VAT Registration in the European Union

VAT (Value Added Tax) is a tax intended for the domestic consumption of various products and services. Company VAT registration is a mandatory procedure that should be followed by any company operating on the territory of the European Union if certain conditions are fulfilled. Each EU state develops its own VAT policy, although the registration process remains similar everywhere.

VAT registration in Europe is used in order to fulfill the following purposes:

  • Identify the tax status of the customer;

  • Determine the place of taxation;

Why to proceed with VAT registration?

One of the major benefits of VAT registration in Europe is that the purchases can be reclaimed over the past few months. Basically, it is possible to claim back VAT on the major categories of goods bought after the completion of VAT registration in Europe, as long as you still use those goods for business purposes. However, Europe implemented certain restrictions on recovering the tax, thus, the services should be purchased by your company and for taxable business reasons.

How to register for VAT in Europe?

  • Fill in a VAT registration form and send it with the supporting documents the corresponding National Tax Authorities.

  • After the application was submitted, it will take up to 8 weeks to get a VAT number issued. The tax authorities may also ask additional questions as the measure of VAT fraud prevention.

Thus, foreign companies eligible for VAT registration should get familiar with additional requirements delivered by each European country.

  • Once the registration is completed, the concerned authority provides the company with a unique VAT registry number.

When to proceed with VAT registration?

Each country member of the European Union identifies determines its threshold. Thus, it can be determined whether an individual, a partnership, or a company should register for VAT or not. When the value of a company’s taxable supplies is eligible for registration threshold, VAT registration should be completed at the end of current month. VAT can also be preregistered if the significant growth of the business formation is expected in the coming months.

NOTE: If it is a non-resident company that launch any business activity, VAT registration must be completed immediately!

VAT registration for non-EU companies

If the Poland company formation becomes the Importer of Record, it is mandatory to register VAT in the EU. However, the chances increase that VAT will not cross your radar. 

Keep in mind that the Importer of Record membership, as well as VAT registration on the territory of Europe can help create the competitive business advantage by reducing the level of import taxes and by delivering a better customer buying experience.

VAT ignorance

Are you ready to take this kind of risk?  If the tax authorities discover your case, you will most likely be asked to pay penalties for missed VAT number in Europe. Furthermore, if it is discovered that your company broke the rules intentionally, so you can easily find yourself invited to the court.

Thus, it is highly recommended to accomplish VAT registration in Europe on a voluntary basis according to the European Law, as the benefits prevail over the costs.

If you are interested in buying a ready-made company in Poland or planning to establish a new company. Qualified specialists will answer to all your questions and offer favorable cooperation terms.

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