How does the Value Added Tax (VAT) affect online businesses

Printing invoices and labels with the correct amount of VAT made easy with Nventree!


Online sales can be affected by Value Added Tax (VAT), which stands out as one of the most important tax policy innovations out there, spreading to a great majority of countries- more than 160 worldwide.

VAT is usually seen as a part or percentage of the total cost of a product. If, let’s say, a product costs $100 and the VAT is  15%, the buyer pays $115 to the seller. The seller will keep $100 for himself and pay $15 to the state as VAT. 


In order to help reduce the administrative burden on companies and also to help them trade more easily across Europe, there are national VAT registration thresholds set by each country.
Why is this important? Well, if a foreign company is selling below those thresholds, that particular company doesn’t need to register for VAT, while if it sells over these limits within the same calendar year, the company is obliged to apply for a VAT number.


 Once a seller is VAT registered in one EU country, sales delivered from that country to local private buyers or to customers in other EU countries are governed by the EU VAT Distance Selling Rules. As per these rules, the local VAT is charged on any sale made to any consumer within Europe until the set distance selling thresholds are exceeded in any one country.

The Distance Selling Rules allow sellers to test the European markets without the large cost of tax compliance.

After registration, sellers have to submit VAT returns to the tax authority in the same language and at the same frequency while respecting the specific deadline to that particular country.

The list of VAT thresholds set for each country in the European Union can be seen here , on the European Commission website.

Since the beginning of the year, a large number of non-EU companies selling on the UK marketplace have received messages from Amazon informing them that they need to apply for a VAT registration number to continue selling on the marketplace.

Seeing that invoice customization is provided, allowing sellers to include the company’s VAT registration number, all invoices created with our app will always show the correct VAT for each country – a great example of value proposition in overall external sales. If sellers specify a VAT number within the options, Nventree will generate a VAT Invoice. The Nventree app helps sellers manage their sales in waves, by grouping the orders and process them all in one go. Printing invoices and labels for all the orders is also possible, with the VAT being automatically calculated based on the buyer’s address.

Once you are done with printing invoices and labels you can include the invoice in the package and apply the label on the packaging.

Of course, once a sale is final, the app allows sellers to send “Sold” or “Dispatched” custom emails to all buyers, regardless of their country of origin.