VAT compliance

Since its first introduction in Europe in 1970, the VAT system has become ever-more intricate, ever-more convoluted, and year-after-year has develop into something of a bureaucratic burden for businesses across the continent. As many observers have pointed out, the European VAT system has to be constantly modified: new members join the Union, markets alter their essential characteristics, and an increasing number EU-based companies are now playing on a global business stage. However, for all its adaptability, the VAT system has not yet found a way to accommodate the multiple impacts of the Internet—and its e-commerce developments—to say nothing of the far-reaching implications of the privatisation wave that is engulfing the Union. On the other hand, direct taxes, such as corporate income tax, have not been harmonised in the EU in the same way as VAT (which of course places a tax obligation on the consumption of all goods and services throughout the EU). However, none of this makes VAT compliance any easier—or comprehensible. Some advice then: in all things VAT, call for outside help and counsel.

If this is your situation

  • You know that while you can normally declare any VAT you have charged on sales—then offset taxes charged against taxes paid to arrive at a net VAT-due figure—you also suspect that VAT is having more than a cash flow impact on your business and you are not adequately managing those VAT liabilities.
  • You are a retail business and most of your supplies are VAT-taxable (thus recoverable), but the authorities tell you this is not always the case. You need outside help to decide which supplies are truly non-taxable.
  • You operate across a large portion of the EU and you need to understand what the so-called “blocking orders” of each EU member means for your company.
  • Your company has a significant overseas marketing spend and you need to make sure that your VAT accounting treatments are not having you claim VAT credits to which you are not entitled.
  • You would like to find a way to delay the declaration of VAT due on sales—while simultaneously advancing the recovery of VAT reclaimable on purchases—and hence release your working capital.
  • You are party to ERP systems such as Oracle or SAP, but the VAT rules in the various countries which you operate are significantly different, so you need help setting up, and populating, the various condition tables.

How PwC can help you

At PwC we can help you manage—and mitigate—the impact of virtually every aspect of VAT. In fact, we can provide a range of innovative VAT-related solutions that are tailored to the unique concerns and demands of your business. Our highly-trained specialists can help you reduce your VAT liabilities, and show you how to assimilate the entire compliance process into your company’s operational structures. At PwC, our VAT teams will work with you to minimise your exposure to tax penalties and interest, and we will help you find ways to decrease the risk of tax audits—which costly, time-consuming, and disruptive. In fact, we can assist you in handle all your customs and VAT issues so that you can your company’s increase margins and greatly improve cash-flow. If your organisation is burdened with high levels of VAT we will make certain you don't overpay—now and in the future. Plus, if you have concerns about EU and must find more efficient ways of being in compliance with EU directives, we can assist. With PwC as your VAT planning partner you can also get the most out of your commercial marketing opportunities, increase shareholder value, and maintain tight management control over your entire VAT spend. Let us show you how.