Avalara Enhances VAT Solutions to Enable Global Businesses to Manage VAT Registrations, Calculations, and Reporting
Avalara, Inc. (NYSE: AVLR), a leading provider of cloud-based tax compliance automation for businesses of all sizes, today announced updated products to help businesses comply with new value-added tax (VAT) rules for ecommerce in the EU that went into effect July 1, 2021 — Avalara VAT Registration, Avalara AvaTax for VAT, and Avalara VAT Reporting. Over the past several years, an onslaught of significant VAT legislative changes has further burdened businesses selling into and throughout Europe. Businesses navigating the compliance complexities of global trade are seeking integrated solutions to keep pace with changing rules.
“The new EU ecommerce reforms have far-reaching impacts on international and domestic sellers doing business in Europe,” said Kevin Permenter, research manager, IDC. “B2B and B2C ecommerce businesses and marketplaces alike can benefit from automated solutions to simplify the entire VAT compliance life cycle from registrations to calculations to reporting.”
EU VAT reforms heap complexity onto businesses
On July 1, 2021, member states of the European Union (EU) rolled out significant changes to VAT obligations for B2C ecommerce, including the EU One-Stop Shop, the Import One-Stop Shop, and marketplace deemed supplier obligations. These reforms come as part of an effort to tackle the €137 billion ecommerce VAT fraud gap. Each reform brings changes and associated complexity for domestic and international sellers in the EU, including:
- One-Stop Shop (OSS) allows intra-EU sellers to report all their pan-EU distance sales on a single VAT return in their home country instead of having multiple VAT registrations across the EU. The aim is to boost cross-border online trade and promote trade across the EU’s digital single market by reducing compliance obligations.
- Import One-Stop Shop (IOSS) gives non-EU sellers the option to register for IOSS in just one EU state to declare the VAT on B2C sales and imports of consignments below €150. However, non-EU sellers may require an intermediary to register for IOSS. There are instances where a facilitating marketplace (see marketplace deemed supplier rules) or delivery service may step in to report and pay the VAT. If any seller chooses not to use the IOSS, the customer may have to pay the delivery or customs agent to access their goods.
- Marketplace deemed supplier requires online marketplaces to collect VAT in place of sellers as the deemed supplier. Due to the rapid increase on digital commerce, deemed supplier laws aim to ensure VAT is collected on all online sales, including those completed through marketplaces.
“These changes, which have been part of the EU road map, herald a massive opportunity for business growth. Businesses of all sizes and stripes, including ecommerce and marketplaces, can now start to unlock access to the world’s largest trading bloc,” said Salim Ali, senior vice president of International at Avalara.
Automate VAT compliance with Avalara
Avalara’s enhanced VAT compliance solutions provide global businesses with features that help navigate the new OSS, IOSS, and marketplace deemed supplier laws across the EU, as well as optimize overall VAT compliance through automation.
VAT registration management. Streamline the process of researching and obtaining VAT registrations for multiple countries:
- Avalara VAT Registration enables businesses to simplify the burdensome process of registering to collect VAT across 74 countries. This enables global retailers and marketplaces to:
- Streamline VAT registrations. Reduce time and money spent registering in every country by automating the process once in a single language and remove the manual back-and-forth process between businesses and tax authorities to receive approved registrations more quickly.
- Address fiscal representation requirements. Avoid delays and noncompliance with comprehensive fiscal representation. A fiscal representative is a local entity that represents a nonresident company and assumes joint liability for value-added tax (VAT) compliance. To date, 19 countries across the EU require foreign businesses to register a fiscal representative to manage queries and VAT return filing obligations with local tax authorities.
“Managing the process of VAT registrations on our own was time-consuming and complex, especially when it came to managing our marketplace transactions,” said Abi Lucas Maia, CEO at Yum Biltong LDA, a provider of high-quality biltong products. “Avalara VAT Registration saves time and frustration by making the process as simple as scanning the documents into the system and being able to walk away.”
VAT calculation management. Comply with new legislation and improve the accuracy of VAT calculations on domestic and cross-border transactions:
- Avalara AvaTax for VAT helps businesses calculate VAT with a greater degree of accuracy to comply with new compliance rules and regulations across the EU. This enables global retailers to:
- Increase VAT compliance. Reduce audit risk by applying up-to-date tax information across transactions when invoicing and charging customers.
- Improve operational efficiency. Free up resources dedicated to VAT calculations by automating the time-consuming process of aggregating and maintaining complex tax rates and rules across multiple systems. AvaTax for VAT automates updates with integrations into business systems like enterprise resource planning (ERP), point of sale (POS), ecommerce, and other customer applications.
- Enhance customer experience. Reduce surprise costs at delivery for international customers by taxing delivery duty paid (DPP) — where the seller takes responsibility for duties, taxes, and other fees — at checkout.
VAT reporting management. Streamline the VAT reporting process through automation with more accuracy and control. Avalara offers three tiers of VAT reporting platforms designed to fit reporting needs for businesses of all sizes:
- Avalara VAT Reporting for Small Business provides small businesses with an online self-service portal to simplify the management of international VAT returns. This enables small businesses to:
- Grow the business internationally. Reduce the complexity of VAT compliance as the small business grows into new international jurisdictions by using an up-to-date tax filing calendar and easy-to-use tools to format local VAT returns correctly.
- Increase business efficiency and data visibility. Save time, reduce the total cost of preparation and filing, and increase visibility into the entire filing process by using an online self-service portal.
- Avalara Managed VAT Reporting provides small to medium-sized businesses with an automated international VAT tax filing and returns solution to manage the entire VAT preparation and filing process across jurisdictions. In addition to the benefits of VAT Reporting for Small Business, this enables businesses to:
- Automate VAT reporting for multiple countries. Use intelligent automated preparation and filing technology to simplify the entire reporting process regardless of the number of channels used or countries sold to.
- Avalara Managed VAT Reporting Premium provides medium to large businesses with an outsourced solution for custom handling of VAT returns filing. In addition to the benefits of Managed VAT Reporting, this enables enterprises to:
- Reduce business disruption. Have a dedicated preparer to help ensure local VAT returns are filed correctly and on time, while reducing the need to train personnel and disrupt ongoing business processes.
“Europe is critical to the continued growth of sellers, retailers, and marketplaces," said Sanjay Parthasarathy, chief product officer at Avalara. "New compliance reforms and rules across the EU have created new complexities for international businesses and our enhanced VAT solutions provide them with the technology needed to simplify, streamline, and manage the entire VAT compliance life cycle.”
For additional information on Avalara’s VAT solutions, please click here.
Avalara helps businesses of all sizes get tax compliance right. In partnership with leading ERP, accounting, ecommerce, and other financial management system providers, Avalara delivers cloud-based compliance solutions for various transaction taxes, including sales and use, VAT, GST, excise, communications, lodging, and other indirect tax types. Headquartered in Seattle, Avalara has offices across the U.S. and around the world in Brazil, Europe, and India. More information at avalara.com.
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