Webshop sales tax and accounting issue

Lower foreign VAT rates substantially decrease the competitive disadvantage of Hungarian webshop sellers applying the single highest VAT rate in the EU.

Do you have any question?

Don't hesitate to contact us!

Dániel Sztankó

Head of Indirect Tax Services

Miklós Héhn

partner, head of accounting services

Phone

Companies should consider the advantages of voluntary foreign VAT registration: competitive sales prices, a simple, transparent and effective sales process, lower foreign VAT and lower Hungarian corporate income tax. With our experienced tax and accounting advisory team we assist our clients in identifying and applying the most efficient taxation scheme in a due and compliant way.

What is our product about?

Lower foreign VAT rates substantially decrease the competitive disadvantage of Hungarian webshop sellers applying the single highest VAT rate in the EU. Companies should consider the advantages of voluntary foreign VAT registration: competitive sales prices, a simple, transparent and effective sales process, lower foreign VAT and lower Hungarian corporate income tax. With our experienced tax and accounting advisory team we assist our clients in identifying and applying the most efficient taxation scheme in a due and compliant way.

Who should be interested in our product?

Our tax and accounting advisory services are intended to companies selling products to foreign individuals involving deliveries from Hungary (or any other member state which is different from the state of the shipment’s destination). Such transactions, professionally labelled as ‘distant sales’ do not require that orders or payment should be made online – so, if the supply involves delivery to another Member State and to a private individual, the distant sales context applies. Practically, in these cases it is worth finding out how much is the benefit of invoicing it from under a foreign VAT registration number.

What advantages may the distant sales scheme bring to the webshop seller?

Distant sales are always B2C transactions and thus must be invoiced with VAT – all 28 Member States have set a threshold above which their local VAT rates must be charged. The EU and the national VAT legislations allow for the seller’s deciding whether, before reaching the threshold, the VAT of the country of dispatch or that of the arrival is charged (ie. the VAT of the country from where the goods are shipped or to where they are shipped).

Foreign tax liabilities related to such supplies are limited to VAT. The webshop seller does not incur foreign corporate income tax liabilities by merely selling and shipping goods to foreign individuals – neither below the threshold nor above it.

We have quantified the tax advantages available to a Hungarian webshop seller shipping goods to German private individuals, opting for an early foreign VAT registration (ie. before reaching the threshold for Germany, net EUR 100.000 / year) in the table below.

Country of dispatch (member state)Delivery address (member state)German VAT registration before the threshold Yearly net value of supplies to private individuals (EUR)Applicable VAT
Tax rateTax amount
HungaryGermany NoEUR 99.90027% (Hungarian)EUR 26.973
HungaryGermany YesEUR 99.90019% (German)EUR 18.981
DifferenceEUR 7.992

How can we help?

  1. Our team of tax experts coordinate foreign VAT registrations and tax representations, including the filing of VAT returns and representation during VAT audits. We also provide single coordination centre services for foreign VAT compliance services in several foreign jurisdictions.
  2. Our accounting team has several years of experience in accounting companies holding foreign VAT registrations. We are familiar with the accounting related issues such companies face, and we regularly deliver solutions built on our industry-specific insight and experience. Our comprehensive bookkeeping services include monitoring the aggregate value of supplies to foreign individuals and, on a need-to basis, we also manage the entire invoicing procedure in a compliant way.

Our webshop sales support tax and accounting services include:

  • one-stop-shop coordination services during foreign VAT registration and tax compliance;
  • advisory on invoicing;
  • advisory on electronic invoicing;
  • comprehensive advisory on distant sales related issues;
  • identifying and controlling order and sales related information relevant for accounting and tax purposes;
  • ongoing bookkeeping.

If you have any question, please don't hesitate to contact our experts!

Contact our expert directly or send us an offer request!

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