Do you sell shoutouts to customers in Europe on your Instagram account? Yes? Then you’ve surely always invoiced these customers for VAT and then transferred it in the customer’s country, haven’t you?… You don’t know what I’m talking about? Then this article is just right for you!
Act best before it’s too late. Most of meme account owners don’t care about paying taxes until they’re getting costly penalties. Unfortunately, it doesn’t matter if they didn’t know that they have to pay taxes. But let’s be honest. Most of them know that they have to pay taxes … it’s just way too complicated in an international context. But no worries! This article might save you a lot of time and trouble in the future.
Important: We’re no tax experts and don’t provide legally secure instructions in the following text… but we’re giving our best to get you an idea of the topic! In special cases, you should consult an expert.
What is the Value-Added Tax?
The Value-Added Tax ( = VAT) is a tax that taxes the added value of a product or service – it’s like the sales tax in America. VAT is paid exclusively by the end consumer. However, for technical reasons, the tax is collected by the selling companies and paid to the responsible tax office. Each country determines itself how high the Value-Added tax should be so it varies in each country. You can find a list of VAT rates in all European countries at the end of this article. It varies between 17 – and 25 %.
Why is VAT important for you?
As an Influencer that sells digital services to customers in Europe, you have to take care of VAT collection and transferring. No matter where you come from. Since 2015, there has also been a rule that VAT on the sale of digital services must be paid in the recipient’s country.
What does this mean for you as an influencer?
If you sell shoutouts to customers who live in the EU, you must collect VAT on every sale and pay it in the customer’s country. In order for this to happen, you must register in the respective country and apply for a VAT number. Of course, you also have to write and keep invoices. That doesn’t just sound difficult, it is difficult! But don’t worry, there are ways to master the whole thing without worries and great effort. Depending on the place of your company and the origin of your customer, a distinction must be made between different cases.
Case 1: Your customer has a registered company in the EU
Then everything is easy. You don’t have to pay VAT. If you would like to know more about this, you can google for the term „reverse charge procedure“. Make sure that you get a valid VAT or VRN number of the company. For more security, you can check this number here. Write the number on your invoice and keep the invoices in a safe place for ten years. If the number is wrong you have to pay VAT out of your own pocket.
Case 2: Your customer has no registered business in the EU
In this case, you, unfortunately, have to collect VAT and pay it in the respective country, but depending on where you come from you have to distinguish here again – depending on where your business is located.
You run your business in the EU
You’re lucky! You still have to collect VAT, but you can use the VAT regulations of your country to process it and pay it in your own country.
This is only possible as long as the turnover of cross-border payments in the EU is below 10.000 EUR. If you exceed 10.000 EUR keep reading.
You run your business outside the EU
Then you have to make sure right from the start that you charge VAT and pay it in the respective country (if your customer does not have a business nor a VAT number.) Now you’ll ask how this should work in reality… Good question! Keep reading 😉
In order to simplify the collection of VAT in all European countries, the EU has introduced the Mini-One-Stop-Shop (MOSS) procedure. Imagine MOSS as a central distribution point for VAT. Instead of sending the VAT incurred to each individual country, you can simply send it to this one place and they will take care of the rest. Registering for the MOSS procedure is not exactly easy, but still much easier than registering for each EU country and paying your taxes individually. If you would like to know more about the procedure take a look at this website.
Solution 1: Mini-One-Stop-Shop (MOSS)
If you decide to work with MOSS, there are still a few things you need to keep in mind.
1. You have to register which country your customer come from (each country has its own tax rates)
2. You have to write an invoice with the following details:
- Your business’ VAT number
- Your business’ name and address
- Invoice date
- Invoice number (in a consistent order)
- Name and address of your customer
- Buyer’s VAT number. If you are using the reverse charge mechanism, you must also add the text “EU VAT reverse charged”
- VAT amount and rate applied to each item
- Total amount after the VAT is added
- The currency used
Yes, that is also connected with effort. Depending on how many customers you have, a lot of time can be lost here. The last and probably best solution for you might be to use adstock.
Solution 2: adstock
adstock is like a middleman between you and the buyer. So in theory adstock buys the service and is responsible for the collecting and transferring taxes and the invoicing. adstock also uses the MOSS procedure and takes care of everything that you would have to do otherwise. Yeeey!
2019 VAT rates per country:
|Country||Tax Rate (VAT)|
|🇧🇪 Belgium||21 %|
|🇧🇬 Bulgaria||20 %|
|🇩🇰 Denmark||25 %|
|🇩🇪 Germany||19 %|
|🇪🇪 Estonia||20 %|
|🇫🇮 Finland||24 %|
|🇫🇷 France||24 %|
|🇬🇷 Greece||24 %|
|🇮🇪 Ireland||23 %|
|🇮🇹 Italy||22 %|
|🇭🇷 Croatia||25 %|
|🇱🇻 Latvia||21 %|
|🇱🇺 Luxembourg||17 %|
|🇲🇹 Malta||18 %|
|🇳🇱 Netherlands||21 %|
|🇦🇹 Austria||20 %|
|🇵🇱 Poland||23 %|
|🇵🇹 Portugal||23 %|
|🇷🇴 Romania||19 %|
|🇸🇪 Sweden||25 %|
|🇸🇰 Slovakia||20 %|
|🇸🇮 Slovenia||22 %|
|🇪🇸 Spain||21 %|
|🇨🇿 Czech Republic||21 %|
|🇭🇺 Hungary||27 %|
|🇬🇧 Great-Britain||20 %|
|🇨🇾 Cyprus||19 %|