European VAT considerations for North American businesses
VAT is not optional once you sell into the EU or UK — here's what North American businesses tend to overlook first.
Value-added tax (VAT) works differently from the sales tax systems most North American businesses are used to. It generally applies to a much broader range of transactions, at every stage of the supply chain, and registration obligations can arise sooner than businesses expect — sometimes from the first sale into a given country.
One frequent point of confusion is treating the European Union as a single VAT jurisdiction. It isn't. The EU sets common VAT rules, but registration, rates and specific compliance requirements are administered at the member-state level, and the United Kingdom operates its own separate VAT system entirely outside the EU framework.
Supply-chain structure also matters. Where goods are stored, where they are shipped from, and who is considered the seller of record for VAT purposes can all change which registrations are required and where VAT needs to be charged and remitted. This is worth reviewing before finalizing a fulfilment or distribution model, not after.
Cross-border invoicing requirements — including what information must appear on an invoice and how VAT should be displayed — also differ from North American norms and are worth getting right from the first invoice.
This article outlines general considerations only and does not constitute tax advice for a specific situation. For selected VAT and indirect tax matters, EXCOFIM works in coordination with ASD, an international compliance partner supporting businesses across multiple jurisdictions.