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  A Glossary of VAT Terms for Businesses

VAT is something that the majority of businesses could most likely do without, given the choice. After all, high rates both at home and abroad have the potential to eat into a business' profitability and then there are the complex legal issues to consider around areas such as VAT registration and compliance. With that in mind, Brighton-based Accordance VAT have put together this helpful glossary of terms associated with the world of VAT, so you'll know your intrastat from your input tax in no time.

13th Directive
A procedure by which tax paying businesses established outside of the EU yet trading within the market can obtain a VAT refund.
Accounting Period
The time covered by any VAT return (see below).
The process by which an importer receives goods from a supplier in an EU member state that is exempt from VAT (Andorra, Channel Islands, Gibraltar, Mount Athos, San Marino and Vatican City).
Commodity Codes
A unique code applied to a product(s) so that it can be identified in international commerce. It is eight digits in length for exports leaving the EU and ten digits for imports coming from outside of the EU. It allows businesses to look up duty rates and any restrictions that may be in place.
Distance Selling
Refers to the movement of a product(s) between a VAT-registered business to a customer who is not registered for the tax. In other words, this will mainly apply to online transactions between a business and a private individual.
Simply, products or goods sent from within the EU to a country or state outside of it.
ERP (Enterprise Resource Planning) Coding
A process of integrating information across an entire organisation, at the same time as facilitating the flow of it to external parties. It is therefore essential for calculating inter-state VAT and reporting requirements.
Input Tax
The amount of VAT paid on purchases.
Intrastat reporting is required by companies trading across EU borders, so that each member state's tax authority can monitor the movement of goods around the EU and chase up any unpaid VAT incurred in that particular state. It also allows statistics on cross-border trade to be compiled for research and informational purposes.
Place of Supply
The place in which the supply of goods must be registered for VAT purposes.
Nature of Transaction Code
Otherwise abbreviated to NoTC, this is a record of the type of transaction declared as part of intrastat reporting. Types of transactions include sales or acquisitions, free-of-charge goods or services.
Refund Directive
Put in place to ensure that EU taxable enterprises can gain access to a 'VAT rebate' from transactions occurring in member states in which they are not registered, the refund directive takes into account the company in question's inability to submit VAT returns in that particular country.
This refers to when a customer issues a VAT invoice themselves, a copy of which they include along with their payment to the supplier
Value added tax, paid by the consumer of a good or service. Rates vary across different countries.
VAT Registration
An important element for businesses, registering for VAT enables them to charge and recover local VAT on an international basis. Some regions only require a business' registration once their annual turnover exceeds a certain amount.
VAT Returns
A requirement of businesses registered for value added tax, these are reports that include details of all sales and services which are subject to it.
Tax Point
The date by which VAT has to be accounted for, usually when the goods/services been received/performed.

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