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Frequently Asked Questions
VAT liability = Output Tax – Input Tax Output Tax = VAT collected from customers by you, paid to the tax authority after filing Input Tax = VAT paid by your business VAT paid on business-to-business (B2B) purchases Import VAT paid during customs clearance (customs duties are NOT considered input tax) B2B purchases: any relevant purchase invoices, showing the seller’s VAT number and the amount of VAT paid Import VAT: customs clearance documents, as declared by your shipment/logistics provider Some jurisdictions (e.g. the UK) will have additional reclaiming requirements. Please refer to our country-specific FAQs for any applicable information.
Some jurisdictions will require foreign businesses without a physical presence to appoint a domestic agent/tax provider to act on their behalf. This usually also involves the agent/tax provider taking joint liability for any debts incurred by the business, by acting as a guarantor. A fiscal representation arrangement can include requiring the agent/tax provider to make payments on behalf of the business, such as remitting any VAT owed to the tax authority. Please refer to our country-specific FAQs for individual fiscal representation requirements.
A deactivation can occur for several reasons, depending on the tax authority that issued the VAT number. This can include failing to file according to the required frequency, failing to pay VAT liabilities on time, and failure to respond to requests/enquiries made by the tax authority. In addition, some tax authorities may deactivate a VAT registration if there has consistently been limited or no trading activity for an extended period of time.
Within the EU, the VAT Information Exchange System (VIES) can be used to verify the validity of a VAT number. Some individual jurisdictions may also offer their own tools to verify the validity of any local numbers. VIES is a publicly accessible tool available at. In the UK, HMRC offers an online verification platform, which can be found at.
VAT numbers issued by an EU Member State are usually comprised of two numbers – a local VAT number, and a European VAT number for cross-border trading within the EU. A VAT number can be recognised by the presence of a two-character country code prefix which indicates the EU Member State responsible for issuing the number.
EORI refers to Economic Operators Registration and Identification. An EORI number is used to identify businesses for import/export purposes.
EU-issued EORI numbers are valid across the EU, regardless of which Member State issued the number.
Since leaving the EU, the UK has issued its own UK EORI numbers which serve the same purpose, but these are only valid for the UK.
If you’re based in the EU and want to store inventory in other EU Member States, you’ll need an EORI number before you can export.
If you’re based outside the EU, you’ll need an EORI number to import inventory into the EU for storage.
If you need to import/export goods to/from the UK, you’ll need to apply for a UK EORI number.
EORI numbers are often linked to their respective VAT registration – please check our VAT FAQ for more details.
You’ll usually need to apply for the corresponding VAT registration first, except in certain circumstances. Please check our VAT FAQ for more details.
An apostille is a legal document which certifies that any documents attached to it have been examined and found to be genuine. When applying to activate the VAT/GST number, the apostille will usually need to be attached to various company documents. The Spanish Tax Authority requires this additional verification process before issuing the VAT/GST number. Any apostille must be issued within the jurisdiction in which the corporation is based in. For example, a business based in the UK must obtain an apostille issued within the UK. There are also specific requirements for the format of the company documents; please get in touch with us for further information.
Sales tax is a consumption tax that is imposed on customers at the point of sales.
The relevant sales tax rate is usually set by the state and/or local authority, so the rate will differ depending on the location of purchase.
You’ll need to start collecting sales tax if you have established a trading nexus in a particular state.
Each state will have their own requirements on whether a nexus has been established in their state.
Once a nexus has been established, you’ll need to apply for a sales tax permit before you can begin collecting sales tax.
A nexus is a link between a business and the state(s) that is trading in. There are usually two ways to establish a nexus:
- Physical presence – by operating a physical entity within the state
- Economic threshold – by exceeding a pre-defined turnover within the state
Once a nexus has been established with a state, they will usually require you to register for a sales tax permit within a set deadline.
This depends on whether you are a US citizen/resident or are applying from overseas.
If you’re based overseas, you may need to obtain additional registrations such as an Employer Identification Number (EIN) and/or Individual Tax Identification Number (ITIN) first.
Please contact us for further support and advice regarding this.
Most states will require the permit to be renewed. In most cases you’ll be required to renew annually, and according to any deadlines set by the state.
Please check with us for more details.
Some states have implemented marketplace facilitation rules which work in a similar manner to how VAT by online marketplaces in the EU/UK.
Marketplace facilitation means that online platforms such as Amazon are legally considered retailers in their own right, even when only facilitating sales made by third-party sellers. This means that they are legally obliged to collect and remit sales tax on your behalf, even if you are not registered for sales tax.
The other rules on sales tax (e.g. nexus) still apply. You’ll need to apply for sales tax if required, even if the marketplace is collecting and remitting on your behalf. Any sales tax returns can be adjusted to reflect that some/all sales tax is collected by the marketplace.
Establishing a business has numerous additional benefits, including the ability to sell goods that are restricted for overseas businesses.
Contact us for more information, and we’ll help you get started.
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