The Author of the Article
To keep in mind
One of the most frequently asked VAT related questions on search engines is: "I am a foreign business, how do I know if I need to register for VAT purpose in another European country? »
And this is only natural: European businesses involved in international trade of goods or services want to understand the complex rules of cross-border VAT and are looking for relevant information to help them determine whether or not they have VAT obligations abroad.
The answer to the question: "Do I need to have a VAT number abroad? " is unfortunately not as simple as it sounds.
Are there situations where VAT registration in another country is compulsory?
Yes, the European VAT Directive contains a number of provisions that oblige your company to register for VAT in another European country. The most common situations are those where your company is itself designated by law as the person liable to pay local VAT:
1. International trade of goods:
- Your company imports goods from a third country (USA, China, etc.)
- Your company exports goods to a third country (USA, China, etc.)
2. Intra-Community trade in goods :
- Your company delivers goods to another European country
- Your company acquires goods from another European country
- Your company moves part of its stock from one European country to another (advanced stock, call-off-stock, consignment stock, etc.)
3. Domestic transactions:
- Your company sells a good that remains in the same country (no border crossing) for which no reverse charge is applicable
- Your company provides a service in another country for which no reverse charge is applicable
Is it legally possible to avoid the obligation to register for a VAT number abroad?
In order not to increase the administrative burden for businesses unnecessarily, it is possible in certain situations to legally avoid VAT obligations abroad:
- The VAT Directive provides for specific situations in which businesses do not have to register for VAT in another European country: simplified triangular scheme, consignment stock arrangements, non-transfers, etc.
- Over the years, European countries have agreed collectively (through the VAT Committee) on specific situations where VAT registration, which is in principle compulsory, is not required: contract work, breakdown of an intra-EU supply of goods into two transactions (a transfer of goods followed by a domestic supply), etc.
- Some European countries have made internal arrangements and do not require the VAT registration of a foreign company due to exceptional circumstances when such registration is normally compulsory: occasional transactions, etc.
Is it possible to be granted a VAT number abroad on a voluntary basis even if it is not compulsory?
Some European countries (e.g. Belgium, Sweden, Slovakia or Portugal) allow foreign businesses to identify themselves voluntarily for VAT purposes in certain defined situations.
The VAT expert's eye
Your company is involved in international trade in goods and services and you are wondering whether or not it should apply for a VAT number abroad?
Our VAT expert advice: don't underestimate the answer to this question. Any mistake could cost you dearly. Most European countries apply fairly heavy financial penalties if the company has not registered for VAT or has registered late. Some countries (e.g. Germany and Italy) no longer hesitate to take legal action against the managers of defaulting companies.
Why Choose European VAT Desk for Your VAT Needs?
Navigating the complexities of VAT regulations can be challenging, especially when it comes to international trade. That's why it's important to work with a trusted and experienced partner like European VAT Desk.
Here are some reasons why you should choose us for your VAT needs:
- Expert advice: Our team of experienced professionals can provide expert advice on VAT regulations and help your company navigate the complexities of international trade.
- Save time and money: By working with European VAT Desk, your company can save time and money by ensuring compliance with VAT regulations and avoiding costly mistakes.
- Stay up to date: VAT regulations are constantly changing, and European VAT Desk can help your company stay up to date with the latest developments and requirements.
- Peace of mind: Working with European VAT Desk can provide peace of mind, knowing that your company's VAT obligations are being handled by professionals.
We offer a free video conference to assess your situation and provide you with a tailored solution.