Companies selling goods & services across Europe's borders usually do not have to register for VAT in the country of the customer. This is part of free market measures introduced by the EU to encourage trade in the region. Once registered, complanies are required to follow the EU VAT Compliance and VAT Return obligations.
Click here if you would like free guidance on EU VAT registration requirements.
There are however important exceptions - complicated by inconsistent interpretation of the rules between the member states.
Examples of when companies have to register in a foreign country where they are doing business and do not have an establishment, ('non-resident'), include:
- Holding stocks abroad and then selling it to local customers;
- Buying and selling products in a foreign country without the goods leaving the country;
- Organising live events (conferences, artistic, education) abroad; and
- Distance sellers of goods to individuals (e.g. internet retailing).
It is essential that companies determine whether they should be registered. The penalties for non-compliance and late registrations can be immense, and VAT authorities are paying increasing attention to this area with the massive growth of 'missing trader' fraud.
What is involved in an EU VAT registration?
Companies must submit a formal application, along with key legal documentation, to the relevant local VAT authorities to obtain a VAT number.
Each EU country is different in its requirements for this. However, submissions should generally be in the local language, and companies may have to provide answers to follow-up questions before the number is granted. With the threat of missing trader / 'carousel' fraud, countries are becoming increasingly cautious about issuing VAT numbers to foreign companies.
How can TMF help?
TMF stays on top of the varying requirements for the 27 EU countries' VAT registration procedures. Its team has obtained several hundred numbers for its clients, and so is intimately aware of the exact requirements. This is crucial to ensure that a registration takes only 2 weeks, and not 3 months.
Typically, TMF needs the following:
- A company's formation documents;
- Its local VAT / tax certificate;
- Background on the planned operations; and
- A letter of authority appointing TMF as the VAT agent.
In many countries, e.g. Spain and Poland, some of these documents need to be verified with a Public Notary. TMF can advise you on all of these details.
The European VAT registration is granted - What next?
Obtaining a non-resident VAT number may seem a huge challenge. However, this is only the start of the VAT compliance procedure.
Click here to read the VAT Returns section to see what is required next.
Click here also to read our VAT Registration Case Studies to see how TMF can assist.
Companies from outside of the EU often have to register for VAT too - sometimes in several countries.
A number of countries require non-EU companies to appoint a 'Fiscal Representative' to handle the registration. TMF can provide this service throughout Europe.
To learn more, contact one of our VAT experts for FREE guidance:
+44 (0)870 067 8881