Managing your overseas VAT compliance

VAT obligations vary widely by jurisdiction, and these obligations are often underestimated or addressed too late in the contracting process. As a result, delays in registration or compliance gaps can have serious financial and operational consequences, damaging both reputation and customer relationships.

It is therefore essential that overseas VAT implications are considered and addressed from the outset.

Common overseas VAT compliance issues include:

• Local or EU bank account requirements: Some jurisdictions require a local or EU‑based bank account before a VAT registration can be submitted, extending lead times and adding administrative complexity.
• Apostilled documentation: Many tax authorities require original documents to be apostilled and recently dated. Obtaining, certifying, and sending these documents overseas can introduce unavoidable delays.
• Fiscal Representative: In countries where a business has no fixed establishment, appointing a fiscal representative is often mandatory. This adds another layer of coordination and time before registration can proceed.
• EU EORI and VAT‑linked EORI complexities: Securing an EU EORI or a VAT‑linked EORI for import VAT recovery is often more involved than the UK’s streamlined process, especially where a fiscal representative is required.
• Extended lead times for advice and registration: Engaging advisors, gathering documentation, preparing the VAT registration, and awaiting approval from tax authorities can take considerably longer than businesses expect when compared with UK processes, especially where there are delays and hold ups with the local tax authority.
• Postponed VAT accounting: Unlike in the UK, some countries require advance approval or a licence to use postponed VAT accounting (i.e. self-reporting import VAT via VAT returns). Delays in obtaining approval can creates adverse cashflow consequences.

Non-compliance with overseas VAT requirements can result in:

• Cash flow pressures: Without a valid VAT registration, businesses may be unable to use postponed VAT accounting, requiring upfront payment of import VAT.  In some countries VAT registration is a prerequisite for importing goods.
• Irrecoverable import VAT: If the correct VAT and customs arrangements are not in place at the time of import, VAT incurred may be permanently unrecoverable.  Local rules around backdated registrations and pre-registration VAT recovery vary and may result in additional cost.
• Penalties for late registration: Backdated VAT registrations can trigger penalties, interest, or increased scrutiny from overseas tax authorities.
• Customs delays and supply chain disruption: Missing or incorrect VAT registration, EORI numbers or fiscal representation can result in goods being delayed at the border.  This can disrupt supply chains, increase storage costs, and damage customer relationships.
• Delays in invoicing:  E‑invoicing mandates and local invoicing rules often require specific formats, platforms, or authorisations. Failure to prepare in advance can delay invoicing and revenue recognition, in addition to penalties for non-compliance.

Preparing for overseas VAT obligations

For businesses pursuing international growth, early planning is essential. Understanding local VAT requirements, setting realistic timelines, and engaging experienced advisors at the outset can significantly reduce the risk of unexpected delays and financial exposures.

How we can help

Our Indirect Tax experts are experienced in supporting businesses through the complexities of cross-border VAT. With Indirect Tax teams in over 100 countries, we can connect you with local expertise to help navigate local VAT and customs requirements.

Contact us