Advancements in technology, communication, and transport have made cross-border activities easier for businesses. However, this also poses a risk for businesses from a VAT perspective.
The five most common risk areas with respect to EU VAT and cross-border transactions are:
- understanding the VAT treatment,
- data issues,
- documentation supporting exempt transactions,
- input VAT deduction, and
- challenges in dealing with multiple EU Member States.
Businesses need to have VAT-minded people within their organization and maintain quality data to reduce risks associated with deficient data. They also need to pay close attention to documentation and discuss the correct parties with their logistics partners to recover VAT. Finally, outsourcing VAT compliance requirements to a dedicated team with VAT expertise and knowledge can save time and resources while reducing the risk of non-compliance.
Source Meridian
