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VAT reports

A value-added tax (also known as VAT) is levied in some countries from selling/purchasing certain goods and services. Generally, it can be defined as a consumption tax estimated and charged based on the value being added. Usually, VAT is considered destination-based, as application of VAT depends on the jurisdiction of the seller and purchaser. It must be noted that VAT provides almost 20% of total tax amount charged worldwide.

Whenever you choose to do business in the EU, you are surely to face the question of VAT number registration. VAT questions are complex. Nevertheless, all EU Member States follow EU VAT Directive, thus each EU country worked out its own legislation towards VAT requirements and reports.

As soon as the company is registered for VAT number, it must regularly file its VAT report, which will contain information about the incoming and outgoing invoices, whether those were issued / received by other EU counterparties or non-EU partners or not. Most importantly, all deals must be declared in the VAT report, including invoices where 0% VAT was applied.

Compulsory VAT registration for EU companies

There may be several conditions, when an EU based company is required to register for VAT and submit VAT reports. In most of the EU jurisdictions, VAT registration should be done in the following cases:

By thresholds

When a company registered in the EU reaches certain sales turnover, it is required to register for VAT. The thresholds for obligatory VAT registration are determined by VAT Law of each EU Member State. For example:

See complete table of EU VAT Registration Thresholds here: EU VAT Registration Thresholds by Member State

Voluntary

Any company registered in the EU may choose to apply for VAT registration voluntarily, even if the determined by local VAT Law thresholds are not reached yet.

Foreign company registration for EU VAT

For foreign businesses operating across the European Union, there can be requirements in order to obtain EU VAT number. The requirements are listed not only in the EU VAT Directive, but in local VAT laws of each Member State as well. Typically, the requirements to register for EU VAT are:

Application for VAT number can take from 5-10 days to several weeks to process, depending on the certain Member State procedure. Required documents and information for VAT application vary from country to country as well. VAT authorities have the right to ask additional questions and request documents to prove the company's intention to trade in a certain EU country (agreements, invoices, etc.).

Confidus will provide full guidance and support with VAT application in any EU Member State – feel free to contact us.

VAT status

Once the registration of the VAT number is approved by the tax office, your business entity receives VAT number. From now on you are required to maintain the VAT status, submit VAT reports and indicate your VAT number correctly. Your commitments are as follows:

VAT returns

A VAT return – is a balance document, which indicates the amount of VAT due on sales (also known as the output VAT) and the amount of VAT that can be returned on purchases (also known as the input VAT), hence providing detailed information about how much VAT is paid and how much can be reclaimed from the local tax administration.

Periods of VAT returns

The periods of VAT report mostly depend on the turnover of the company, number of deals within the EU and on the legislation of the specific EU Member State. Most common periods for VAT returns are:

We must note that more and more EU Member States move to monthly VAT returns, due to the toughened compliance and increased amount of intra-community deals, and especially, increased amount of fraud deals with 0% VAT rate application.

Information indicated in the VAT return

Each Member State draws its own rules for VAT returns, but there are some common guidelines for all VAT declarations:

Besides periodic VAT declaration VAT scope of work includes:

Professional support is crucial when dealing with VAT matters, especially when it comes to VAT refunds and VAT returns. Do not hesitate and consult with Confidus Solutions regarding correct use of 0% VAT rate for intra-trading and triangulation schemes.

Read further:

Order tax reporting services: Annual Financial Statement

Financial inspection explained: Audit

Hire an accountant for your offshore company: Offshore bookkeeping

EU VAT Registration Thresholds by Member State

Below you can default VAT rates imposed in countries of the European Union. Keep in mind, that increased or decreased tax rate, as well as tax exemption may be applicable, based on circumstances.

CountryAmount
Austria€30,000
Belgium€15,000
BulgariaBGL 50,000
CroatiaHRK 230,000
Cyprus€15,600
Czech RepublicCZK 1million
DenmarkDKK 50,000
Estonia€16,000
Finland€10,000
France€32,600
Germany€17,500
Greece€10,000
HungaryHUF 6million
Ireland€75,000
Italy€65,000
Latvia€50,000
Lithuania€45,000
Luxembourg€25,000
Maltan/a
Netherlands€1,345
NorwayNOK 150,000
PolandPLZ 150,000
Portugal€12,500
RomaniaROL 220,000
Slovakia€49,790
Slovenia€50,000
Spainn/a
Swedenn/a
UK£83,000

If you want to know more about exact VAT tax rate imposed in certain jurisdiction - ask us.