Do I need to charge VAT?


If you sell to other businesses that are located in VATVAT
A type of transaction tax levied on goods and services in more than 170 countries. Like sales tax in the US, VAT is expected to be paid by the consumer making the purchase.
countries, you should collect a VAT IDVAT ID
Also known as a VAT registration number (VRN), this is the unique number that identifies a taxable business that is registered for VAT.CleanShot 2023-08-17 at 11.41.50@2x.pngMost businesses (and other persons carrying out an economic activity) are required to have a VAT number.
from those customers and validate the number provided. See Send VAT IDs to Anrok for validation.

In many countries, if you've collected and validated your customer's VAT ID, VAT is not charged on B2B sales. Instead, B2B transactions are subject to a “reverse charge,” which transfers the responsibility of accounting for VAT from the seller to the buyer. In most cases, if the buyer provides appropriate documentation, VAT is not applied to these transactions.

Importantly, the reverse charge mechanism keeps B2B sellers from having to register and file if the right process is followed. B2C sales, on the other hand, are subject to VAT and can require remote sellers to register and file in the country of sale. Without proper documentation, B2B sales can also be treated in the same manner and lead to VAT exposure. See Next steps after VAT exposure.

How can I determine whether I'm obligated to register and charge VAT?

The flow chart below may help you determine whether you are obligated to charge VAT on your sales:

What is the registration threshold for VAT countries?

A VAT registration threshold indicates the amount of taxable sales made (or in some cases expect to make) at which a VAT registration is required. Your sales are tracked against the relevant country registration thresholds in Anrok. You will be alerted when a registration threshold is crossed and progress can be viewed in the Jurisdiction page.

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