VAT Considerations when Starting an International Transport Business

At NordicHQ, we’re committed to helping entrepreneurs navigate the complexities of starting and running their businesses. Today, we’re looking into VAT implications for a new international transport venture.

If you are looking for general rules about cross-border VAT, please use the module below:

Cross-Border VAT Guide

Are your transactions within or outside the EU?

Client Question:

"Good afternoon,

I have a question. I want to start as a freight forwarder/transporter, primarily for clients to and from Asia. I understand that this is taxed at the 0% VAT rate. Here in my home country, I'm renting a warehouse. Can I still claim the input tax on that?"

Answer:

Starting an international transport business involves several VAT considerations. Let's break down the key points:

  1. VAT Rate for International Transport: You're correct that international transports, such as those to and from Asia, often fall under the 0% VAT rate. This is also known as "VAT reverse-charged" or "zero-rate".
  2. Warehouse Rental: For renting a warehouse in your home country, VAT is normally due.
  3. Claiming Input Tax: In principle, you can indeed reclaim the input tax (VAT) on costs you incur for your business, such as warehouse rental, even if your services fall under the 0% rate.
  4. Conditions for Claiming Input Tax: To be eligible to claim input tax, you must:
    • Be VAT registered
    • Use the warehouse for your VAT-taxable activities (even if the rate is 0%)
    • Have valid invoices stating the VAT amount
  5. Important Consideration: If you provide services that are not VAT-taxable in addition to your 0% rate services, you may only be able to reclaim a portion of the input tax.

Given the complexity of VAT regulations, especially in international service provision, we strongly recommend consulting a tax advisor or accountant. They can provide tailored advice based on your specific business model and ensure you're compliant with all relevant tax laws.

At NordicHQ, we're here to support entrepreneurs like you in navigating these challenges. If you need help finding a suitable tax professional or have any other questions about starting your international transport business, please don't hesitate to reach out.

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