Transaction tax automation expert offers five tips today to help merchants minimise potential disruptions tomorrow
Avalara, Inc., (www.avalara.co.uk), a leading cloud-based tax and compliance automation technology provider, today offered five specific tips to help European broadcasting, telecommunications and electronic services (BTE) companies address imminent VAT changes when supplying to EU consumers.
Currently, if these services are purchased in the EU, they are subject to VAT in the country where the supplier is established. However, changes to the EU VAT Place of Supply Rules, due to come into effect from 1st January 2015, mean that multinationals will become responsible for charging VAT in the countries where their customers reside.
Despite plans by the European Commission to minimise disruption by allowing VAT filings in a single EU tax authority, Avalara recognises these changes could potentially present logistical and cost management complexities for BTE retailers involved in cross-border trading across the EU’s 28 member states.
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“It’s important cross-border retailers involved in broadcasting, telecommunications or electronic services take steps now to avoid getting caught out by the imminent VAT changes,” said Kevin Boland, Avalara’s Vice President of Business Development in EMEA. “In addition to planning for changes in their cross-border pricing structure, businesses need to make sure they do not get overwhelmed by the different tax rates. It could be potentially very time consuming and costly dealing with multiple VAT requirements, unless merchants partner with an industry expert knowledgeable in global tax.”
As a pioneer in transaction tax management, Avalara is well qualified to help nullify these complexities by providing a suite of solutions ranging from registration and calculation to reporting, filing, and remittance, which should bode well for EU BTE businesses. A report co-ordinated by the European Commission, published last year, found that only about a quarter (24%) of retailers planned to sell cross-border in the ensuing 12-month period, due in part to the potential complexities involved. One of the top obstacles to cross-border trading named by retailers was the additional cost of compliance with different national tax regulations (highlighted by 36% of those surveyed).
Boland’s 5 Tips to Help Merchants Minimise Potential Disruptions from
2015 VAT Changes
- Know your thresholds and obligations – Different EU member states have different turnover thresholds after which you must register to collect VAT. If you need to register, you are also obligated to provide certain additional information on your invoices.
- Be prepared – The prepared business will be the successful business. The key is to learn how these changes will affect you before they happen and avoid getting caught out.
- Tackle VAT head on – VAT is a necessity in EU trading, but it’s not something that should be a hindrance to business. Look for automated tax calculations that offer a fast, easy, accurate option, letting you concentrate on your core business objectives.
- Ensure your tax-management is scalable and affordable – Manual systems might work for a small business in a single territory but wider growth will present additional taxation complexities and you need to ensure you can grow with it.
- Ask the experts – The new tax laws can be daunting for cross-border digital retailers, but don’t be afraid to ask for guidance and advice on successfully managing VAT across multiple territories.
“New legislation means BTE suppliers are about to experience a significant shift in how much VAT they need to collect and file,” said Boland. “At Avalara, we’re passionate about helping companies understand and address the new tax rules so they can continue to focus on growing their business. We look forward to drawing on our experience to help EU BTE businesses quickly and efficiently deal with cross-border VAT.”