When you sell a product to a European company, the product may be subject to customs clearance as well as duties and taxes upon arrival. The European importer can claim the VAT on its inputs the same way we claim the GST here in Canada. It is the simplest way to avoid paying the VAT.
In more complex cases, for example if your company intends to expand its European market and wants to take over home delivery or maintain an inventory in Europe for future orders, there is another way to proceed. In Europe, specialized tax professionals can represent your company when dealing with the government. Known as “tax representatives,” these individuals allow you to recover the VAT paid to customs on a regular basis. They can even manage your account in a local bank in Europe for European sales and collect European credit card payments for the local market. In certain cases, once an agreement is reached with the tax representative, it is possible to retroactively claim the VAT paid a few months before.
Given that developing your European market share requires a bit of administrative planning, it is worthwhile to hire a tax representative in order to avoid unpleasant surprises. With our wide network, we have access to professionals who can help you secure tax representation in Europe.