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VAT compliance obligations & considerations for B2B businesses

Once registered for VAT in one or multiple countries, your sales that originate in those countries or sales that are made to customers in those jurisdictions, must be treated in accordance with the local VAT legislation.

There is a lot to consider, including:

  • Should VAT be charged, and if so – which country’s VAT rate is applicable?
  • How do I recover the VAT paid on my imports?
  • Does the standard or reduced rate of VAT apply?
  • What are my obligations if my sales are made in foreign currencies?
  • Do I need to issue VAT invoices?
  • When am I obligated to report sales and pay over taxes?

If you make a mistake with any of the above issues, the tax office will be very strict with issuing of penalties and charging interest on any late or incorrect VAT payments. Often potential the cost of non-compliance can exceed the total annual cost of doing business in a country.

Vatglobal will produce a customised VAT Guide, which is document that lists all compliance considerations and gives practical explanations. In addition, we will appoint you a dedicated account manager who will provide ongoing support via telephone or email should you have any compliance questions.

VAT reporting

Once you register for VAT in a foreign country, online sellers are required to file periodic VAT returns in the countries where they have VAT registrations. (This is usually a monthly or quarterly filing)

These are statutory declarations where all taxable transactions which took place in that period must be reported and any VAT liability or refund is calculated. Each country has a unique filing deadline which usually corresponds to the date that any tax liabilities must be paid.

Failure to submit a VAT return on time or late settlement of a VAT liability will result in penalties being imposed.

A VAT registered business may appoint an agent to prepare and file the VAT returns on its behalf. In some countries this may be a prerequisite, but even in cases where the company can file the return itself, it is recommended that an agent is appointed owing to the language issues and compliance and reporting complexities.

Vatglobal offers a comprehensive return filing solution:

  • Automated extraction of transactional data from your accounting software where possible.
  • Dedicated account manager to support the entire filing process.
  • Integration with our vfile software.
  • Preparation of all statutory filings.
  • Online submission of VAT returns.

The following compliance checks will be completed each period before the VAT return or other statutory reports are prepared:

  • VAT rate, net and gross amount checks.
  • Detection of out-of-date transactions.
  • Identification of duplicate transactions (already captured in previous periods).
  • Flagging high value inputs based on pre-defined thresholds.
  • Identification of all zero-rated or reduce-rate sales.
  • Analysis of net payment vs. net refund compared to previous period.
  • Escalation of vendor / client VAT treatment inconsistencies.
  • Exchange rate discrepancies.
  • Missing VAT numbers in zero-rated intra-community transactions.
Download the Enterprise VAT Guide
Download the Enterprise VAT Guide
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