Picture of Teemu Konttinen

Teemu Konttinen

MA in Design Management. Market focused strategist with bids eye view.

VAT calculation | EU VAT compliance guide

Again there are good and bad news. Bad news is that you cannot sell at your domestic VAT rates anymore, VAT to be paid is according to the destination country VAT (you can check the rate here). Which means you have to have access to a database with all EU VAT rates, including the reduced rates if your goods are applicable for them.

The good news is that you can compete more efficiently as this can remove the unfair tax advantages companies in lower VAT countries may have. Another good news is that there are tools to handle VAT calculation and they have a name: Full Landed Cost Calculators (FLCC).

As is usual with the solutions, there are the good, the bad and the expensive. High cost is not an indication of superior performance or accuracy, which are both requirements for compliance. For example, some expensive products by well known large service providers cut corners and simply apply the highest national VAT rate without any consideration for the actual goods.

Our recommendation is to use only the VAT calculator that is based on Harmonised System codes, the universal customs codes, HS6 if possible. Some platforms unfortunately make taking advantage of the reduced rates very difficult but do ask us. Only HS facilitates the accurate VAT calculation.

In order for such a FLCC to work, you need HS-codes, automated or manually input into your product catalogue. All modern e-commerce platforms would have support for HS code in product catalogue. Once HS codes are in place, everything including VAT calculation and collection of data for the infamous Intrastat is automated, accurate and you are 100% compliant. EAS tools naturally facilitate both manual and automatic handling of the HS codes, we can even check in real-time the accuracy of the code.


online seller calculates VAT for EU sales

EAS provides top-notch VAT calculation solution

EAS solution calculates the VAT and duties automatically based on multiple data and databases, HS code in itself is not yet a complete solution. The accuracy is the basis of the obligatory compliance – which is entirely automated with EAS.

The accurate calculation is essential, don’t cut corners here. Recurring mistakes will result in banning from the official OSS system, a mountain of unnecessary work and basically create potentially terminal risks to your business.

Have a talk with us about VAT calculation

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