Offshore VAT: not the after-sales value-added tax of the home country.

Local VAT: after-sales value-added tax owned by domestic people or companies.

VAT generally refers to value-added tax in international trade. According to the different tax rates in each country, the value-added tax paid by foreign trade personnel is also different. However, for mainstream online foreign trade businesses like eBay, eBay sellers do not need to pay VAT value-added tax because eBay sends items in the form of mail packets, thus omitting the complicated process of VAT. Nonetheless, for general foreign trade companies, value-added tax is an important step in customs clearance. Foreign trade companies need to master the algorithm of VAT, follow certain methods of paying VAT, and be reasonably familiar with the foreign trade process.

Why does cross-border e-commerce require VAT?

If a warehouse in a local European country is used and sold, then the order will need to pay VAT tax. To pay VAT tax, you need a tax code that belongs to your own tax entity. The VAT number is this code. (Metaphor: A seller without VAT is equivalent to a street vendor on an overpass. He needs to pay attention to the protection fees of urban management cars and gangsters. With VAT, he is equivalent to having a business license and can find a store to open a regular business). If there is intentional delay, error or false declaration, you may be subject to varying degrees of penalties including seizure of goods by the British tax office HMRC, reporting to eBay or Amazon resulting in account freezing, fines, etc. Therefore, it is a very irrational decision for sellers to do business in Europe.

Extended information: The necessity of paying VAT

1. Import tax rebate: Without the VAT tax number of the local country, you cannot enjoy the import VAT tax rebate;

2 . Compliance and customs clearance: Without the VAT tax number of the local country, there is no import qualification for the local country. If you are found to have borrowed someone else's VAT or the VAT tax number is invalid, the goods may be detained and unable to clear customs;

3. VAT invoice: Without a VAT tax number in the local country, you are not qualified to issue VAT value-added to customers. tax invoice. If you cannot provide valid VAT invoices to your overseas customers, the customers may cancel the transaction or even leave negative reviews. With valid VAT and legal operation, you can be protected by the laws of the country where your products are sold, which is conducive to building customer trust and ensuring normal transactions. At the same time, it will greatly increase the transaction rate and praise rate;

4. E-commerce platform : Without a local country’s VAT tax number, cross-border e-commerce platforms may restrict sales authority. Having a valid VAT number makes it easier to pass the review of e-commerce platforms, prevent account closures, and help develop business on their platforms.