# Set up an Avalara client as a marketplace

Source: https://developer.avalara.com/vat-marketplace/configure-avatax/set-up-avalara-client-as-a-marketplace/

From July 2021, marketplaces may become the deemed supplier when they facilitate certain cross-border B2C transactions of their third-party sellers. They will therefore be liable to collect, report, and remit the VAT due from the consumer. While the marketplace takes on the VAT rights and obligations of the sale, they do not take on other obligations, such as product liabilities. This new rule comes into force as part of the e-commerce package of reforms to help simplify VAT compliance and tackle online VAT fraud. For more information, refer to the [2021 EU marketplaces VAT deemed supplier rules](https://www.avalara.com/vatlive/en/vat-news/2021-eu-marketplaces-vat-deemed-supplier.html) blog.

This section describes how to set up an Avalara client as a marketplace. This assumes:

-   The marketplace has merchants who sell their product through their platform.

-   The marketplace is the facilitator.

For the purposes of this guide, we will walk through the setup process for setting up a marketplace in the [Sandbox](https://sandbox.admin.avalara.com) environment. This setup configures a company whose primary address is in the United States. If your company is based outside of the US, the steps will vary slightly. Simply follow the walk-through in the UI, which will guide you through the configuration.

1.  Sign in to your Avalara [Sandbox](https://sandbox.admin.avalara.com) environment.

    1.  Check your email for the confirmation you received from Avalara when you signed up for your account.

    2.  Sign in to your account using the username and link in your confirmation email.

    3.  Follow the prompts to create a new password.

    4.  Click **I accept** to the Terms and Conditions.

2.  Click **Get Started** to begin the walk through for adding a company. The first step is to enter your company details. This information is not verified, so technology partners can specify generic information for this test.

    1.  Specify your company's legal name.

    2.  Enter the company phone number.

    3.  Disable the **My company's primary business location is in the US** checkbox.

    4.  For this guide, specify the country of primary location to be in the UK.

    5.  Enter a business ID (BIN) and taxpayer ID (EIN).

    6.  Select the **I do business within the European Union** check box, then enter a 12-digit alphanumeric value for the IOSS number.

    7.  (Optional) In the **Attributes** section, optionally select and enable the **Ismerchantsellertaxdependency** attribute. Note that this is only required for marketplaces that include a freight line along with a goods line in a transaction, and that marketplace wants to provide a grouping based on the `MerchantSellerIdentifier`, `ShipFrom` address, and `ShipTo` address. Specifically, when (1) this attribute is enabled, (2) the company is a marketplace, and (3) the transaction includes a `MerchantSellerIdentifier` value, then the AvaTax calculation engine will calculate freight based on the goods being shipped by that seller.

    8.  Skip the **Is this a standalone company or child company?** section. AvaTax configures this as a standalone company is configured by default.

    9.  In the **Is this an online marketplace?** section, select **Yes, this company is an online marketplace that connects many sellers to customers on a single platform**.

    10.  Click **Next** when you're done.

3.  The next section allows you to specify your company address. Enter a German mailing address for your company, then click **Next**.

4.  Accept the defaults for **Calculate VAT/GST and customs duty** and for **This is a permanent establishment**.

5.  When prompted to confirm whether this company is registered to collect and pay tax in other countries, click **Yes, add more countries**.

6.  When prompted with, Are you registered to collect and pay sales and use tax in the US?, select No, as this isn't necessary for the examples in this guide.

7.  In the **Add countries where you collect VAT/GST** page, select the following countries, then select **Next** at the bottom of the page.

    -   Austria

    -   Iceland

    -   Switzerland

8.  AvaTax will prompt you to review tax collection and establishment information for each country. Disable establishment in these countries.

9.  On the **Where you collect tax** page, review the regions where you're collecting VAT/GST, then click **Done with tax jurisdictions**.

10.  Finally, click **Activate Company** to begin using AvaTax.

## Verify your distance selling threshold

Effective July 1, 2021, the EU is eliminating the existing country-to-country distance sale threshold and replacing that with a single, 10,000 Euro threshold. Transactions that are dated prior to July 1, 2021 will support any existing country-to-country settings. Transactions dated after July 1, 2021 will use the new checkbox setting.

As a result, the existing AvaTax EU Distance Sale UI will be updated to a single check box to reflect this legislative change. The AvaTax engine by default enables this option, thus assuming that a company has exceeded this threshold for all transactions.

Verify this setting in AvaTax by going to **Settings > All settings > EU** distance selling threshold. This setting is enabled by default. Only change this if your company will not exceed the 10,000 Euro distance selling threshold.