Value added tax (VAT) is a form of consumption tax used in the European Union and elsewhere, in lieu of sales tax. Since our facilities are located in these regions, we are subject to this tax system as well.
How to avoid VAT:
- If the goods are imported and invoiced into an EU country from different EU country (Czech Republic), and if the buyer of those goods is VAT registered in that importing country, then the invoice is issued without VAT. There should be a sentence at the bottom of the invoice noting that VAT liability is transferred to the recipient in the destination country of the goods.
- For all remaining scenarios the invoice for goods being exported to another EU country should include the VAT, based on the rate of the exporting country.
- When goods are exported out of the European Union: The invoice may omit the VAT as long as an official document is obtained from the customs office, proving that the goods have been exported outside of the EU.
** Incoterms condition explanation:
DAP - Delivered at Place: This term means that the seller pays all the costs of transportation (export fees, carriage, insurance, and destination port charges) up to and including the delivery of the goods to the final destination. The buyer is responsible to pay only the import duty/taxes/customs costs.