AvaTax provides settings for managing Place of Supply rules if you make transactions into a European Union (EU) Member State or other VAT countries globally. Select specific countries where you have a permanent establishment and specify whether you are the importer of record for a particular goods transaction so VAT rules are more precisely applied.
If these settings don't display in your Admin Console, or if you receive the error "NoNexus not supported for this transaction type" when invoicing the EU, call your Customer Account Manager (CAM) to discuss enabling this feature. Please consult your tax advisor to determine if your business may have a PE in a particular jurisdiction, as this may impact your liability for VAT.
What is a permanent establishment?
A permanent establishment is a fixed place of business which generally gives rise to VAT liability in a particular jurisdiction. Examples that generally qualify as a permanent establishment include a branch, a factory, warehouse, or a place of management. The activities of a dependent agent may also give rise to a permanent establishment for the principal. Other examples that are generally excluded from the definition of a permanent establishment are:
- ancillary or preparatory activities
- the use of a storage facility solely for delivery of goods to customers
- the maintenance of a stock of goods owned by the enterprise solely for purposes of processing by another enterprise
- purchasing or information gathering activities.
Who is the importer of record?
The Importer of Record is party to the transaction that facilitates the import of the goods into the Destination country. Specifically, the Importer of Record will be responsible for the goods and the customs duties and tax payable upon import. The Importer of Record is therefore liable for collecting the Import VAT applicable to the goods at Destination. Importer of Record is now supported by Avalara APIs and batch imports but isn't yet available in all connectors.
The supply of goods from one EU Member State to another doesn't implicate an importer of record, as the EU is a single customs union where all goods circulate freely between Member States.
The importer of record defaults by country based on your nexus settings. Set Importer of Record to True (checked) to calculate and collect taxes in the country.
Configure a permanent establishment
Select countries where you have a permanent establishment so that the appropriate VAT rules are applied to your transactions. AvaTax assumes that permanent establishment is involved in transactions in these countries.
- In AvaTax, click the Organization tab and select the company for which you want to set a Permanent Establishment.
- On the Company page, select Nexus Jurisdictions.
- On the Country Jurisdictions page, use the Country and Has Permanent Establishment fields to configure your place of supply settings for countries where you do business and in which you have a PE. The default settings for these fields is True. Click the checkboxes to deselect jurisdictions where you do not have a Permanent Establishment.
- The Has Permanent Establishment field is also visible at the state level for Brazil, Canada, and India. The field is present, but not editable for the US.
Change the default importer of record setting
AvaTax uses the country importer of record set in your nexus jurisdiction settings, by default. We recommend that you maintain your country importer of record settings in your nexus jurisdiction settings, in most cases.
If your business application sends the importer of record information at the transaction level and your invoices have varying importer of record settings, then you may want AvaTax to use the importer of record set at the transaction level. Contact Avalara Support to have AvaTax use the importer of record set at the transaction level.
Specify the importer of record in your nexus jurisdiction settings
AvaTax uses the country importer of record set in your nexus jurisdiction settings, by default. To specify that you're the importer of record for a country:
- Go to Organization > Nexus Jurisdictions.
- Next to the country you wish to change, check Importer of Record, and then click Save.
Specify the importer of record when adding or editing a transaction
Set the importer of record on a transaction if you had Avalara Support change AvaTax to use the importer of record set at the transaction level. Otherwise, the nexus setting is used and what you enter on the transaction is ignored.
To specify that you're the importer of record on a transaction:
- In AvaTax, click the Transactions tab and then click New.
- On the New: Transaction Adjustment page, click the checkbox at the bottom of the Document tab if you are the Importer of Record.
- This field is also available to check when using the Advanced Tax Calculator.
Include importer of record information in your bulk upload template
Include importer of record information when you import your transactions, if you had Avalara Support change AvaTax to use the importer of record set at the transaction level and not from your nexus jurisdiction settings. Use the Import Toolkit to upload Importer of Record information directly into AvaTax.
- To download the Import Toolkit, in AvaTax click the Tools tab and select Import Data. Then click Download.
- Unpack the zip file and open the ImportTransactionsHelp_Protected Excel file.
- Use the IsSellerImporterofRecord column to specify this value for each of your transactions (Enter TRUE or FALSE in the column). Then upload the Excel file into AvaTax. The IsSellerImporterofRecord column is an optional column. AvaTax accepts uploads both of old Excel templates (those without this column added) as well as this new template with that column left blank.