Page 11 - Horizon Han22

potential liability/exposure than the correct application of the Customs valuation methods.
Direct registration in an EU member state
Direct registration provides an EU mechanism to reclaim or account for import VAT, the ability to account for local VAT within the EU and the ability to provide an EU VAT registration number when needed for intra-community supplies of goods.
Where businesses are not looking for a full 3PL solution, direct registration in your ‘point of entry’ member state (to the EU) makes the most sense.
If you cannot achieve a single ‘point of entry’, I would encourage you to try and limit the number of member states where you import goods on a ‘Delivered Duty Paid’ (DDP) basis. Perhaps you adopt a cluster approach and use two or three EU hubs to fulfil customer orders around the rest of Europe. This approach could help manage the logistics challenge and keep the EU VAT compliance position as ‘light’ as possible.
Where you are only trying to facilitate EU to EU supply chains, it is important to decide which member state makes the most sense.
In very simple terms, it is likely you would register for VAT in the member state where your key EU supplier is based or, failing that, where your key EU customer is based.
The EU triangulation provisions could help you to facilitate any other EU supply chains.
Depending on the member state, direct registration may require fiscal and potentially customs representation. In most cases, appointing a VAT agent may suffice. You could also explore whether an overseas VAT compliance technology offering could provide the right service. My advice would just be clear in terms of what level of service you can expect. VAT agency tends to be more responsive and are able to manage the relationship with the local tax authority more
relationship with the local tax authority more effectively. A technology solution can be more cost effective when the wheels are on and you provided the right information in the right format. On the flip side, the issue resolution and communication side of things can leave a lot to be desired.
Final Thoughts
There is so much to consider above.
From a financial planning perspective, logistics should always drive the conversation but it is important for the VAT position to be managed effectively to reduce cost and ensure compliance.
Getting it wrong can result in significant delays and additional costs.
It is not a one size fits all scenario and if you take the time to map and understand your supply chains, making sure you have the right ‘building blocks’ in the right places, you can go a long way to create as smooth a process as possible with minimal or no surprises.
If you have any questions around the topics discussed above, or need support with your supply chains, we would be happy to help.
Please feel free to get in touch: aneedham@hwca.com.
11. Haines Watts
Horizon issue 2.indd 11 14/12/2022 14:48:59