A value-added tax (also known as VAT) is levied in some countries from selling/purchasing certain goods and services. Generally, it can be defined as a consumption tax estimated and charged based on the value being added. Usually, VAT is considered destination-based, as application of VAT depends on the jurisdiction of the seller and purchaser. It must be noted that VAT provides almost 20% of total tax amount charged worldwide.

Whenever you choose to do business in the EU, you are surely to face the question of VAT number registration. VAT questions are complex. Nevertheless, all EU Member States follow EU VAT Directive, thus each EU country worked out its own legislation towards VAT requirements and reports.

As soon as the company is registered for VAT number, it must regularly file its VAT report, which will contain information about the incoming and outgoing invoices, whether those were issued / received by other EU counterparties or non-EU partners or not. Most importantly, all deals must be declared in the VAT report, including invoices where 0% VAT was applied.

VAT returns
A VAT return – is a balance document, which indicates the amount of VAT due on sales (also known as the output VAT) and the amount of VAT that can be returned on purchases (also known as the input VAT), hence providing detailed information about how much VAT is paid and how much can be reclaimed from the local tax administration.

Periods of VAT returns
The periods of VAT report mostly depend on the turnover of the company, number of deals within the EU and on the legislation of the specific EU Member State. Most common periods for VAT returns are:

On monthly basis: 1) for EU companies with large turnover and large amount of transactions; or 2) typical for such EU States as Bulgaria, Poland, Czech Republic;
On quarterly basis: typical for such countries as Cyprus, Austria, the Netherlands;
On semi-annual basis: this period term is used rarely for companies with limited activity or 2) companies which are newly registered for VAT (for example, Cyprus);
On annual basis: 1) in some EU States Annual VAT Return is used as additional report uniting all monthly or quarterly VAT declarations submitted throughout the year (for example, in Italy); or 2) this period can be used for non-active companies, which have VAT numbers.
We must note that more and more EU Member States move to monthly VAT returns, due to the toughened compliance and increased amount of intra-community deals, and especially, increased amount of fraud deals with 0% VAT rate application.

Information indicated in the VAT return
Each Member State draws its own rules for VAT returns, but there are some common guidelines for all VAT declarations:

Totals of all incoming and outgoing invoices (dis-regardless, made with EU or non-EU companies);
Totals of VAT for all incoming and outgoing invoices (including all types of VAT rates: standard VAT rate and reduced VAT rate);
VAT amount due (total of VAT payable to the government);
Total of intra-trading supplies with 0% VAT rate (including names of countries, where the goods come from and where they are delivered to).
Besides periodic VAT declaration VAT scope of work includes:

EC Sales Lists (ECSL) and Intrastat forms;
VAT Refunds;
EORI number requirements.
Professional support is crucial when dealing with VAT matters, especially when it comes to VAT refunds and VAT returns. Do not hesitate and consult with Confidus Solutions regarding correct use of 0% VAT rate for intra-trading and triangulation schemes.