Forget about penalties and pain by choosing the right system
VAT-registered businesses that trade in goods with other EU member states are required to provide details of these transactions, which are used for statistical purposes. “Intrastat” is the system used to collect these statistics.
At first, it was mostly used by countries to observe intra-community supplies and general trade. Now, Intrastat is increasingly becoming a useful tool for tax authorities to spot VAT fraud. The list of countries (Germany and Belgium first) using it as an anti-fraud tool is increasing: businesses are now asked to reconcile their VAT returns to their Intrastat filings, in order to identify inconsistencies in their VAT compliance.
Information on trade between EU member states is not only a legal obligation vital to governments, it increasingly matters to businesses and to citizens. How? These stats and trade figures play a significant part in drafting a country’s balance of payments account and, as such, they have a direct impact on our daily lives. Banks may change interest rates accordingly, which would affect citizens through mortgage rates, credit card rates and more.
Your business itself can benefit greatly by using these figures, too. How? Try using Intrastat declaration as an extra comparison tool to see where your business stand compared to competitors from any business dealing with EU Member States.
Providing accurate and complete data will not only save you from incurring penalties, but will also help you gain insight on the market, competitors and your business.
This is all good and well, but do you have to provide the EU data on your trade? And is there a way to make it easy?
How to know if you have to fill in an Intrastat declaration
Goods vs. Services
As explained above, Intrastat is the system used by the EU to collect information on the trade in goods between member states. This system also covers goods moved between EU countries for other reasons. "Services" is excluded from Intrastat, meaning that if you trade in services, you're not supposed to provide this declaration.
If you are a VAT-registered business trading goods with other EU member states, you're obliged to declare certain figures. What you have to declare depends on several factors.
Mainly, the amount of information you have to provide depends on whether the value of your purchases or imports (“Arrivals” as per the official terminology) or sales or exports (“Dispatches”) exceeds the annual Intrastat exemption threshold/s. This figure is defined by states and can change yearly (for example, some countries including Austria, Sweden, Spain and Belgium have changed their threshold for 2015). You should keep track of this threshold in order to avoid mistakes in your declaration.
How to submit your Intrastat declaration
Those who trade in the EU above the Intrastat exemption threshold for that year must complete a monthly Supplementary Declaration (SD). SDs must be submitted on a monthly basis, normally calculated using the calendar month as reference period. Exceptions to the calendar month reference can be made if your business is approved to use non-standard VAT periods.
As a rule of thumb, Intrastat returns must be submitted by the 21st day of the month following the period for which you are reporting. So for January, your return should be submitted by February 21st.
Your SD can be submitted online.
Intrastat declaration and penalties: how you can avoid them and what you risk
Penalties for late or inaccurate SDs are treated as a criminal offence.
If your SDs are persistently late, missing, inaccurate or incomplete you may incur in penalties for late or inaccurate SDs and, as the it is considered a criminal offence, this could lead to proceedings in a Magistrate’s Court. Court can be avoided by bringing your Intrastat declarations completely up to date, and you might get away with an administrative fine rather than legal proceedings.
But why take the risk?
Intrastat declaration can be filled in easily and with no pain and, in some cases, automatically.
How to fill in your Intrastat declaration easily by choosing the right help
To deal with your declaration you can rely on the Intrastat website for your country, or use a system that allows you to integrate your accounting system to your warehouse one, as you might be required to provide information such as "Means of transport" and "Incoterm".
Look for a system that lets you associate an intrastat code to each product exported, filling an information regarding the region of origin of products, and an information regarding the type of transaction.
Ideally, your system should be able to perform a transversal search to obtain the right information. Certain systems let you choose the right values to apply to the country of reference and others let you prefix values for your country.
A good system will provide you with a file you can submit right away (online form and offline or via an Electronic Data Interchange - EDI).
Do you fill in your Intrastat declaration manually or through a system? Let us know in the comment box below!
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