VAT management for dropshipping if you are based in Europe, involves 3 different scenarios:
- Dropshipping within the European Union
If you are based in Europe and work with suppliers based within the European Union, you won't need to do anything. VAT will already be paid by your supplier.
- Dropshipping with AliExpress
If you are based in Europe and are working with AliExpress, the platform's French website already includes the price of the products with VAT. So there's nothing more to do here either.
- Dropshipping with non-EU suppliers
If you are based in Europe and working with non-Dropizi suppliers based outside the EU, we recommend that you contact your suppliers directly to find out more about how they handle VAT.
☝️ The particularity of self-employed status
Since 1 July 2021, VAT is payable on all shipments imported from third countries destined for the European Union, whatever their value. This new law therefore obliges you to pay VAT when purchasing products outside Europe, but it does not oblige you to sell your products with VAT.
If you operate under self-employed status and you buy your products from a French or European company, when you purchase you will pay VAT, but your customer will not pay it.
If you buy your products from a non-EU company, the operation will be the same, but the amount of VAT will be "separated" from the purchase price (which will by default be indicated excl. tax by your supplier). VAT will therefore not be automatically included in the price you pay to your supplier. You will have to declare it to the tax authorities (👉 Find out more).
This declaration is mandatory, and if it is not done by the retailer, the customs authorities will be entitled to claim the unpaid VAT from the recipient of the product (i.e. your customer).
💬 Feel free to contact your Business Coaches if you have any questions!