Selling goods into Europe can be a major growth opportunity, but for non-EU businesses, VAT & Duty often becomes the first real barrier to entry. The rules can feel unfamiliar, the responsibilities are not always obvious, and the wrong setup can lead to unexpected VAT registrations, delayed shipments, unrecoverable VAT costs, and compliance risk across multiple countries.
In this first part of our series, we set out the key VAT decisions and structural choices you need to make before you start trading into the EU (or as soon as possible if you already are). We focus on the practical questions leaders need answered: where VAT is due, who is responsible, and what “good” looks like in a compliant operating model.
At HaysMac, we help non-EU businesses build a VAT setup that is robust, scalable and aligned to the commercial vision, from first sale through to business-as-usual compliance across multiple jurisdictions. If you’re planning to enter Europe, or you want reassurance that your existing approach is fit for purpose, speak to our VAT team for a clear route map and a single point of coordination.
Read on…
Why EU VAT feels complicated
For non-EU businesses, EU VAT can feel complex because it sits across your commercial model, supply chain, customer experience and processes, not just tax. Decisions such as whether you sell business-to-business (B2B) or business-to-consumer (B2C), ship direct or via a marketplace, or hold stock in the EU can all change your VAT obligations. The good news is that whichever option suits your business model, with the right structure and clear ownership, EU VAT becomes manageable – and scalable – as your European sales grow.
A five-step route into EU VAT compliance
Step 1: Clarify your goods model and customer type
Even when a business sells only goods, EU VAT outcomes depend heavily on how those goods are sold. Before looking at registrations or reporting, you need clarity on two fundamentals:
a) What type of goods transaction are you making?
For example:
- Standard physical goods
- Distance sales to EU consumers
- Goods imported and sold locally
- Goods held in EU fulfilment centres
Small differences in delivery terms, stock location, or timing of ownership transfer can materially change where VAT is due and who is responsible.
b) Are you selling to consumers (B2C) or businesses (B2B)?
This is a defining decision because it typically drives:
- Where VAT is due
- What invoicing requirements apply
- Whether simplification schemes can be used
- How VAT is charged and displayed at checkout
Getting this clear upfront avoids re-engineering your VAT model later.
Step 2: Map the movement of goods
For most non-EU businesses, EU VAT complexity is triggered by one key factor: where are the goods at the point of sale? It’s a simple question, but it determines VAT outcomes. You’ll want to map:
- Where goods are dispatched from
- Where they are imported into
- Where they are stored (including fulfilment centres)
- Where customers take delivery
This matters because VAT obligations often arise where goods are physically located; not where your company is headquartered.
Step 3: Decide who is the importer of record (and why it matters)
One of the biggest causes of EU VAT problems for non-EU businesses is that the importer of record position is not clearly defined or aligned with the commercial arrangement. In practical terms, you need to confirm:
- Who is responsible for import VAT and customs formalities?
- Who is responsible for charging VAT to the customer?
- What will your customer experience be at delivery (no surprises vs unexpected charges)?
EU VAT and Duty shouldn’t ever be the ‘tail wagging the dog’. We firmly believe that the business should determine whichever option is best for your business that should be your operating model. However, if there is a mis-match between the operational model and the document or reporting process at the point of import, businesses can face:
- Delayed deliveries
- Invoices that don’t reflect the correct VAT liability
- VAT costs that cannot be recovered
- Exposures that appear months later in a review or audit
- Reputational damage due to unfavourable customer experiences
Step 4: Choose your route to market
How you sell into Europe affects how VAT responsibilities are allocated:
a) Direct sales to EU customers
Often gives you greater control over customer experience and pricing but can also mean:
- More responsibility for registration and compliance
- More operational complexity if selling across multiple EU countries
b) Selling through marketplaces / platforms
This can simplify parts of the process, but it introduces new questions around:
- Who charges VAT
- What evidence is required
- What data you need to retain for reporting and audit trails
- What your residual obligations still are
The key is avoiding assumptions. Many businesses assume the platform “handles VAT”, only to discover later that obligations remain with the seller in certain scenarios. This will particularly be the case as the EU introduces new ‘marketplace’ rules between now and 2028.
Step 5: Build a VAT structure that can scale
Many businesses start small in Europe then scale quickly. Your VAT structure needs to handle growth without becoming fragile. That means designing the model around:
Control and governance: Who owns VAT internally?
- CFO?
- Head of Tax?
- Financial controller?
- Operations / logistics?
- External provider?
Clear ownership prevents VAT becoming a “grey area” between teams.
Consistent VAT treatment: If your VAT position differs by country, channel, or product type, consistency matters. A scalable model includes:
- Documented VAT decision-making
- Consistent logic in finance systems
- The ability to explain and defend positions later
Data readiness: VAT compliance depends on good data:
- Customer location evidence
- Product classification and VAT coding
- Shipping and delivery records
- Invoice data and payment reconciliation
This becomes even more important as Europe moves towards increased digital reporting and e-invoicing requirements and as scrutiny increases. As Europe moves towards a “right first time” approach, businesses need to ensure that their set-ups are robust to reduce administrative burden.
Common pitfalls non-EU businesses face when entering Europe
Here are some of the most frequent issues we see when businesses start selling into the EU:
- Starting to sell before confirming the VAT model
- Unexpected registrations after using an EU fulfilment centre
- Inconsistent VAT treatment across sales channels
- Poor audit trail, making it hard to defend filings
- VAT returns becoming spreadsheet-heavy, increasing risk of error
- Multiple local advisers with no single coordinated view of risk or deadlines
None of these are inevitable, but they are very common when VAT is treated as “something we’ll tidy up later”.
What good looks like: a practical EU VAT entry checklist
If you want a quick sense-check of readiness, start here:
- Confirm your goods supply model
- Confirm customer profile (B2C / B2B)
- Map where goods move and where they are stored
- Define the importer of record position
- Understand how marketplaces affect VAT responsibilities
- Confirm how VAT will be charged and invoiced
- Identify what data you’ll need to retain for compliance
- Decide on a support model that can scale with European growth
How HaysMac can help
Entering the EU shouldn’t mean stitching together VAT advice across multiple jurisdictions, providers, and inconsistent interpretations. At HaysMac, we provide a joined-up, leader-friendly ‘one-stop shop’ approach that brings clarity and structure to EU VAT, from initial planning through to ongoing compliance.
We can help you:
- Sense-check your route to market from a VAT perspective
- Structure responsibilities across the business so risks don’t fall through the gaps
- Plan the right compliance approach as your European footprint grows
- Coordinate support so you have one point of contact and a clear view of what needs to happen next
If your business is planning to trade into Europe, or you already are and want reassurance that your VAT approach is robust, speak to HaysMac’s VAT team.
We’ll help you get the fundamentals right early, reduce risk, and put a scalable VAT model in place so your finance function can focus on growth, not firefighting.
Coming next in the series…
Part 2: Which registrations / OSS / IOSS you need
