Expanding Horizons: How to sell to EU with a LLC?

In order to sell to EU with a LLC from the USA, there are several VAT (Value Added Tax) requirements to consider: this will be your biggest headache with regards to legal requirements (among the other requirements, such as GRPD, IP addresses and cookies, etc). Here’s an overview of the key points:

  1. VAT Registration: As an LLC operating in the EU, you may be required to register for VAT in the EU country where you have established a presence or conduct business activities. For further information on VAT registration see our article on How to get a VAT ID number in EU for NonEU citizens and companies.
  2. VAT Compliance: Once registered for VAT, you must comply with the local VAT regulations of each EU country where you have a taxable presence. This includes charging VAT on your sales, issuing VAT invoices, and maintaining proper VAT records. Thanks to OSS regulation, you can make a single process for all EU Member States. For more information on VAT regulations and requirements click here.
  3. VAT Rates: Each EU country sets its own VAT rates, which can vary across different goods and services. It’s crucial to understand the applicable VAT rates in the countries where you operate to ensure correct VAT calculations and invoicing. In addition, VAT rates can vary over time, so it is vital to be up to date with regulations on the issue.
  4. VAT Returns and Payments: You will need to file periodic VAT returns with the tax authorities of each EU country where you are registered for VAT (this is, the Member State of Identification). These returns typically require reporting the VAT collected on sales and deducting the VAT paid on purchases. Payment of the VAT liability is also required within the specified deadlines. You will have to identify the value of the transaction and the applicable rate for each Member State of Consumption.
  5. VAT Refunds: Depending on the circumstances, you may be eligible for VAT refunds in certain EU countries. This could include VAT incurred on business-related expenses, such as trade shows, travel, and accommodation. The process for claiming VAT is independent from OSS. The eligible expenses can be reclaimed through the Electronic VAT Refund Mechanism (as outlined in Council Directive 2008/9/EC) or through the procedure specified in the 13th VAT Directive (Council Directive 86/560/EEC). Alternatively, if the taxable person is registered (but not established) in the Member State of consumption, the expenses can be claimed through the domestic VAT return. See more information in: VAT Refunds procedure.
  6. VAT Records: The obligation for the taxable person entails the proper maintenance of specific records in accordance with Council Regulation 282/2011 (Article 63c). These records encompass a range of information, including the Member State where the supply is consumed, the nature of the supply, the date of the supply, and the corresponding VAT amount. Furthermore, it is essential to document specific details such as any advance payments made and the information used to determine the customer’s establishment, permanent address, or habitual residence. See more information in: VAT records: requirements, duration, procedures and documentation.

It’s essential to seek professional advice from tax experts, accountants, or legal advisors with experience in international taxation and VAT regulations in order to sell to EU with a LLC with all guarantees. They can provide tailored guidance based on your specific expansion plans, industry, and the countries involved. They will help ensure compliance with VAT requirements, minimize tax liabilities, and optimize your VAT-related processes during the LLC expansion from the USA to the EU. You can solve all your questions on accounting with our Free Online VAT and tax consultant in EU.

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