International VAT | VAT International Services

How does VAT work when trading internationally?

Value-Added Tax (VAT) is a consumption tax and is levied by almost all countries globally on the supply of goods and services. Some countries have implemented alternative tax regimes which operate in a similar way to VAT, such as Goods and Service Tax (GST) or Consumption Tax.

When trading internationally, businesses should be aware of their VAT obligations as they will often have a requirement to charge this tax on their sales. In many cases this will be from the first sale made in a foreign country as there are often no registration thresholds that will apply to them.

The good news is that once registered, in most cases, it will allow the non-resident trader to reclaim VAT amounts they incur; this could be on local purchases of goods or services, or on imports of goods into that country.

When trading as a non-resident, keeping on top of local VAT rules and obligations can be a difficult task, and some countries will also require a local resident company to act as a fiscal representative or VAT agent for the non-resident company, to allow them to VAT register.

Failure to comply with VAT obligations can result in VAT assessments, financial penalties and fines. It can also result in goods being blocked at import or seized. As such, you should consider seeking specialist international VAT support before starting to trade internationally.

Countries where VAT and other indirect taxes apply

VAT applies in all European Union (EU) countries, and many other countries around the world including the United Kingdom, Norway, Switzerland, the United Arab Emirates, Saudi Arabia and Singapore.
Countries such as Australia, Canada, and New Zealand operate GST, and other countries such as Japan operates a consumption tax.

Our team of experts can help you navigate the VAT rules in different countries globally and ensure that your business complies with its VAT obligations.

EU VAT

The EU VAT system can be complex as it comprises of 27 different EU countries all with their own VAT regimes. Although in the main they follow the same legislation, each country can implement differing VAT rules, which is the reason why you see differing VAT rates and obligations from one EU country to another.

Often when trading in the EU, the VAT treatments for transactions differ depending on what types of supplies you are making (goods or services) and the types of customers you are selling to (businesses or consumers).
In relation to goods, if you import into one EU country and sell to VAT registered businesses (B2B) in other EU countries, you will usually only require a VAT registration in the country of import. This registration then allows you to reclaim any import VAT incurred, as well as report and charge VAT if required on your B2B sales.

If you are selling goods to consumers (B2C) across EU borders, then this requires you to charge VAT in the country of your customer, and you then have the option of reporting and paying this VAT by using the “Union One Stop Shop”. Further information about the VAT requirements and obligations when selling B2C can be found within our E-commerce VAT pages.

Services have their own complexities and non-resident businesses supplying these into the EU will need to closely examine the types of services they are providing and who they are providing these to, to ascertain if they have a requirement to VAT register and charge VAT.

No matter what you are selling in the EU and where, our team of experts have in-depth knowledge of the EU VAT system so can identify where you need to register and help you to stay compliant whilst trading.

VAT services from Fiscal Solutions

We provide a comprehensive consultancy and compliance service which:

• Lends foreign traders the use of our in-country business address from which you can apply for VAT registration;
• Grants access to our multi-lingual team of VAT compliance managers and specialists, that can provide guidance and consultancy services helping businesses to understand their VAT obligations when training internationally; and
• Provides foreign traders with an all-round VAT compliance service, including submissions of VAT returns, EU sales lists, Intrastat and all other in country VAT reporting.