VAT in a foreign country. Why would your business need to register? It’s much more likely than you might suppose. You don’t need to be a massive multinational company with branches around the world. Perhaps you sell goods online and ship them to customers in another country. Or maybe your business provides online services, like gaming or data management solutions. If so, there’s a good chance you need to register for VAT in one or more foreign country.
Let’s consider some reasons why your business may need to register for VAT in a foreign country. We’ll then consider why you probably need to speak to a VAT expert to determine your precise VAT obligations.
If you sell products on your own website to private customers (B2C) in other countries, there’s a good chance you have a VAT obligation in one or more of those countries.
If you’re selling goods through an online platform such as Amazon, then in many cases the platform is required to manage the VAT. However, there may still be good reasons to register for VAT.
Digital services in a foreign country
If your business charges for digital services online (anything from gaming to streaming to cloud-based services) it’s really easy to incur a VAT obligation . Barriers to entry in new markets are low (you don’t have to ship goods or clear customs) and digital services VAT is becoming standard policy around the world.
Events in a foreign country
VAT rules relating to events and conferences can be fairly complex. For example, if you run an event in an EU country, your liability for VAT on tickets sales will be in the country in which the event is held.
If your business ships goods to a warehouse in another country, and retains control of those goods for the purpose of onward sale, you may have an obligation to register for VAT.
Importing goods for sale
If you import goods into a foreign country for the purpose of selling those goods, you likely have a VAT obligation.
The subtleties of VAT thresholds
Many countries require you to register for VAT if your relevant sales exceed a specified threshold.
Therefore, there are two main questions that will determine whether you are required to register for VAT in that country. Do you have a VAT obligation in that country? And what, if anything, is the relevant threshold?
However, there are two reasons not to be complacent about thresholds. Most obviously, a threshold does not always apply. In some cases, if you are engaged in a specified type of business, you will be obliged to register for VAT no matter what the value of sales.
Secondly, seasonal surges can lead you to exceed those thresholds. You may not think you have an obligation to register in a given country, but a robust Christmas sale season or Black Friday-driven demand could mean you need to register. In addition, sales can spike for unforeseeable reasons. For example, Covid-related social distance saw a global surge in demand for streaming services.
Making VAT compliance in a foreign country simple
Part of the reason global VAT compliance is so complex is that while the fundamental principles of VAT are similar in most jurisdictions, there are important nuances that differ from country to country. In many cases, you won’t even be aware of these distinctions, leaving your business open to penalties and potential criminal liability.
Vatglobal’s technology-driven solution makes the complex problem of global VAT compliance simple. Our expert team will ensure you are fully VAT compliant everywhere you have an obligation.
We can register your business for VAT in every country in which you have an obligation. Plus we’ll ensure all filing is performed correctly, completely and on time – in accordance with the strict requirements of each country.