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Why is VAT Registration Necessary in Europe?

 

WHAT IS VAT REGISTRATION?

Value Added Tax is the abbreviation of the word VAT, which is frequently heard by people and institutions that are actively in business life. In Turkey, it means KDV, that is, value added tax. The state earns itself in every purchase and sale made with watts. In other words, tax is applied to every product you buy. All companies doing business in countries that are members of the European Union must have a VAT number. In addition, countries such as Turkey, which are not in the European Union but have signed trade agreements, have VAT numbers.

IS VAT REGISTRATION MANDATORY?

It is obligatory to obtain a VAT number in order to trade in European countries. If you do not receive this number, your sales will not be considered legal. If you try to sell tax-free, your brand will lose its chance in the European market indefinitely. Strict sanctions are applied to businesses that do not make their tax payments in Europe.

PERSONS/ COMPANIES THAT HAVE TO REGISTER VAT

  • Companies and individuals that sell goods or services taxed with VAT.
  • Firms and individuals that purchase goods or services in the European Union
  • Firms and individuals providing services or products for which the customer is liable to pay VAT.

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COMPANY

Establishing a company in Europe should be one of your primary steps in order to carry your brand abroad and to sell your products in global markets.

There are many developed countries. These are Countries that have opportunities to trade. Such as Germany, Austria, Bulgaria, Ireland, Spain, England, Italy, Latvia, Czech Republic, Belgium, Poland, Denmark, Finland, Estonia, France, Netherlands, Croatia, Sweden, Lithuania, Malta, Hungary, Portugal, Slovenia, Slovakia, Romania.

Advantages of Establishing a Company in Europe:

  1. You can globalize your brand and reach a much wider audience of potential buyers.
  2. Since the country where you established your company is in Europe, you can deliver your products to many European countries with more advantageous and lower costs.
  3. Since the income you will earn from your company will be in foreign currency, you can meet your production and raw material costs more easily, and you can multiply your earnings with the exchange rate difference.
  4. Since you operate abroad, you will be exempt from some of the taxes you pay, and you can benefit from government incentives.
  5. Thus, you meet the cash flow necessary to grow your business.
  6. Since you have a company in Europe, you can request a long-term residence permit in European countries and get a visa easily.
  7. You can meet intermediate warehouse, fast logistics, alternative advertising activities, which are essential in trade, at affordable prices.

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For company establishment in European Countries some countries such as Germany require you to be physically present in the Country where the company will be established. In some countries, installation processes can be carried out online. The country where you can establish a company in the easiest and shortest way in Europe is Estonia. Estonia does not require you to be physically present in the Country for company formation. When you establish a company in Estonia, you can benefit from tax exemptions up to 2201 Euros per month.

What Are The Costs When Establishing a Company in Estonia?

190 € Company establishment fee paid to Estonia. Apart from this, a second cost arises depending on the company establishment method you prefer. There are two ways to establish a company in Estonia:

Establishing a Company with e-Residency: You can establish a company online. If you already have an e-Citizenship card (it is a digital facilitator application specific to Estonia. You can apply on the website of the Estonian consulate.), you can establish your company with e-Residency. The fee to be paid to the state is 120 €.

Establishing a Company with Notary Public Service (without e-Residency): To establish a company with a Power of Attorney. You must apply to the notary in your place of residence with your declaration, power of attorney, ID or passport. The fee for this service is 750 €.

The minimum capital for a private limited company is €2,500. For a public limited company, the minimum capital is 25,000 €. You can pay this capital immediately or defer it for up to 10 years.

Vezuve, together with its valuable partners, helps you manage your VAT registration process.

For detailed information and pricing about VAT registration and company establishment procedures, you can visit mukellef.co

Seyda Nur Erdoğan
E-Commerce Specialist
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