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Resident VAT registration vs Non-resident: What’s the difference?

Resident VAT registration is VAT in a country in which your company is based.  Once you generate revenue past a certain threshold, your business will be required to register for VAT, in accordance with the specific regulations of the country in which you are based.

On the other hand, non-resident VAT registration refers to VAT registration in a country in which your business does not have a local presence.

So far, so simple. But here’s where it gets a little trickier. You may be obliged to register for VAT in a foreign country for a number of reasons. That’s why it’s essential to know what your global VAT obligations are. Failure to do so could result in penalties or even legal jeopardy. 

If you have any doubts about your obligations to register for VAT, at home or abroad, get in touch with Vatglobal for full clarity. We’ll ensure you’re 100% compliant wherever you have a VAT obligation.

What if you have a foreign VAT obligation and you don’t even know it?

Non-resident VAT only applies if you do business in a foreign country.  That sounds obvious enough. But what does ‘doing business’ mean?

For example, say you make jewellery. You start a website where people can order your products online. An order comes in, you pop the product in a bag and the courier comes in and collects it. It hardly seems like you’re doing business anywhere but right there in your workshop.

But consider the following scenario. Suppose your factory is in the UK. You notice a particular earring range that is a huge hit in Latvia. You don’t know why, exactly, but it doesn’t really matter. As long as customers keep buying, you’re happy. 

What you might not have noticed is that the annual value of goods sold to the country has now reached the point where you are obliged to register for VAT in that country. 

You may never have conducted an advertising campaign specifically targeting Latvia. There’s no section of your website written in Latvian. But you now have to figure out how to manage a non-resident VAT registration. 

Non-resident VAT registration for importers

Even when you don’t have an obligation to register for non-resident VAT, there may be good reasons to do so.

If you are exporting goods into a country foreign country, you will often be required to pay import VAT and customs duties. 

Generally, those payments are due at the point that your goods enter the country. However, you may wish to apply for VAT deferments or other preferential mechanisms. In many cases, though, you will be required to register for VAT in the country to which your are importing in order to take advantage of deferments. 

The specific options and requirements will differ from country to country. However the essential point is that non-resident VAT registration is not merely a question of compliance. In many cases, companies elect to register for VAT because it confers advantages. 

Should I register for VAT?

Whether you run a home studio or a multinational manufacturing business, you need to take VAT seriously. 

Vatglobal’s team of global VAT experts will provide you with the expert guidance you need to fully understand your VAT obligations, everywhere you do business. 


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