Why Should My Business Have a VAT Compliance Partner?

Why Should My Business Have a VAT Compliance Partner?

Managing VAT compliance across multiple jurisdictions can be a daunting task, but partnering with a VAT compliance expert can significantly lighten the load. Whether you're a small business or a large multinational corporation, having a VAT compliance partner can save time, reduce risk, and improve efficiency. In this article, Mariana Príncipe, Ryan’s Senior Director/Head of Compliance, VAT Compliance, Consulting and Recovery, explains the benefits of partnering with a VAT compliance specialist.

To understand why it’s essential for companies to have a VAT compliance partner, it's important first to grasp what it means to be VAT compliant.

  • To be VAT compliant means that a company that has transactions in another country is complying with all the VAT obligations/requirements in that specific country.
  • VAT compliance typically refers to a company's ability to accurately charge the correct amount of VAT to its customers and to subsequently report and remit that VAT in accordance with the local regulations of the country where the transactions are taking place.
  • VAT compliance also refers to obtaining a VAT registration in each country, having a fiscal representative when required, and reporting the transactions in accordance with the country’s format/requirements.
  • VAT compliance is a mandatory part of operating a business and is imposed by laws and regulations. Not meeting the VAT compliance obligations could result in penalties, fines, late interest imposed by tax authorities, and in some cases, business closure or detention for directors and senior business leaders.

What Are the Challenges in VAT Compliance?

Increased global trade, rapid globalisation, and expanded distribution and production channels create significant international growth challenges for multinational corporations, including significantly increased VAT administrative responsibilities. As a consequence, companies may be required to VAT register in countries outside their own and, consequently, comply with the VAT compliance obligations.

Companies face numerous challenges when trying to maintain compliance in all the countries where they do business. And when we say "countries," we're not just referring to European member states, but to a global scope.

Some of these challenges include:

  • Additional administrative workload
  • Ever-changing and complex tax environment
  • Identifying the different obligations in each country
  • VAT rules differing in each country
  • VAT reporting requirements differing in each country (different data format, different detail of the data to be reported, etc.)
  • Risk of penalties, fines, and interests if non-compliant
  • 24 official languages in the European Union (EU) alone
  • Different VAT service providers per country

How Can a VAT Compliance Partner Help?

A VAT compliance partner can provide valuable guidance and support to companies facing these challenges. Additionally, there are numerous benefits that an external VAT compliance partner can bring to the equation. Let’s explore the top seven advantages they offer.

  1. Expertise in different and complex country regulations: VAT laws and regulations are notoriously complex and can vary greatly from one country to another. Partnering with a VAT compliance expert provides your business with specialised knowledge and experience, ensuring full compliance with the latest legal requirements and minimising the risk of costly mistakes.
  2. Up-to-date knowledge: For businesses operating across multiple countries, keeping track of the various VAT regulations can be incredibly challenging. A VAT compliance partner with international expertise can efficiently manage these cross-border complexities, ensuring the business remains fully compliant in every relevant jurisdiction.
  3. Overcome language barriers: VAT reporting and communication with tax authorities must be conducted in various languages, not just within EU member states, but on a global scale. Many companies lack the necessary linguistic and regulatory resources to manage this complexity effectively. A VAT compliance partner can bridge this gap, facilitating seamless communication with tax authorities worldwide and ensuring accurate and timely compliance.
  4. Focus on business: Managing VAT compliance internally is often time-consuming and diverts valuable resources from the core business activities. By partnering with a VAT compliance expert as a single point of contact for global indirect tax management, companies can focus on growth and operational priorities while the complexities of VAT compliance are expertly handled.
  5. Risk mitigation: Non-compliance with VAT regulations can result in substantial penalties, interest charges, and legal repercussions. A VAT compliance partner helps mitigate these risks by ensuring accurate and timely filing of VAT returns while also maintaining thorough and compliant documentation.
  6. Cost savings: A VAT compliance partner can help businesses save money in the long run by minimising the risk of errors and penalties. Additionally, their expertise can uncover potential VAT refunds or optimisation opportunities that might otherwise go unnoticed, further strengthening the financial position.
  7. Building relationships with tax authorities: Building a strong relationship with tax authorities is crucial for running a successful business. Partnering with experienced VAT compliance specialists who have the expertise and deep understanding of tax legislation is an effective strategy to achieve this.

At Ryan, your company can find a trusted VAT compliance partner who not only helps overcome the complexities of VAT regulations but also leverages the deep expertise and knowledge of their wider team to provide added value.

To explore how a Ryan VAT compliance specialist can support your business, simply fill in the form below.