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VAT Registration

Trading structures operating within the European Union require VAT registration in order to account for their purchases and sales and to avoid having to pay VAT that they cannot then recover. UJ can arrange VAT registration that will enable clients to operate in a fully compliant manner throughout the EU.

Since 1 January 1993, goods and services can no longer be sold between EU Member States without liability to account for or collect VAT. Offshore companies have long been used to minimise tax on international transactions but, from this date, offshore companies trading within the EU had to register for VAT if transactions between Member States were to be zero-rated for VAT.

Where to register for VAT is a key decision. An offshore company can be registered for VAT anywhere within the EU, irrespective of where the actual trading takes place, but it is important that the tax benefits of the offshore company are maintained. VAT registration in certain Member States could imply residence and create a future tax liability there.

UJ advises that offshore companies register in the EU by setting up a UK limited company to act as their agent for VAT purposes. The UK limited company could either be a subsidiary of the overseas company or a company with common ownership. UJ recommends that the UK company is structured with third party non-resident directors and that UJ provides corporate nominee shareholders.

It is important that the offshore company does not trade in the UK in order to protect its position as not being liable to UK corporation tax and, ideally, the UK company should not provide any services other than a VAT service.

The UK company must register the offshore company for VAT in the UK and a VAT number is usually issued two weeks after submission of an application form and supporting documents.

We can recommend UK-based accountants who are VAT experts to handle the registration and to provide the principal place of business in the UK. They would also attend to the filing of the quarterly returns and preparation of EU Sales Lists to the UK VAT authorities.

In addition to the one-off VAT registration fee of £300, there will be an annual charge for the provision of quarterly returns and preparation and audit of accounts by the UK accountants who handle the registration. There will also be fees for the incorporation and annual service costs for the UK company.

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