European VAT Filing Deadline is Approaching
Value Added Tax (VAT) filing deadline in most of the European countries is approaching (Please find a list of countries attached). If VAT has been paid on expenses within the European Union (EU) after January 1, 2013, the invoices should be gathered now in order to meet the VAT filing deadline.
Please contact our office no later than April 15, 2014 if interested in proceeding with a VAT refund. This gives our VAT experts time to prepare the necessary forms before the June 2014 filing deadline. The preparation time is due to a certificate from IRS that has to be ordered which can take up to 3 months to receive.
Value Added Tax (VAT) of 15-25% is being charged on many of the North American companies’ business expenses in Europe and most likely the North American company is entitled to a refund. Typical expenses where VAT has been incurred and is refundable and when VAT registration may be required are:
- Tradeshows, conferences, hotels and car rental
- Drop-shipping and imports
- Research and development
New Stricter Rules Related to Eligible VAT Invoices within the EU
New implemented rules within the EU means stricter requirements on eligible invoices accepted for VAT filings and refunds. Please contact our VAT experts for further information.
European Commission is Scrutinizing Companies for VAT Fraud
The European Commission is concerned that many international companies, including North American companies, are doing business within the European Union (EU) without following the local Value Added Tax (VAT) laws. Therefore, we want North American companies to be aware that they might have to be VAT registered and charge VAT to their local customers when selling "electronically supplied services" (online services) within the EU.
VAT fraud is particularly high among the telecom and e-service industries, since many companies are unaware that they actually might have to register for VAT, and also charge VAT to their customers if they sell services online (including online games) to private people within the EU. Since these sectors are growing at a rapid rate, EU neighbors and trading partners are now working together to identify VAT fraud cases and to track down these companies that are breaking the local VAT laws.
Click here to read the full article “Cooperating against VAT Fraud” by www.eubusiness.com.
Please contact our VAT experts for further details.
VAT Rate Changes
The French government increased their standard VAT (TVA) rate from 19.6% to 20% on January 1, 2014.
Two New Factsheets
We have added two new factsheets covering:
VAT Reclaim on Travel and Other Expenses [pdf]
VAT on Sales of Services (E-Commerce) [pdf]
Click here for additional factsheets and our general brochure.
VAT Case Study: VAT on Sales of Products through Websites in the EU (E-Commerce)
Sample:
A North American company has decided to sell products through amazon.co.uk in the United Kingdom. They are planning to ship their products to an Amazon fulfillment warehouse in the UK. Sales are done through the Amazon website in the UK. In this case the North American company is required to:
1. Register for VAT in the country of import and warehousing, such as the UK in this case.*
2. Charge VAT to the customer.
3. Pay around 20% VAT that will be assessed by customs in the country of import, in addition to the duty. This VAT is only refundable to the North American company if registered for VAT in the country of import.
*Amazon within the EU now requires all North American companies that are planning to sell goods through Amazon in the EU to register for VAT before a contract is signed with any of the Amazon websites within the EU.
Conclusion:
A North American company is legally required to register for VAT in the UK when it import and sell goods. If the North American company does not register, the VAT incurred upon import cannot be reclaimed. In addition, VAT registration is required by UK law.
The VAT is refundable to most business customers; however, private persons cannot reclaim the VAT paid on this type of transactions.
Please note that the VAT rules vary from country to country, so if the North American company is planning to store and sell goods through websites in other EU countries as well, additional VAT registrations might be required. This has to be reviewed in detail for each country.
Please contact our VAT experts for further details.
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