EU businesses facing non-resident EU VAT compliance

Wed 10th Jun 2015

Within the finance team of any EU business, VAT is often the last thing on the agenda. This is understandable. With VAT neutrality, output VAT covers input VAT suffered. A well worn path of experience of VAT inspections together with VAT-skilled personnel within the finance team allow the FD to concentrate on more pressing daily monitoring and reporting requirements. In the worst case, should any VAT non-compliance arise, the matter can usually be regularised quickly, with possible penalties minimised.

EU VAT registrations

This situation can lead to a false sense of security for EU businesses who, because of the nature of their trading, find that they require to VAT register and submit VAT returns in other countries where they may have no permanent establishment i.e they are non-resident. Instead of pushing the VAT issue much further up the agenda, the European VAT compliance work is often left for the existing home country VAT-skilled members of the company’s finance department.

Differences in EU VAT compliance

Serious difficulties can arise. It is not just the fact that the foreign tax office does not speak the same language; all of the administration and reporting may be different. Many questions may need to be asked. How often should EU VAT returns be submitted? What are the deadline dates for periodic VAT payments? Are refunds automatic if you submit a VAT return showing a credit? Should VAT returns be hard copy or electronic submissions? How should the VAT declaration be completed? What boxes have to be filled? Do the regulations demand an annual summary return? When are EU VAT refunds issued? Where can information and guidance be provided? Is it on-line?

By moving the foreign VAT issue further up the agenda, serious and costly non-compliance can be avoided.