Member-only story
I Found a Loophole in the EU VAT System
Not really a loophole, more of a contradiction.
I found a contradiction in the EU VAT system where someone who isn’t subjected to VAT would still be obligated to pay it.
This paradox applies to non-VAT-subjected organizations that make a distance sale to their own country, which doesn’t make sense, but nonetheless exists.
Let me explain.
Say you are located in Belgium and not subjected to VAT because you make less than the €25k threshold; and you want to sell with Amazon FBA in Belgium.
The issue is that Amazon doesn’t have any warehouses in Belgium but ships products from either France or Germany.
This means you need to send your products to one of those warehouses. Let’s say you choose France.
Because your products are now stored on French soil, you need to register for VAT in France even though you are not selling to French customers.
And because you now sell from France to Belgium, this is called a distance sale and you need to charge Belgian VAT on your goods because your customers are located in Belgium.
You will have to report and pay that VAT to Belgium through the OSS, a European platform enabling you to pay VAT to European countries…
