# Set up an Avalara client as a marketplace

Source: https://developer.avalara.com/avatax-for-vat/chz3888111366337/

# Set up an Avalara client as a marketplace

Learn the key VAT and company setup considerations for marketplace transactions in AvaTax, including deemed supplier obligations, default company configuration, freight tax dependency attributes, and EU distance selling thresholds.

Under the EU ecommerce VAT package (effective July 1, 2021), marketplaces facilitating certain cross-border business-to-consumer (B2C) sales by third party sellers are treated as the deemed supplier. When deemed supplier rules apply, the marketplace assumes the tax rights and obligations of the sale becoming legally responsible to collect, report, and remit the VAT due from the consumer without taking on product liabilities or warranties. For more background on these regulations, refer to the [EU marketplaces VAT deemed supplier rules](https://www.avalara.com/vatlive/en/vat-news/2021-eu-marketplaces-vat-deemed-supplier.html).

When an Avalara client operates as the marketplace platform, create and configure a default company in AvaTax to represent the marketplace entity:

-   Designate the company as an online marketplace to enable AvaTax's deemed supplier calculation logic.

-   Enter required business identification (BIN/EIN) and EU Import One-Stop Shop (IOSS) registration numbers.

-   Configure the primary business location and establish all jurisdictions where the marketplace collects VAT/GST, ensuring establishment is disabled for jurisdictions where the marketplace collects tax without a physical presence.

-   For step-by-step UI instructions on creating and configuring company profiles, entering international addresses, and setting up tax jurisdictions, see [Add a company](https://knowledge.avalara.com/bundle/dqa1657870670369_dqa1657870670369/page/Add_your_company_information.html), [Add VAT, GST, or customs duties for non-US countries in Avalara](https://knowledge.avalara.com/bundle/dqa1657870670369_dqa1657870670369/page/Add_non-US_countries_to_collect_VAT_GST_or_customs_duties.html), and [Add IOSS registration information to your company profile](https://knowledge.avalara.com/bundle/dqa1657870670369_dqa1657870670369/page/Add_IOSS_registration_information_to_your_company_profile.html).

For transactions that bundle freight charges with goods, AvaTax supports the optional `IsMerchantSellerTaxDependency` company attribute. When enabled on a marketplace company profile and a transaction includes a `MerchantSellerIdentifier`, the AvaTax calculation engine groups freight calculations based on the `MerchantSellerIdentifier`, `ShipFrom` address, and `ShipTo` address to calculate freight tax based on each specific seller's goods.

Depending on your role in a transaction, configure AvaTax accordingly:

-   If the Avalara client is the marketplace platform, configure the default company profile as a marketplace and pass third party merchant details (`merchantSellerIdentifier`, `merchantEstablishmentCountry`, and `merchantVATId`) at the transaction line level.

-   If the Avalara client is a merchant selling on a third party marketplace, add a dedicated location within your company profile, set the type to Marketplace, and assign a unique `locationCode` and `reportingLocationCode` to ensure tax liability routes correctly.

EU regulations establish a single, EU-wide €10,000 threshold for distance selling. AvaTax enables the EU distance selling threshold by default under Settings > All settings > EU distance selling threshold, assuming your business exceeds €10,000 across all EU transactions. Only change or disable this setting if your business won’t exceed the €10,000 threshold. For procedural steps, see [Update your EU distance selling threshold in AvaTax](https://knowledge.avalara.com/bundle/dqa1657870670369_dqa1657870670369/page/Change_your_EU_Distance_Selling_Threshold_setting.html).