When is a business required to register for VAT?
If you are an online seller or sell across borders, do you know when your company must VAT register in the country you are supplying to?
If you have a business that sells either goods or services to businesses and/or consumers either domestically or abroad, then you may need to register for VAT.
When does my business need to register for VAT?
The rules around VAT registration vary in each tax jurisdiction. The local VAT thresholds in each country are unique and may even vary for the provision of goods or services. If your company is performing any of the below taxable activities (or any other activities that are deemed taxable), you must adhere to the VAT laws of the country where the supply arises – which can include VAT registration, and periodic VAT returns and statistical filings.
Local VAT registration thresholds do not apply to non-established or “foreign” businesses. If you are a non-established business with taxable supplies in an EU country, the domestic VAT registration thresholds don’t apply. You may have a registration obligation from your first Euro sale.
Also, if you are selling cross border in Europe to consumers you may need to consider the VAT registration thresholds applicable to distance sales.
Examples of activities in foreign countries that may trigger VAT obligations:
- Importing goods into the country for onward sale or distribution,
- Storing goods in a warehouse for onward sale or distribution,
- Buying and selling goods locally,
- Selling goods over the internet (turnover thresholds apply),
- Events in the country,
- Providing telecommunications, broadcasting or electronic services to consumers.
The full list of EU VAT thresholds can be found here.
VAT Registrations for online and distance sellers
Distance sales occur when goods are dispatched or transported to a private consumer (not VAT registered) in another European Union (EU) Member State, and the supplier is responsible for the delivery of the goods.
Any businesses selling goods online to consumers in other EU countries where they are not already VAT registered will have an obligation to register for VAT if they breach the threshold for distance sales in that country. Taxback International can assist with your VAT registrations and VAT compliance obligations related to your distance sales. We can also assist you with the E-Commerce changes coming from 1 July 2021.
VAT for Amazon sellers
Businesses selling goods online through Amazon to consumers in other countries may have additional registration requirements if they are using Fulfilment by Amazon, which will give rise to VAT registration obligations in countries where they hold stock. Taxback International are an approved Amazon VAT provider, andcan assist with your VAT registration and compliance obligations.
Once a company is VAT registered, what happens?
Once registered for VAT your business must submit monthly/ bi-monthly /quarterly /bi-annual and /or annual VAT returns with the relevant tax offices where the taxable supply has occurred.
VAT Compliance describes the process associated with the VAT registration of a business for VAT in a specific country /jurisdiction and the preparation and subsequent submission of the associated monthly, quarterly and /or annual VAT filings associated with that VAT registration.
What are the penalties for not registering for VAT?
If you fail to register for VAT at the appropriate time, your business could be liable for a late registration penalty. The longer the period that you failed to register for VAT, the greater the penalty will be. VAT obligations are not an option, they are compulsory.
Fiscal representation – what is it and when is it required?
Fiscal Representation is required in the following scenarios:
• Non-EU businesses registering in an EU Member State where Fiscal Representation is required
• EU business registering in another Member State where there is a beneficial VAT regime. For example, to use the import VAT deferment scheme in the Netherlands
After Brexit, as the UK will be considered a 3rd country, UK established businesses will need to appoint fiscal representation where it is currently required for other non- EU countries, with some exceptions following the Brexit deal. Generally, fiscal representation has to be in place prior to the submission of the first post Brexit VAT return, although some tax offices have set more stringent deadlines.
Brexit and VAT Registrations
Any company that requires new VAT registrations or fiscal representation as a result of Brexit will see a practical impact on their VAT processes. For more on this, check out our recent interview with Global VAT Director – Lisa Dowling.
Work with real VAT experts
Taxback International will analyse and review your business’s activities to determine if a VAT registration or fiscal representation obligations exist in a particular country. If VAT registration is required we will prepare all necessary documents, forms and supporting documentation and submit and follow the request for VAT registration to the relevant tax office(s) until complete.
With over 25 years’ experience in the area of VAT management, we handle all countries and languages where VAT obligations exist. We have a dedicated & centralized team of VAT experts, with a reputation of excellence within all global tax offices ready to speak to you about your VAT obligations.
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