There comes a point in every international tax manager’s career where they need VAT registrations and have to explore their options. When choosing the way forward, it’s important to think it through and choose the right structure that best suits your business. That’s because VAT compliance done incorrectly can lead to penalties and resource wastage.
Exploring your options for VAT registration and management
So you’ve realised that you need VAT registrations in multiple jurisdictions. You’ve met the sales thresholds and are now liable to account, report for and file your VAT. you can move forward with your VAT compliance by managing it inhouse, appointing fiscal representatives in the countries you need to register, appoint a Big 4 accounting firm or adopt VAT compliance technology that sets the whole process on autopilot. We will explore each of these options in more details below.
Inhouse VAT management & compliance
Most businesses have a central VAT team that are responsible for their multiple VAT registrations and the filing and reporting of these returns. It can be an effective model, but costly. You need to hire resources to do what is ultimately a very manual, repetitive process. Your team will also need to understand the local VAT laws and regulations in great detail. In addition, they’ll need to keep up with the constant VAT changes. VAT authorities change their rules frequently so not staying on top of those changes comes with penalties. This can be a lot of pressure for an internal team to carry.
Support your inhouse team with VAT compliance technology
Even if your business does decide to manage its VAT internally, it’s worth exploring software that can make the entire ordeal easier. VAT compliance technology exists to help set the entire process on autopilot. For example, our own platforms vfile and vsuite act as VAT compliance companions for international tax teams with registrations in multiple jurisdictions. Built to make the repetitive and mundane tasks easy so that VAt teams can focus on more strategic goals.
VAT compliance often means the need to appoint a fiscal representative in the country in which you need to register for VAT. Many choose to hunt down a fiscal representative in each jurisdiction. This helps to build a personal relationship with that supplier and have a local presence to stay on top of local laws and regulations.
But for companies that require multiple VAT registrations, having so many different fiscal representatives can become a major burden. Language challenges abound and the effort required to manage so many suppliers can make this an unpleasant and inefficient method. Although you have a local “man on the ground”, you’ll need many of them. Therefore, you’ll need the resources to manage them which will eventually weigh heavy on your costs.
Appointing a Big 4 consultancy Firm
It’s often a common destination point for businesses looking for VAT compliance assistance. But this method comes with a hefty price tag. Big 4 firms are very capable of helping companies with their VAT compliance. However, it’s not their main area of expertise. It’s actually a small offering among their bigger picture services. As far as a long term solution goes, this may not be the best option for companies that want to reduce their costs while also streamlining their VAT compliance.
Managed Compliance – Outsourcing to VAT Compliance Experts
Then there are VAT compliance agencies like Vatglobal who offer one service and do it well. A true partner for VAT departments needs to be an expert that focuses solely on VAT registration, filing and compliance. A very strong option is to outsource all your VAT compliance to a company that can offer end-to-end management, robust technology solutions and one single point of contact for all jurisdictions. This way, you can deal with someone in your country who speaks your language but has the resources and technology to offer VAT compliance in over 160 jurisdictions.
Whatever method you choose to manage your VAT registration and compliance, the why is still more important than the how. Whichever direction your company chooses to go, the important thing is that you act now so that you can avoid any pitfalls or penalties ahead.