VAT Compliance Tips for Online Sellers

Blog » US LLC for EU Business: VAT Compliance Tips for Online Sellers

Using a US LLC for EU business is a strategic option for online sellers looking to expand their operations into the European market, whether they are based in the EU or outside of Europe. This approach provides flexibility, liability protection, and global credibility. However, compliance with EU VAT regulations is critical for success.

This guide explains how a US LLC can be used to do business in the EU, the challenges of VAT compliance, and how services like hellotax can simplify the process.

Why use a US LLC for EU business?

A US LLC (Limited Liability Company) is a popular choice for online sellers, both within and outside Europe, due to its simplicity, flexibility, and global recognition. Here are some key reasons why sellers choose this structure to expand into the EU market:

1. Cost-effective business setup
   Incorporating a US LLC is typically faster, less expensive, and less complex compared to many EU countries.
2. International credibility
   A US LLC is widely recognized and trusted. This credibility helps sellers establish partnerships, secure payment processors, and build customer confidence.
3. Liability protection
   LLCs protect personal assets from business liabilities, making them ideal for sellers looking to scale operations in multiple markets.

VAT compliance for a US LLC operating in the EU

To operate in the EU, a US LLC must comply with Value Added Tax (VAT) regulations, even if the business is incorporated outside Europe. Here are the most important aspects of VAT compliance for US LLCs:

1. VAT registration
   US LLCs must register for VAT in any EU country where they store inventory (e.g., Amazon FBA warehouses) or sell directly to consumers. Sellers using the One-Stop Shop (OSS) scheme can register in one EU country to report VAT for all EU-wide sales in a single filing.
2. Fiscal representative requirement
   In some EU countries, non-EU businesses must appoint a VAT fiscal representative. This representative ensures the company complies with VAT rules and handles communication with tax authorities.
3. Import VAT and customs duties
   When shipping goods into the EU, US LLCs must pay import VAT at the point of entry. They also need an EORI number (Economic Operators Registration and Identification) to manage customs processes efficiently.
4. Record-keeping and reporting
   US LLCs must maintain accurate VAT records and submit regular filings to avoid penalties. Automated solutions like those offered by hellotax simplify this process and ensure VAT compliance.

For detailed information about the OSS scheme, visit the European Commission’s VAT OSS page.

Challenges of using a US LLC for EU business

While there are many benefits, using a US LLC for EU business comes with some challenges:

1. VAT compliance management
   Although EU VAT rules are largely harmonized, there can still be slight variations between countries, such as local VAT rates, registration thresholds, and reporting requirements. Managing these differences, particularly when selling in multiple EU countries, can be time-consuming without the right tools or support.
2. Administrative complexity
   Operating a US LLC in the EU requires businesses to register for VAT where they sell or store goods. For sellers unfamiliar with EU regulations, this administrative burden can seem overwhelming, especially when navigating systems like the One-Stop Shop (OSS).

How hellotax simplifies VAT compliance for US LLCs

If you’re considering using a US LLC to operate in the EU, hellotax offers tailored solutions to streamline VAT compliance and support your business operations:

• VAT registrations and filings: hellotax handles the entire VAT registration process, from obtaining an EORI number to managing OSS filings.
• Fiscal representation services: In countries where fiscal representation is required, hellotax offers solutions to help your business meet compliance requirements.
• Automation tools: hellotax’s platform automates VAT reporting and filings, reducing administrative workload and minimizing the risk of errors.

Learn more about VAT fiscal representation and how hellotax can assist your business.

👉 Get started with a free consultation today and see how hellotax can support your US LLC in Europe!

Final thoughts

Establishing a US LLC to operate in the EU can be a smart strategy for online sellers, regardless of their location, offering flexibility and liability protection. However, compliance with EU VAT regulations is crucial to avoid penalties and maintain smooth operations. With the right support, such as hellotax’s VAT solutions, your business can thrive in the European market.