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What should I need to know about VAT?
According to EU tax laws, Spreadconnect must charge VAT in all EU member states on goods delivered from the EU to the merchant’s customer. These transactions are considered to occur in the merchant’s name within the EU. Spreadconnect (Spreadshirt Print On Demand GmbH) is registered for VAT in Germany. This guide explains what VAT is, how Spreadconnect handles it, and how VAT is calculated on your transactions.
VAT Exemptions for EU-Registered Businesses
If you are a registered business within the EU and can submit a valid VAT ID:
- You might not be required to pay VAT on Spreadconnect orders. Find more information on how to submit it here.
- However, you must verify your individual tax obligations with a qualified tax advisor.
The merchant needs to check whether they are able or have to charge their customers VAT. More information can be found here.
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How is VAT calculated?
(Product Price + Print Price - Discounts + Shipping Cost) × VAT Rate
Applicable VAT Rate:
Generally, Spreadconnect applies the German VAT rate. In some cases, we apply the VAT rate of the destination country if specific conditions are met:
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- You are a small business registered in the same EU country as the order’s destination.
- Your business has not exceeded the acquisition threshold in the country where your business is registered.
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Prices Refer to Merchant Costs:
All calculations are based on the prices merchants pay to Spreadconnect, not the price the customer pays to the merchant.The above content is no tax advice. Please clarify with a tax advisor your individual tax obligations.
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When will VAT be charged?
VAT will only be charged on orders that are produced in our European factories and shipped to an address of a Member State of the European Union. Please note VAT will not be charged to Special Zones within the EU.
Please see the breakdown below for when VAT will and will not be charged:
- Spreadconnect will charge German VAT on all orders being delivered to Germany.
- If you have a valid German VAT ID, we will charge the German VAT rate on all orders delivered to EU countries
- If you have a valid VAT ID from another country other than Germany, we won't charge VAT on orders delivered to other EU countries except for Germany.
- If you don't have a VAT ID, we will charge VAT on the orders that are delivered to EU countries. The VAT rate will depend on the shipping country and if you are registered as a small or regular business.
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What is the difference between a small and regular business?
In the Spreadconnect App’s Account Settings under Taxes, you need to specify your business type: Small Business, Regular Business, or enter your VAT ID. Understanding which category applies to you is crucial to ensure accurate tax settings and compliance.
Small Business
You are considered a Small Business if:
- You are not VAT registered.
- Your sales within your country do not exceed a specific threshold set for small businesses. This threshold pertains only to domestic sales.
Regular Business
You are considered a Regular Business if:
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Your sales exceed your country’s small business threshold.
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You are not VAT registered.
Example Definition Business
Small Business Owner Regular Business Owner If you are based in Austria and your domestic sales are less than €30,000, you qualify as a small business.
Note: The threshold includes all sales, not just those made through Spreadconnect.
If you are based in Germany:
- Sales through Spreadconnect: €12,000
- Additional sales from other products: €10,000
Your total sales amount to €22,000, which exceeds Germany’s €17,500 small business threshold. In this case, you should classify your business as a Regular Business.
Important Notes:
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If your business status changes (e.g., your sales surpass the threshold), update your Tax Settings immediately.
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Failure to update your status may result in incorrect VAT charges and potential issues with tax authorities.
The above content is no tax advice. Please clarify with a tax advisor your individual tax obligations.
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Which countries will VAT be charged in?
VAT charges can apply to the Member States of the European Union. Please note that no VAT is charged for deliveries to special zones within the EU.
For deliveries to addresses outside of the EU, VAT charges will not apply. Customs and import tax charges may apply to deliveries sent outside of the EU.
The above content is no tax advice. Please clarify with a tax advisor your individual tax obligations.
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Where is the VAT seen in the app?
The VAT applied to an order can be seen on the Order Detail Page within the Spreadconnect app. Once you open the order you will see the applied VAT rate and amount for the order. Also on your .csv exports and on the invoices that you can download in the documents column on the order page.
The above content is no tax advice. Please clarify with a tax advisor your individual tax obligations.
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Can I claim any of the VAT charges back?
If you are a merchant not based in Germany and do not have a valid VAT ID, you may be eligible to claim a VAT refund from German authorities under certain conditions. The process varies depending on your location:
For EU-Based Merchants
Merchants located within the European Union can submit a VAT reimbursement application through the electronic portal of the Member State where their business is registered.
For Non-EU Merchants
Non-EU merchants can apply for a refund of German VAT if their business is not registered for VAT in Germany.
For Merchants Registered for VAT in Germany
If your business is VAT-registered in Germany, you must claim the VAT refund directly through your German VAT return.
Next Steps for Merchants Without German VAT Registration
Merchants who are not registered for VAT in Germany should contact the Bundeszentralamt für Steuern to determine the correct procedure for claiming a refund.
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How do I submit my VAT ID to Spreadconnect?
To add your VAT ID, go to Account Settings > Taxes > VAT Registration.
Your information will be verified by the eVatR, the German VAT number validation service. To validate it, please make sure that all your information in your account matches perfectly the one registered at the European Commission. If you do not remember exactly what information was registered, you can go to the VIES to access it.
The above content is no tax advice. Please clarify with a tax advisor your individual tax obligations.
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Should I charge VAT to my customers?
If you own a business that meets the requirements to become a VAT registered business, you need to collect VAT from your customer and declare/pay VAT to the tax office depending on the countries you are registered in. Rules may vary for small businesses.
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Why is my VAT ID marked as invalid?
Your VAT ID is automatically validated using eVatR, the German VAT ID validation service. To ensure accuracy, we revalidate your VAT ID daily. However, VAT ID verification may occasionally fail for several reasons.
Common Reasons for VAT ID Rejection
1. eVatR Service Unavailable
The eVatR service might be temporarily offline. If this occurs, please wait until the service is back online before attempting to add your VAT ID.
2. Invalid VAT ID
The eVatR service may indicate that your VAT ID is invalid. To resolve this, ensure that:
- The information in your Spreadconnect account matches the details registered with your VAT ID.
- To confirm the details registered with your VAT ID, visit the VIES on-the-Web - European Commission page.
Additionally, your VAT ID must be compatible with Spreadconnect's VAT ID.
How to Check VAT Compatibility
- Visit the eVatR Service Page.
(Note: This page is available in German only.) - Enter the following details:
- Field 1: Spreadconnect VAT ID.
- Field 2: The country where your VAT ID is registered.
- Field 3: Your VAT ID.
By following these steps, you can verify if your VAT ID is valid and compatible with Spreadconnect.
The above content is no tax advice. Please clarify with a tax advisor your individual tax obligations.
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Where can I get help understanding my VAT obligations?
You can find most of the necessary information on the European Commission website.