Your business might need a EU VAT registration if you intend to “import” goods into the EU, to sell products or services in the EU, to “acquire” goods from another EU member state or to obtain an “EORI” number for importations. By incorporating a UK company you can speedily obtain a UK VAT registration number and facilitate your trading and business objectives with the minimum of hassle.
Situations when your business needs to register for VAT
The EU classifies the transactions in respect of goods and services into the following categories for VAT purposes and therefore your business may require VAT registrations and to apply specific VAT procedures in most of the following circumstances:
If you supply goods
1. Importations: when goods are imported into an EU country from a country outside the community “import” VAT needs to be paid and then recovered.
2. Exports: when goods are shipped, within a certain time period from the date of sale, to a country outside the EU.
3. Acquisitions (B2B): when a VAT-registered person or entity “acquires” goods from a VAT-registered supplier in another EU member state. Your business will require to quote its local VAT number in order to receive the goods without VAT. Otherwise, the supplier in the other EU country will be obliged to charge VAT.
4. Dispatches (B2B): Conversely, when goods are shipped by a VAT registered person or entity in one member state to a VAT-registered person or entity in another member state, you will require to quote your VAT number in order to “zero-rate” the transaction for VAT.
5. Triangulation (B2B): A (in say Germany) invoices B (in the UK) and B invoices C (in say France) but the goods are shipped directly from Germany to France. VAT simplification procedures apply.
6. B2C Sales (domestic): If your business is making domestic supplies of goods within a particular EU country or cross-border into another EU country up to certain sales threshold.
7. B2C sales (cross-border): If your business is selling goods from one EU country into another (e.g. from the UK to Germany) then the VAT “distance selling” rules apply above a certain sales level. You may have to register for VAT in the “destination” country.
There are also procedures for call-off stocks and consignment stocks.
If you supply services
1. Sales (domestic): VAT registration is required on sales (both B2C and B2B) within a particular member state. Some (not all) states apply a minimum sales threshold for VAT registration purposes.
2. Sales B2B (cross-border): As in the case of goods VAT registration is required in order to quote VAT numbers to “zero-rate” supplies of services.
3. Sales B2C (cross-border): From 1 January 2015 many services, such as e-services, telecommunications and radio and TV broadcasting services, will be VAT-ble where the recipients of the service are established. That means applying the VAT rates of each and every EU member state where such services are “consumed”. Other services will be taxed under the “general” rule – i.e. where the “supplier” rather than where the “customer” is established.
One will see the VAT rules are complex. RKG Consulting will be pleased to advise you of the VAT structure most appropriate to your business needs. We can also assist you in obtaining the necessary VAT registrations in the UK and in other member states of the EU and to meet your VAT obligations there.
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