Distance Sales in EU

What are distance sales?

Distance selling in the EU occurs when a supplier in one EU Member State sells goods to a person in another Member State who is not registered for VAT and the supplier is responsible for the delivery of the goods. It includes mail order sales, phone or tele-sales or physical goods ordered over the internet.

Under the distance selling arrangements, sales to customers in other Member States who are not registered for VAT are liable to VAT in the Member State of the supplier provided that the threshold appropriate to the Member State of the customer is not breached (see Thresholds below). Where sales exceed the threshold in any particular Member State, the supplier must register and account for VAT in that Member State.

Distance sales to the State

Where the value of distance sales to persons in this State by a supplier in another Member State exceeds or is likely to exceed €35,000 in a calendar year, that supplier must register for VAT in this State and must account for VAT at the appropriate Irish rates. If the threshold is not exceeded, the supplier may, nevertheless, opt to register and account for VAT in this State on his or her distance sales.

Distance sales from the State

An Irish supplier who makes distance sales to customers in other Member States who are not registered for VAT, is liable to Irish VAT on such sales until the value of the sales reaches the threshold applying in that other Member State. Once the value of the supplier’s sales exceeds the threshold in the other Member State, the supplier is obliged to register in that Member State and account for VAT at the rates applicable there. If the appropriate threshold is not exceeded, the supplier may, nevertheless, opt to account for VAT in the Member State to which the distance sales are made.

It should be noted that a supplier who is engaged in distance sales to several Member States is required to register in each Member State in which the value of the distance sales exceeds the appropriate threshold.

Thresholds

Under the EU VAT arrangements, Member States were required to adopt a distance sales threshold of either €35,000 or €100,000. Ireland has opted for €35,000.

The value of distance sales of excisable goods should not be taken into account for the purposes of determining whether or not the threshold has been exceeded. If the threshold, excluding the value of excisable goods, is not exceeded the supplier may continue to account for VAT in the Member State from which supplies are made.

Any supplier who makes distance sales of excisable goods e.g. alcohol, tobacco and oil to another Member State must register and account for VAT in that Member State, since distance sales of excisable goods are always subject to VAT in the Member State to which they are dispatched.

Goods excluded from the distance selling arrangements

Sales of new means of transport are excluded from the distance selling arrangements. These sales are always intra-Community acquisitions and the person acquiring the new means of transport must pay VAT in the Member State of destination.

Obligations of traders

If a foreign supplier is obliged to register for VAT in the State because the annual value of his or her distance sales to the State exceeds or is likely to exceed €35,000 s/he must register for VAT. Applications for registration are made using Forms TR1/TR2, which are available on the Revenue website under Business & Self Assessment/Popular Forms.

Once registered for VAT the distance seller will be obliged to;

• calculate VAT due on the value of his or her distance sales,
• complete the periodic VAT 3 return, showing the VAT liability,
• send the completed return to the Collector-General, together with payment of any VAT due, within the prescribed time limit (Returns made be made using Revenue’s ROS online services via the Revenue website),
• keep proper records so as to enable the VAT liability to be determined,
• make those records available for inspection by Revenue on request.

If an Irish supplier is obliged to register for VAT in another Member State because the value of his or her distance sales to that Member State exceeds the relevant threshold, s/he should contact the fiscal authority of the Member State concerned who will provide details of the requirements for registration.

Intrastat - distance sales from the State

A supplier who is registered for VAT in the State and also registered in another Member State because of his or her distance sales to that Member State must include the value of such sales in the INTRASTAT Box E1 of the Irish VAT 3 return. However, a person who is registered for VAT in Ireland should not include the value of distance sales to other Member States in Box E1 where s/he is not registered for VAT in those Member States.

Intrastat - distance sales to the State

A supplier, registered in another Member State who is also registered in the State because of his or her distance sales to the State, should include the value of such sales in the INTRASTAT Box E2 of the Irish VAT return.

Internet

Sales of goods ordered via the internet but physically supplied are considered to be distance sales for VAT purposes. However digitised goods, that is goods for downloading by the customer via the internet are considered to be services, within the meaning of the Fourth Schedule for VAT purposes.

Further information

Enquiries regarding any issue contained in this Information Leaflet should be addressed to the Revenue District responsible for the taxpayer’s affairs. Contact details for all Revenue Districts are available on the revenue website at: Contact Details

VAT Appeals & Communications Branch,
Indirect Taxes Division,
Stamping Building,
Dublin Castle.

October 2008

This information leaflet which sets out the current practice at the date of its issue is intended for guidance only and does not purport to be a definitive legal interpretation of the provisions of the Value-Added Tax Act 1972 (as amended).