Every year, online sellers lose thousands of euros due to avoidable VAT mistakes. These are the 7 most common ones, ranked by financial damage. Number 3 surprises most Amazon sellers, but number 1 only hits you when it’s already far too late.
7. Applying the wrong VAT rate to your product category
Not every product falls under the standard rate of 21%. Food supplements, books and certain household items sometimes qualify for the reduced rate of 9%, but the exact product description determines what applies. On top of that, this differs per EU country. A small mistake, but during a tax audit it adds up quickly. How to avoid this: check the HS code of your product and the corresponding VAT rate per country. The Dutch Tax Authority offers a handy search tool for this.
6. Calculating VAT on shipping costs incorrectly
The VAT on shipping costs follows the rate of the main product. Shipping a parcel of apples? Then 9% VAT applies to the shipping costs. Shipping office supplies? Then it’s 21%. Many webshops charge a standard 21% on everything. That may seem safe, but it regularly leads to incorrect VAT filings. Better than mistake number 7, but still a common stumbling block at higher volumes.
5. Miscalculating the OSS threshold of €10,000 per country
This is a widespread misconception. Many sellers believe the €10,000 threshold applies per EU country. That is incorrect. Since 1 July 2021, there is one combined threshold for all EU countries together. Selling €6,000 worth to Germany and €5,000 to France? You’re already €1,000 over the limit and must apply local VAT rates. Not registered for the OSS scheme? Then you’re unknowingly filing incorrect VAT returns in multiple countries.
4. Registering for the OSS scheme too late
The OSS scheme is the one-stop-shop system that lets you file VAT returns for multiple EU countries through a single filing. The catch: you must register before the quarter in which you exceed the threshold, not after. Register too late and you’ll fall behind, with surcharges to follow. Unlike mistake number 5, you can course-correct relatively quickly — but it costs you time, stress and potentially a fine.
3. No VAT registration when storing inventory via Amazon FBA abroad
This surprises many Amazon sellers. The moment your inventory is held in a German, French or Polish fulfilment centre, you become liable for VAT in that country. Not after a certain turnover figure. Immediately. Many FBA sellers are unaware of this, or ignore it until Amazon sends a notification. By then, the backlog can already be significant. This is one of the most costly VAT mistakes online sellers make, simply because it stays under the radar for so long.
2. Assuming Amazon handles all your VAT
Partly true, but not entirely. Amazon does remit VAT in certain cases via the deemed supplier rules, but this does not apply to all transactions and all countries. If you are active as the seller of record, you remain responsible. Sellers who misjudge this sometimes receive a surcharge from a foreign tax authority years later, sometimes alongside the one from mistake number 3.
1. Unknowingly building up VAT debts for years
The most expensive VAT mistake isn’t made in a single day. It’s the result of registering too late, waiting too long, or simply not knowing you’ve become liable for VAT somewhere. VAT debts don’t expire quickly, and foreign tax authorities, particularly in Germany and France, are scrutinising sellers more and more closely. A surcharge covering three years, including interest and penalties, can cost a seller tens of thousands of euros. Not sure whether everything is in order? Joke would be happy to take a look with you. Want to know more about the OSS scheme or VAT registrations in Europe? Visit our VAT page at staxxer.com.
