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VAT registration

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Brexit has changed how EU member states interact with the UK. Please consult with your tax adviser on how Brexit has impacted your tax situation.

Note 

Note

Avalara AvaTax is a tax compliance solution that automates the complexities of calculating sales tax, VAT, and GST. Please ask your Customer Account Manager about Avalara AvaTax and how it can help with your VAT calculations.

 

The first step in understanding VAT registration starts with two key questions:

  1. Do I need to register?
  2. If so, where and what type of registration do I need?

Do I need to register?

Simply speaking, registering for VAT entails applying to the relevant tax authority for a unique VAT number for your business.

Note 

Note

  • Once your VAT number has been issued, certain tax authorities require you to file a VAT return even if you do not meet their usual VAT thresholds or filing requirements.
  • Certain countries allow businesses to backdate VAT registrations. There are however often still penalties involved.

Typically, the first county where you will register for VAT will be the home country of your business, if they require VAT registration and you have exceeded, or are about to exceed the local VAT sales threshold. Depending on the type and volume of your trade, you will often need to register in other countries where you buy and sell goods or services.

For example, your business may be required to register for VAT in other countries when you:

  • export goods to other countries for onward sale to other businesses and consumers.
  • sell goods to consumers outside of your home country via an online marketplace and use a fulfillment service for the sold goods.
  • sell goods to consumers outside of your home country, where those sales exceed the destination country’s distance‐selling threshold limits.
  • provide transport services in other countries.
  • supply digital services to consumers.
  • store goods in other countries and sell those goods to other businesses locally.
  • organize events with entrance fees in other countries.
  • supply services for immovable property.
  • supply and install goods in other countries.

Additionally, some businesses will choose to register voluntarily for VAT in their main country of operation before hitting any required thresholds, businesses may do this to help them claim input VAT. 

Read more about the EU VAT number registration process on Avalara VATLive.

Where do I need to register?

When selling goods or services within your home country, VAT registration will be dependent on your home country's tax authority and their VAT registration threshold. VAT thresholds are often calculated using either a 12-month rolling window or the calendar or financial year.

With VAT being a tax on the final consumer, when you sell goods and services in other countries these destination countries will often expect you to register with their tax authority to calculate, declare, and pay the VAT that is due. To ensure you remain compliant, you will need to review the distance selling thresholds of the relevant destination countries.

Local and distance selling thresholds

The distance selling threshold is the amount of net sales you can have going into a country before you must start paying tax in the destination country rather than in the country of dispatch. Within the EU, this only applies to business to consumer (B2C) and business to business (B2B) transactions. Further information on the current EU distance selling thresholds can be found on Avalara VATLive. The EU VAT registration threshold (local or domestic thresholds) is the amount of net sales you can have within your home country before you must register and start paying tax. Further information on the current EU local selling thresholds can be found on Avalara VATLive.

Note 

Note

In certain countries, different thresholds are sometimes declared for resident and non-resident businesses. Specific goods and services, for example digital services, may also have separate thresholds.

What type of VAT registration do I need?

Depending on the tax authority for the country where your business needs to register, there may be multiple options available. It is important that you select the registration type that is appropriate for your scenario. Depending on the relevant tax authority, options could include:

Permanent establishment

When selling goods or services within your home country, VAT registration will be dependent on your home country's tax authority and its resident VAT registration threshold. VAT thresholds are often calculated using either a 12-month rolling window or the calendar or financial year. Registering to pay VAT in your home country is referred to as registering as a permanent establishment.

Fixed establishment

When selling goods or services within a country that is not your home country, but your business does have a significant presence in the form of a branch or staff, that may be deemed a fixed establishment and it will need to register for VAT as a fixed establishment.

Direct

If your business sells goods or services within a country where you do not have a presence, your business can often register for VAT as a non‐established business. Certain tax authorities do however insist on the use of a Fiscal Representative and do not allow direct registration from non-present businesses.

Fiscal representation

Certain tax authorities do not allow businesses that are not based within their country to register directly for VAT. Instead, the tax authority insists that these businesses use a local representative for their VAT registration. These local representatives are termed, fiscal representatives.

The use of fiscal representatives is prevalent within the EU as a majority of EU member states insist that businesses from outside of the EU must use fiscal representatives for VAT registration. For more information on fiscal representation, see the Fiscal Representative help article.

VAT Mini One Stop Shop (MOSS)

VAT MOSS is an optional scheme that enables businesses to account for VAT that is due in multiple EU countries, to just one EU country. This means businesses do not need to register with tax authorities in every EU country they sell to, instead, they only register for VAT, file VAT returns, and make payments in one EU country. This scheme is largely limited to the supply of digital services and is available to businesses that sell into the EU and are based in an EU member state as well as for businesses that sell into the EU that do not have any presence within EU member states.

Registering for VAT

Note 

Note

Forms, websites, and communication with a country's tax authority are often done in the local language of that country. A translation or intermediary service is often required if this is not the same language that you do business in.

With the prevalence of tax digitization, a number of tax authorities have enabled online VAT registration. Availability of online VAT registration does however vary between countries, certain countries do still require the completion and postage of paper, hard-copy forms.

Required documentation

As part of the VAT registration process, applicants are often asked to submit a variety of documentation, these can include:

  • VAT registration documentation from your business's home country tax authority.
  • Company incorporation documents
  • Company articles of association
  • Evidence of company existence
  • Evidence of business activities, including contracts, receipts, and invoices
  • When using a fiscal representative or agent, a power of attorney

VAT registration number

Certain countries issue businesses with unique tax numbers for their local and intra‐community sales. Often, tax authorities will issue a local VAT number by default and then request businesses to provide proof that they also need an intra‐community VAT number.

It is important to note that the format of VAT numbers differs between different countries. This article provides more information on EU VAT number formats. When providing your VAT numbers to suppliers and customers, it is important to ensure you are providing them with the correct numbers and in the correct format. The EU provides a VAT number validation tool, called VIES, to assist with validating VAT numbers.

Note 

Note

When using a VAT number for intra‐community trade, businesses will need to pre-pend their two‐letter country code to the VAT number. For example, a French VAT number would become "FR12345678901".

See also

Learning VAT Home
VAT Product Home

EU VAT Directive

 

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