VAT stands for Value-Added Tax. VAT applies more or less to all goods and services that are bought and sold for use or consumption in the European Union. It's placed on each stage of the supply chain. That is why fulfillment, sales, and shipping all have VAT applied to it.
The formula Printful uses to charge you VAT is - (our fulfillment price of the product - discounts + shipping price) and multiplied by the 21% VAT rate because that is the VAT rate in Latvia where our fulfillment center is located.
Each country has a set VAT threshold, which represents the total value of everything you sell or supply. And when your sales reach that number, you need to register as a VAT payer. For example, the domestic sales threshold in the UK is 83 000 pounds. If you reach that number, you need to register as a VAT payer in the UK, collect and remit VAT.
You need to keep an eye on the distance selling threshold. This means - just like each EU country has its domestic sales threshold, they also have set a threshold of distance selling. And once your sales reach the distance selling threshold of another EU country, where you’re not based, you need to register as a VAT payer there, collect and remit