Most Common Myths About VAT

September 5, 2019

1 MYTH. It is difficult to be VAT compliant globally.

Actually, it is not! You don’t have to know all the VAT rules around the globe, all You need is a trusted partner providing global VAT compliance solution for B2C eCommerce business which will take over VAT compliance for You and You will be able to focus on Your primary business tasks.

2 MYTH. It costs a lot to be VAT compliant globally.

Wrong again! You don’t have to employ an accountant in every country You sell Your products to, instead, trust all Your VAT issues to Your global VAT compliance partner and he will handle it for You for a reasonable price.

3 MYTH. Tax Authorities are unable to track distance sales and recover unpaid VAT.

Wrong! Wrong! Wrong! Actually, tax authorities have a lot of handy tools which helps them to track distance sales and recover unpaid VAT. For example, tax authorities request financial institutions to provide them information about their customers payments made to non-resident sellers; this way tax authorities obtains the information about distance sellers revenue in a particular country and can start to recover an unpaid VAT.

4 MYTH. I don’t have to register for VAT because I don’t have a physical presence in a country.

Actually, physical presence is not important anymore. More and more countries are implementing the so-called economic presence approach. This means that even if You don’t have physical presence in a particular country, but Your distance sales reach applicable VAT thresholds, You are obliged to register for VAT. You can check VAT thresholds at our THRESHOLDS MAP.

5 MYTH. I will start paying VAT only when I register for VAT in a particular country.

Well, this isn’t so straightforward. If You haven’t had any distance sales in a past in a particular country and You are registering for VAT because You have reached an applicable VAT threshold – this is the case, however, if You had distance sales in a past and You have reached applicable VAT thresholds in a past, but You are registering for VAT only now, most probably tax authorities will claim an unpaid VAT for the previous periods and these periods can be up to 5 previous years. Therefore, we urge you to be VAT compliant ASAP to avoid late interest, fines or even prosecution.