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What's the problem?
As a multi-stage tax applied to supplies of goods and services, every transaction undertaken by a business has potential VAT implications.
Unlike direct taxes, where the country in which a tax liability arises is normally determined by where a business is established, VAT liability is normally determined by where the transaction is considered to take place, ie the place of supply.
This can be the supplier's country, the customer's country or a third country depending on what is being supplied and the terms of sale
I'm VAT registered in Malta - surely this doesn't affect me?
As the common system of turnover tax implemented throughout the European Union, VAT is an essential part of any planning process when trading with customers in other member states.
Any transactions that are not subject to Maltese VAT will probably be subject to VAT in another member state. You, therefore, need to know who is responsible for collecting and paying this tax - you or your customer.
So what about trade with other countries?
VAT as a form of taxation is becoming increasing popular around the world and is being introduced in more and more countries. Therefore, VAT is something that needs to be considered in all international transactions.
But what about businesses based in countries without a VAT system?
VAT may still be an issue even for deals involving suppliers or customers in countries that do not have a VAT system. The place of supply provisions may mean that you are charged VAT by the supplier or are required to charge VAT on your sales.
So what are the issues?
The main issues that should be considered in detail are:
- the place of supply of goods
- the place of supply of services
- the VAT treatment of exported goods
- the VAT treatment of imported goods
- the VAT treatment of electronic services
- transactions in land and property
- transactions involving overseas branches or subsidiaries
- the reclaiming of foreign VAT
Why should you contact Grant Thornton?
International VAT is a specialist and complicated area and it is important to get things right from the start. Grant Thornton deals with all aspects of international VAT. We can guide you though the maze, provide advice and offer you peace of mind.
Contact us about International Aspects
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