What To Look For In Your VAT Accountant For PAN EU FBA Sellers
We get a lot of questions at Cross Border VAT from clients asking us for the correct process for their accounting so we put together the Do’s and Dont’s for you…
VAT can be a minefield, negotiating through it can be very time consuming and expensive especially if your overpaying as a small business owner. Do you have the time and resources to run an audit?
To calculate VAT correctly, it is important to know each of your sales at transaction level rather then relying on monthly summary reports.
Here are some do’s and dont’s to do when finding your VAT accountant
If you are already creating a report to hold all your sales/refunds data you may already understand how long it takes to create a report with this data. However if you are not but plan to and are in the (DIY) mode, then here are the do’s and dont’s of what you need.
- Do collate all sales from all your selling channels into a single file for a given period (usually monthly or quarterly) before any VAT calculations.
- Do keep evidence of transactional sales and refunds in your accounting system showing how VAT was calculated.
- Do reconcile each sale and refund to the correct shipping destination country.
- Do apply the correct VAT currency exchange rates against your sales and refunds.
- Do recognise that at some point you may have to pay VAT directly to other VAT offices in the EU. This is immediately if you have shipped goods for warehousing in an EU country or at a later stage when you break the EU Distance Selling threshold of sales into a country.
- Do remember that only the NET part of your sale counts towards an EU Distance Selling Threshold if you are already paying domestic VAT.
- Do realise there is no need to pay VAT on sales outside of the EU on B2C sales.
- Don’t assume that a marketplace channel sales and refunds correspond with VAT to that same country, for example not all sales on amazon.de will be payable to DE VAT Office, some sales may be payable to the UK HMRC.
- Don’t use monthly summary reports to calculate VAT, some of your transactions may be ZERO rated because they have shipped outside of the EU, or some of your goods may be reduced rated VAT products.
- Don’t miss VAT Registrations in new countries by not monitoring your EU Distance Selling Thresholds.
Consider for example that a single transaction should be filed away in only one of these pigeon holes:
- Standard EU sale shipped to the UK – normal rate of 20% VAT to HMRC
- Reduced Rated EU sale shipped to the UK – reduced rate of say 8% VAT to HMRC
- Standard EU sale shipped outside of the UK but no sales threshold broken – normal rate of 20% to HMRC
- Standard EU sale shipped to Germany, where you have broken the sales threshold – normal rate of 19% VAT is paid directly to German Authorities
- Standard Rated EU sale shipped from a Spanish warehouse to Belgium – normal rate of 21% is paid directly to the Spanish Authorities
- Shipping destination is outside of the EU – no VAT is paid to HMRC, meaning an extra 20% profit for your books
This list can go on and on and on!
Are you forever digging into Amazon transactional reports, full order reports or requesting
that PayPal notify you when you can download a full history CSV!
Then trying to filter the endless data you have so that it matches your sales and refunds summaries from each market place, sound familiar?
Are Pivot tables and Vlookups driving you mad?
This process can take hours, eating into your valuable time with some EU countries requiring you to file your VAT return every month, so those hours turn into days over the year!
The more marketplaces which you sell on the longer this will take and the more reconciliation you will need to do.
This is not an efficient process to have in your tool box so outsource this process to Cross Border VAT Software. CBV will sync directly with your PayPal account and your Amazon Seller Central Europe and USA accounts and download all your sales transactional data from the day your account was setup with them.