Hello and welcome everyone to Managing VAT for Global Expansions. My name is Regina and I'll be your host for today's webinar. Today we'll be covering:

Understanding VAT registration and compliance frameworksImplementing digital tools like OSS, IOSS and e-invoicing to streamline operationsAddressing regional VAT challenges including new platform economy regulationsDeveloping strategies to manage evolving VAT requirements and business growthPreparing for the phased implementation of EU VAT reforms starting in 2025Before we dive in, just a couple of housekeeping items. A friendly reminder that Avalara cannot provide legal tax advice, but we will answer as best we can. On your screen is our Safe Harbor policy — please take a moment to review while I continue with some additional housekeeping.

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We are offering one CPE credit for today's presentation. For those looking to receive CPE credit, please note that we will ask you to respond to three of our four poll questions. The poll question will pop up on your screen for a limited amount of time, so please be sure you're ready to answer when the question appears. Please do not split or tile screens on your computer as this can affect the placement of the poll question. The webinar platform may not render correctly on mobile, so please try to get to a desktop. You must also attend the full 50-minute duration. Once you have met the CPE requirements, your certificate will be available to download in the Earn Certification box on your screen.

Now, let's meet our presenters. We have two presenters from Avalara — Henry Dearlov and Will Cobburn.

Henry, can you tell us a little bit about yourself? Yeah, hi everyone and thanks for joining. I'm Henry. I work in the solutions consulting team at Avalara based in the UK. My role is to help customers and future customers understand how to get the most out of Avalara's products and ensure that they're compliant in the areas that matter most to them in their business. I've been working in indirect tax and finance for about 10 years. Before this I was working at a professional services firm implementing various tax technology products and doing general indirect tax consulting, mainly in the financial services sector. Happy to be here today to highlight some of the trends and issues we've identified and talk about managing VAT for global expansion.

And Will, can you tell us a little bit about yourself? Yeah, thanks. Hi everyone. My name is Will Cobborne and I'm a Senior Product Manager here at Avalara. I've been at Avalara for 5 years now, focusing mainly on the VAT returns space. However, as we're going to be covering today in the webinar, we're going to be looking at how we can create that platform and compliance across all of the different stages of the compliance journey. I work at Avalara between the engineering teams to ensure that we have our roadmap aligned, working with customers to ensure that we can deliver the value, keep our customers compliant, and bring all of our products together to create a connected product suite.

Thank you both for being here today. I'm going to pass it over to Henry to get us started.

Understanding VAT — Henry Dearlov

Thank you, Regina. Today we've got quite a jam-packed agenda. We're going to talk about VAT — value added tax — on a global scale, and then we're going to move into Will who will talk about the technology side of things.

First of all, VAT is a complex tax. It goes far beyond simply charging it and paying it to tax authorities. There are multiple layers of compliance and a range of different frameworks that businesses need to navigate when thinking about VAT. In this session I'm going to look at what it really means to be VAT registered, what questions businesses need to ask themselves before registering, and then once they are registered, what they need to be doing to stay compliant. I'll also highlight some of the key changes shaping the VAT landscape — particularly within Europe and VAD, which is VAT in the Digital Age — and the key topic of electronic invoicing, or e-invoicing.

After that, Will is going to talk through how the right technology partner with a strong suite of solutions can support businesses in managing VAT as they expand internationally. Whether you're a tax professional, business leader, or someone who works across tax and finance operations, I'm hoping this webinar gives you insight into the key areas of managing VAT for global expansion.

Understanding VAT Registration

Let's start with the core concept of the VAT system — registration. If you're familiar with US sales tax, just think about VAT as the equivalent of needing to register for a sales tax permit when your business has nexus in a particular state. But when it comes to VAT, there is no single global standard similar to what we see in the US in terms of state registrations — rules vary from country to country, and the thresholds, requirements, and processes can differ significantly.

When thinking about VAT registration, there are key questions you should be asking yourself as a business:

1. What are you selling? Is it products or services? Similar to US sourcing rules, VAT is governed by what we call place of supply rules, and different rules exist depending on what you sell. For example, if you sell services there may be simplified registration schemes such as VAT on electronic services schemes available in different countries. However, if your goods are over a certain value — for example, within the EU, if your goods are over €150 — you may need to register directly in that country.

2. Where are your customers located? This is key — knowing where your customers are located tells you where you could have potential liabilities. This is particularly important if your customers are based in the EU, which encompasses 27 countries. You'll need to comply with EU VAT laws and directives, which go over and above the standard VAT laws in each individual country — but you might also be able to take advantage of simplified registration schemes.

3. Are you established in the country where you are selling? Think about this like physical nexus within the US. For example, do you have a fixed place of business like an office or warehouse, or do you hold stock or inventory within that particular country? If you are established and meet those rules — which vary from country to country — the registration rules will be different compared to a distant seller, and there may be different VAT registration options available to you.

4. Who are your customers? Are they B2C — consumers — or B2B — businesses? For example, if you're a distant seller selling into the EU to B2C customers, there's a threshold of €10,000. After that threshold, you must charge VAT in that customer's country. How you wish to register will then depend on what is right for your business. Additionally, if you're selling mainly to VAT-registered businesses (B2B) in the EU, you may not need to register locally in each country because in many cases there's something called the reverse charge — where the burden of charging VAT is passed onto your customer. This is what we call Article 194 of the EU VAT directive.

5. What sales channels are you currently using? If you sell on marketplaces like Amazon or eBay, marketplace rules will apply. In some countries, these platforms can be considered deemed suppliers — meaning the marketplace, not your business, becomes responsible for collecting and remitting the VAT above a certain value. For example, in the UK, anything over £250 means the marketplace is responsible for collecting the VAT, not the seller.

I also want to quickly touch on the notion of input VAT. When you're charging your customers VAT, you're collecting output VAT — but when you incur costs, you're paying input VAT which you can reclaim. Within the US you have exemption certificates used throughout the supply chain to zero-rate transactions, whereas VAT is collected and reclaimed at each stage of the supply chain. This brings up another question: do you incur costs in a specific country where you're making your goods and provisioning your services? If you want to reclaim VAT on the costs you incur, you must register for VAT in that country. There are also specific EU VAT laws around reclaiming VAT if you're non-resident — if you're a US business, you can reclaim input VAT through what's called the 13th directive.

As you can tell, understanding your exposure and VAT registration requirements is not simple. It does require real understanding of your business's supply chain, customers, and processes.

Local VAT Registration and Compliance Frameworks

To understand what is best for your business, it is vital to understand the different VAT registration options available.

Local VAT Registration is the process by which a business registers with the tax authority in a country to collect and remit VAT on taxable sales, and in turn have the ability to reclaim VAT paid on business-related purchases. This can apply to both locally established and non-established foreign businesses, depending on the nature of their operations and local VAT rules.

For example, in Germany there is no threshold for non-established businesses — if you're a distant seller selling into Germany, VAT registration is required from the first taxable sale. In Australia, if you're a distance seller, your taxable turnover needs to exceed 75,000 Australian dollars before you have to register for their equivalent of VAT. And if you're a domestic business registered in Germany with a warehouse or staff there, the threshold is €22,000, while in the UK it's £90,000.

Once you're registered, you must follow all the local tax requirements and compliance frameworks in that country. The main ones include:
Periodic VAT returns — monthly, quarterly, or annually depending on local rulesSupplementary listings — particularly prevalent within the EU, requiring businesses to submit additional returns around cross-border transactionsAudit files — Standard Audit Files for Tax (SAFs) are becoming more common, requiring businesses to submit large volumes of accounting and tax data to authorities either annually or on demandLive reporting — for example, in Spain you must submit invoice data to tax authorities within just four days of issuing an invoice, and these must reconcile with your VAT returnsCompliant software — using software that is aligned with and accredited by various tax authoritiesE-invoicing — moving beyond traditional PDF invoices to true machine-readable formats submitted and received electronically in real timeIf you choose to register within an EU member state, your business must not only comply with that country's local VAT rules but also with EU directives and regulations. The main one is Directive 2006/112, which sets out the foundation of how VAT should be handled within the EU. It's not just about following the local country's laws — it's about being aware of the wider EU framework, which impacts how VAT is applied across borders and what information must appear on your invoices.

VAT Registration Options for Distant Sellers

For businesses that don't want to register locally for VAT but still want to sell to customers in other countries and charge them their local VAT rate, there are simplified registration schemes:

One-Stop Shop (OSS) — Created to simplify the VAT burden for e-commerce businesses selling into the EU. It allows you to report and pay VAT for multiple EU countries through a single registration. For example, you can register in just one country — say France — and sell across all 27 EU countries without needing to register in each separate state.

Non-Union One-Stop Shop — Specifically for businesses outside the EU — such as US-based or UK-based businesses — who sell digital services into the EU (e-books, software, etc.). This allows non-EU businesses to register for VAT in just one EU country and use a single monthly return to pay VAT on all EU digital sales, instead of filing 27 separate returns.

Import One-Stop Shop (IOSS) — Designed specifically for low-value goods under €150. Similar to the OSS, it allows a business to charge and collect local VAT at the point of supply and pay it through a single return.

These schemes reflect a broader recognition by tax authorities that global trade is central and that the VAT system needs to support it — not stand in its way.

VAT in the Digital Age (ViDA)

ViDA is a key framework driving the digitalization of tax within the European Union. It's a three-pillar roadmap that aims to modernize how VAT is reported and collected across the EU, making the system more efficient, transparent, and better aligned with today's digital economy and cross-border selling. It's important to note that ViDA is not a single reform or deadline — it's a phased plan starting in 2025 and rolling out over the next few years, with full implementation expected around 2030–2031.

Pillar 1 — Platform Economy Rules: This targets short-term accommodation rentals and passenger transport services — primarily Airbnb and Uber. Currently the responsibility for charging and remitting VAT often falls on individual hosts or drivers, many of whom are small providers who fall below national VAT thresholds. ViDA proposes to shift that responsibility to the platforms themselves — meaning Airbnb and Uber will become deemed suppliers and responsible for paying the VAT.

Pillar 2 — OSS and IOSS Extensions: ViDA plans to extend these schemes to allow for a broader range of cross-border transactions, not just limited to B2C sales, making it easier for distance sellers selling into the EU.

Pillar 3 — Digital Reporting Requirements and E-Invoicing: E-invoicing is massive and is a key part of the VAT landscape at the moment. As businesses expand globally, adapting to different e-invoicing requirements is one of the biggest challenges. Traditionally we used PDF invoices sent by email, but now there's a move to having systems that can accept structured real-time e-invoicing — often submitted to the tax authority before or at the same time the customer receives it.

E-invoicing is being rolled out across the globe — not just in the EU but also in countries like Saudi Arabia and many others. Businesses need to be aware of the different formats, systems, and timelines they need to comply with.

Within the EU specifically, even though the ViDA-wide mandatory e-invoicing deadline is 2028, many countries are pushing ahead earlier. Germany, for example, from January 2025 entered the first phase of mandatory e-invoicing — and German businesses must now have systems in place to accept e-invoices. Belgium is also planning ahead for next year. Early preparation really needs to start now.

Who is Affected by E-Invoicing?

The main group impacted are locally VAT-registered companies. Where you have a local registration and e-invoicing is being introduced, you'll likely be subject to the new requirements. But if you're not registered in a country — say you're a US business without a German registration but you're shipping across borders — you're not generally required to issue German e-invoices, as it's tied to local VAT registrations.

Key strategies for e-invoicing readiness:

Develop a unified strategy — e-invoicing is rarely a one-and-done project. As you venture into new markets, you want a joined-up strategy that looks at things universallyInvest in robust technology — you want something that can integrate with your existing systems, automate where possible, and scale as you enter new marketsStart now — the quicker you implement the right system, the quicker you'll be compliant when mandates come in and the quicker you'll be able to get paid by customersUnderstand country-specific requirements — for example, Poland may require 240 different fields for e-invoicing, which differs greatly from other countriesWhen e-invoicing is done right, it doesn't just keep you compliant — it helps streamline operations. No more PDFs and formatting issues; it's structured, sent to your customers, and submitted to authorities automatically.

How Avalara Helps — Will Cobborne

Thanks Henry. I'm now going to touch on how Avalara can help you navigate through the VAT landscape.

At a high level, the compliance journey starts with identifying your tax footprint. Once that's been identified, the next step is registration — understanding what type of registration you need and where. We have products to help guide you through that journey.

Once registration is set up, you're then able to start selling to your customers. We have classification tools to ensure invoices are classified correctly, and tax determination capabilities to account for different rates and rules as you expand globally. Then comes e-invoicing — as more mandates are brought in, having a scalable solution that meets those mandates as they come through is critical. And finally, there's returns and reporting — getting that summary return available to tax authorities once all transactions are complete.

Avalara's Core Compliance Products:

AvaTax — automates VAT calculations globally, ensuring real-time accuracy and compliance while reducing administrative effort. Over 48 billion AvaTax API calls were made by customers in 2023, and that's growing year on year. Coverage spans not only the US but also VAT and GST rules globally.
Exemption Certificate Management — for B2B transactions, companies collect and validate exemption certificates on the US side of the equation
Avalara E-Invoicing and Live Reporting — as mandates roll out, we're expanding coverage ahead of time to ensure all customers remain compliant
VAT Returns and Reporting — we offer two products: a self-managed VAT reporting tool that customers license and manage in-house, and a Managed VAT Returns product for businesses that don't have the in-house expertise to handle the interface with tax offices, portal submissions, and the complexity of different jurisdictions
Avalara Item Classification — supports over 180 countries, ensuring goods are classified correctly before hitting tax determinationFiscal Representation Services — in some EU states, businesses are mandated to have a fiscal representative in place. Avalara provides fiscal representation services to guide customers through the registrations process

Our Vision: A Connected Platform

One of the key things we hear from customers — and what we know tax offices are increasingly demanding — is more granular data throughout the compliance journey. Our vision is to bring this into a single connected platform with end-to-end compliance across the entire journey.

Currently, a customer using tax calculation has one data connection; a customer using e-invoicing has another; and returns require yet another. We're looking to simplify this by working toward a single connection to financial and invoicing systems. We're revisiting our existing integrations and working with partners to look at supplementary data needed by downstream products, reducing the number of times customers need to send us the same data for each solution.

By improving that connectivity, we'll be able to get better synergies between our products, facilitate further checks and balances across all transaction statuses, and allow for better reconciliation across the entire compliance chain.

Aggregated Compliance Data

For businesses selling across multiple jurisdictions — online and offline — consolidating transactional data and preparing accurate, timely tax reports can become overwhelming. Different frequencies, different tax offices, different requirements can add up quickly, especially as you expand into new geographies.

Avalara's aim is to aggregate data across products and regions into a single view. By coming to a single platform, you'll be able to get your compliance needs met and plan for the future. And as legislation changes — which can often happen late in a filing cycle — having a technology partner like Avalara means we've got you covered, with solutions that can grow with your business.

Q&A Highlights

Is the €10,000 EU threshold per country or for all countries combined?The €10,000 distance seller threshold applies to all EU countries combined — not per country. Even if you only sell €10,000 into one country, once you cross that threshold, you're liable to charge local VAT where that customer is located from that transaction onward.

Is VAT registration mandatory once you are established in some EU countries?Yes. In some EU countries — including Germany, Poland, Italy, and France — VAT registration becomes mandatory once you are established, regardless of your turnover. There's no threshold in place in those cases.

What about Avalara's integration with NetSuite?Avalara does support NetSuite — it supports VAT, duty calculation for the UK, EU, and globally including Australia and Japan. It's worth having a conversation with an Avalara specialist to understand more.

When are the ViDA reforms expected to be implemented?ViDA was initially proposed around 2022 and was finally ratified in March of this year after all 27 EU countries agreed to it. The key milestone is 2028, when mandatory e-invoicing and digital reporting requirements will be introduced EU-wide. However, some countries are going earlier — Germany from January 2025, and Belgium is planning ahead for next year. The platform economy and OSS/IOSS extensions are also expected from 2028.

Are triangulation transactions allowed from outside the EU into EU countries?Triangulation is an EU simplification scheme for three-party transactions — where Party A sells to Party B but Party C actually ships the goods. In order to qualify for triangulation, all three parties must be in different EU countries and must have valid VAT registration numbers. Think of VAT registration numbers as similar in legal standing to an exemption certificate — that's what exempts businesses within the EU from having zero-rated tax.

What about voluntary VAT registration in the UK for businesses under the threshold?
In the UK the threshold is £90,000. However, many businesses voluntarily register even below that threshold — particularly new businesses incurring lots of costs who want to reclaim the input VAT on those costs. There are also different VAT schemes within the UK such as cash accounting, where you pay VAT to authorities only when you get paid by your customers or pay your suppliers, which can help with cash flow for smaller businesses.

What about Sage Intacct integration?
Avalara does support Sage Intacct, though the integration is a bit more complex. It's worth having a conversation with an Avalara solution engineer for more detail.

Closing

Thank you so much to our speakers Henry and Will for joining us today. I also want to alert you to some upcoming webinars at avalara.com/webinars. In addition, Avalara's customer conference is going on tour this year — check it out at events.avalara.com for details.

Thank you all for joining us, and that concludes today's webinar.