European VAT Calculation Methodology

This document outlines the methods used to calculate VAT for sellers utilizing TEMU's VAT Calculation Methodology.

Important: Read this VAT Calculation Methodology carefully before using TEMU’s VAT calculation methodology. You are responsible for the accuracy of all calculations, invoicing, tax reporting and any other tax-related obligations. Consult a tax advisor if you need assistance in configuring tax settings for your business.

Products supplied by sellers with a provided VAT registration number to TEMU for consumers located in the United Kingdom (‘UK’) or Norway or the 27 European Union (‘EU’ or ‘EU27’) Member States shall be subject to the applicable VAT rates in each country.

The VAT Calculation Methodology described in this document does not apply to any orders where Temu is responsible to collect VAT from the customer at checkout and remit this directly to relevant tax authorities under prevailing laws and regulations. For these orders, Temu will use its own product-related VAT rate settings to perform the VAT calculation.

Assigning an Item Tax Code (ITC)

The ITC is important in order to determine the applicable VAT rate on the products listed by the seller in the relevant country where VAT is due (tax jurisdiction).

As a system default, the standard rate ITC (GEN STANDARD) will be set as the seller default ITC once VAT Calculation Methodology is enabled. VAT Calculation Methodology will always apply the standard VAT rate on the products in each of the countries (for example, currently 19% in Germany, 20% in the United Kingdom).

If a seller wishes to change the system default position and assign another ITC, then seller can do so by either changing the seller-selected default ITC assignment within their VAT Calculation Methodology tax settings, or by setting offer level ITC assignments for each inventory listing in the Manage Inventory page. An offer level ITC assignment applies on an individual offer per store and can also be used to choose an ITC that is different from the seller-selected default ITC. The Offer level ITC assignment will take precedence over the default ITC.

For more information, go to VAT Rates and ITCs.

Note: Offer level ITC assignments are only valid per the store for which the seller makes the assignment. If you want the assignment to be valid across all European stores, you must perform an offer-level ITC assignment on each of the stores.

The Distance Sales thresholds previously set by each EU Member State have been abolished. A general "tax-at-destination" principle now applies to all cross-border B2C supplies of goods, meaning VAT is due in the EU country to which the goods are shipped. As a result, you may be required to obtain a VAT registration number in each EU Member State where you conduct B2C Distance Sales. Sellers who have distance sales with intra-EU cross-border deliveries should provide TEMU with:

1. either VAT registration numbers for each Member State you sell to, or

2. the registration for the single window scheme (OSS).

*Please note that TEMU VAT Calculation Methodology currently does not offer support for the sellers who are under the Micro-Business Exception with an annual sale of intra-EU cross-border deliveries not exceeding EUR 10,000.

VAT invoicing

TEMU's VAT Calculation Methodology will automatically create VAT invoices and credit notes to the customer in the name and on behalf of the seller (The creation of VAT invoices and credit notes through TEMU’s VAT Calculation Methodology applies only in UK and in Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Romania, Slovakia, Slovenia, Spain, Sweden). The seller however legally remains the issuer of the VAT invoice that has been generated using TEMU's VAT Calculation Methodology.

The following specific rules shall apply, to the extent applicable, to Italian-established Sellers and to sales made to customers in Italy:

a. Temu may only issue purchase receipts (ricevute d'acquisto) on your behalf. Such receipts do not constitute tax invoices (fatture) or any other tax document under Italian VAT law.

b. If an invoice (fattura) or credit note (nota di credito) is required under Italian tax law, including upon a valid customer request, you remain solely responsible for issuing it and for collecting any required customer information, including the customer’s tax code, where applicable.

c. You are also solely responsible for transmitting any invoices (fatture) and credit notes (note di credito) to the Sistema di Interscambio (SdI) in the required electronic format (XML) and within the applicable deadlines. Temu will not issue or transmit invoices or credit notes to the SdI on your behalf.

Where self-invoicing applies, VAT invoices shall be issued independently based on the information and data made available to you. Commencing on the day immediately following the date mutually agreed between you and Temu, Temu shall cease to automatically create VAT invoices and credit notes to the customer in the name and on behalf of the seller for any subsequent new orders. You represent and warrant that, where self-invoicing applies, all VAT invoices you issue shall be used exclusively for personal (non-commercial) purposes.

Note: TEMU’s VAT Calculation Methodology uses UK VAT legislation and EU VAT Directive rules to create VAT invoices and not local country-specific exceptions.

Disclaimer and Limitation of Liability

TEMU's VAT Calculation Methodology depends on the precision of the VAT registration numbers, Item Tax Codes (ITCs), and other VAT calculation settings provided or configured by the seller through Seller Center. Sellers are solely responsible for ensuring that all their information, including shipping locations, is accurate and up-to-date in Seller Center.

TEMU does not guarantee that the VAT calculations or invoices produced by the VAT Calculation Methodology will always be correct. We are not obligated to verify or correct the information supplied by sellers or customers, but we may do so at our discretion. Consequently, TEMU assumes no responsibility for any incorrect VAT calculations and incorrect VAT invoices resulting from inaccurate or incomplete information provided by sellers or customers. Sellers are responsible for fulfilling their obligations as VAT taxpayers, including but not limited to the timeliness of filing returns/reports to the relevant tax authorities.

[The following content applies only to the sellers in UK, Germany, Spain, France, Netherlands, Belgium, Poland, Italy, Portugal, Croatia, Slovenia, Hungary, Austria and Romania.]

TEMU's VAT Calculation Methodology is not applicable to sellers engaged in the sale of second-hand items. You will be solely responsible for the accuracy of calculation, VAT invoicing, tax reporting and any other tax-related obligations.