The supply chain involved shipments from the Netherlands to and between various foreign warehouses, utilizing logistics service providers. Due to international growth and change in various supply chains, complex VAT issues arose regarding the application of the correct VAT rules for cross-border transactions, VAT registration obligations, invoicing processes and reporting.
One of the main priorities of the client was to ensure VAT compliance directly from the outset in all relevant countries involved, while minimizing administrative burdens and associated costs and tax penalty risk. Another Key interest was to optimize working capital associated with the various supply chains. Having limited in-house tax expertise and wanting to scale up quickly, we stepped in to assist.
During initial discussions, several critical questions emerged: Is VAT registration required in each EU country? How should intra-Community supplies, and acquisitions be handled? How should chain supplies be handled? What documentation is required for substantiation of the VAT zero rate?
Determining VAT registration obligations around the EU.
Correct application of the zero rate for intra-Community supplies, and collecting documentation as well as retention policies.
Setting up a compliant invoicing and reporting process for the various domestic and
cross-border supplies in which the company engaged.
The Process
Supply Chain Analysis & Registration Check – Transaction mapping: Mapping flows of goods and invoices as well as determining in which countries VAT registration is required(e.g., for local acquisitions and subsequent supplies).
Intra-Community Supplies – Advising on the correct application of the zero rate, including supporting documentation.
Invoicing and Reporting – Preparing practical guidelines for invoicing, credit notes, and VAT returns (including EC Sales Listings).
Stakeholder Alignment – Coordinating with logistics partners and IT for correct VAT processing in systems.
Training – Training the internal tax team on VAT obligations and practical points of attention.
Outcome – The company was able to expand successfully and compliantly into various EU countries, with an efficient VAT structure and minimal administrative burden. By correctly applying Dutch and EU VAT rules, the risk of assessments and penalties was minimized.
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