shipped.
Note that from July 1st, 2021, you can register in the Union One-Stop Shop that gives an option
to register for VAT electronically in a single Member State for all intra-EU distance sales
of goods and business-to-consumer supplies of services.
This means you can apply and pay VAT on all your products in a single electronic quarterly
return and work with the tax administration of your Member State.
You can learn more about the Union scheme in the link below.
4.
You’re not based in the EU and sell your products to customers in the EU.
For example, if you’re based in the US, but sell to the EU market, you would need
to register as a VAT payer in that country and charge a VAT to EU sales.
And you would also need to keep an eye on the EU-wide distance selling threshold.
In case you reach that threshold (10,000 euros) you would also need to register in OSS and
charge VAT on all your sales based on the destination country’s VAT rate.
Note that from July 1st, 2021, the VAT exemption for the import of goods into the EU not exceeding
22 euros is removed.
As a result, all goods imported into the EU will be subject to VAT.
For orders shipped from outside Europe to a European address with a price below 150
euros (approx.
183 dollars), VAT will apply as well.
Printful is registered in the OSS system and will collect VAT on such orders so that the
process of receiving the order is easier for the end customer.
VAT will be only charged at the time of purchase, and therefore end customers won’t face any
surprise fees when the goods are delivered.
However, for orders where the total price of the products is above 150 euros (approx.
183 dollars), VAT won’t be charged and the recipient will have to make customs clearance
and will have to pay VAT on the border.
Registering as a VAT payer might feel overwhelming, but don’t worry, there are a lot of tools
to help you.
You can check out services like VATGlobal, FBA heroes, and SimplyVAT for VAT questions
and setup help.
Once you’ve registered as a VAT payer, you’ll need to submit your VAT ID to Printful.
To do that, go to your Printful dashboard -> Billing -> VAT ID.
Select your country from the dropdown menu and enter your VAT ID.
The validation software will automatically verify if the ID matches the country.
Go ahead and enter your registered business name and full address.
Great!
The last thing to do here is to upload a VAT certificate.
If you don't have one, you can upload an invoice that clearly identifies your VAT ID and business
name.
That’s it!
You’ve successfully added a VAT ID to your Printful account.
--- I hope you found this video helpful!
When dealing with tax, use this video as a guideline but definitely consult a specialist
to make sure you're setting everything up correctly.
You can find all links mentioned including different services in the description below.
We also have an FAQ on how to go about VAT when setting up your ecommerce platform, so
make sure to check that out.