Businesses that sell goods to customers in other countries are obligated to charge and collect local consumption taxes. The EU has enacted distance selling regulations to encourage free trade in the EU.

If you are a merchant based in the EU, each sale to customers within the EU is subject to these regulations. The distance selling regulations state that once the annual sales threshold is passed, the merchant must register as a non-resident VAT trader in the delivery country and start charging local VAT. So for example, if you are a UK merchant selling to Germany, you would charge the German VAT rate of 19% (and not the 20% UK VAT).

As part of Global-e’s services, and since we are the merchant on record for all of your cross-border transactions, we will take responsibility for the VAT registration in each EU country. We will also calculate the relevant VAT rate on each of your EU transactions, and will apply the correct VAT for each case. If you sell products which qualify for reduced VAT, we will work together with you during onboarding to identify the relevant products on your website, so that the correct VAT rate can be applied.