Cross-border businesses face VAT threat
Businesses that sell their goods and services across the EU could be hit by new VAT obligations depending on how they structure their operations.
This is because the European Union is currently trying to harmonise the definition of a ‘fixed establishment’.
Under the impending changes the way a business is structured, its arrangements for selling its products and methods of servicing its customers could mean that it falls within new definitions, and thus face VAT bills in the UK or elsewhere in the EU.
According to Hacker Young VAT expert Paul de Beresford, its is vital that a business positions itself in such a way to take advantage of the changes.
‘Having, or not having a “fixed establishment” when the changes come into effect could have significant financial consequences,’ de Beresford said.
As a result, the firm is advising companies that sell across borders to seek professional advice on their international structures.