What is VAT?
A value-added tax (VAT) is a type of consumption tax that is placed on a product whenever value is added at a stage of production and at final sale. VAT is often used in the European Union. The amount of VAT that the user pays is the cost of the product, less any of the costs of materials used in the product that have already been taxed.
For example, when a television is built by a company in Europe, the manufacturer is charged VAT on all the supplies it purchases to produce the television. Once the television reaches the shelf, the consumer who purchases it must pay the applicable VAT.
How does it work?
The VAT system is invoice-based. Each seller in the product chain includes a VAT charge on the customer's invoice. Under a VAT taxation system, all sellers collect the tax and then pay it to the government. The VAT gives sellers along the supply chain a direct economic motivation to collect the tax, thereby reducing the incidence of tax evasion.
It is important not to confuse VAT with sales tax. Under a sales tax, the tax is collected only once at the consumer's point of purchase. The VAT tax, however, is collected every time a business purchases a product from other businesses within the product's supply chain.
Who pays VAT?
VAT is paid by residents of all countries in the European Union. Both consumers and businesses are liable to pay VAT when purchasing services or products. When a manufacturer creates a product, it is liable to pay VAT on the components purchased to create goods.
Do I need to be sending VAT invoices?
If your company does business outside of the United States, you most likely should be sending VAT invoices. Upon registering with Transcepta, you had the option to have Transcepta electronically sign VAT invoices on your behalf. If you have a new customer that requires VAT and you have already registered with Transcepta, you will need to reach out to Transcepta Support to update your account.
My invoice is already VAT signed, what do I need to do now?
If you already have invoices that are VAT signed, you may still submit them via Transcepta. Please note that if you have more than one VAT pre-signed invoice, each file you submit can only have one invoice. You may attach multiple files to a single email or FTP, but each file can only contain one invoice.
How does Transcepta sign VAT onto my invoice?
Transcepta works with a third party, TrustWeaver, that handles all the VAT and legal compliances. TrustWeaver applies long-term verifiable e-signatures (ore-seals) and timestamps in accordance with the applicable law for the supplier and the customer. Trust Weaver always take the steps that are needed to add the highest available level of legal certainty to an invoice where possible, by applying trust services that meet the most stringent e-signature requirements to ensure a reversal of the burden of proof. TrustWeaver is also a Qualified Trust Service Provider under the eIDAS Regulation.