For many Irish businesses, expanding into new markets is a big step. Whether you’re selling through online marketplaces, working with distributors, or using fulfilment centres, international growth opens new doors — and a few hidden risks.
One common pitfall? VAT registration.
If you’re storing goods in another country, even temporarily, you may need to register for VAT locally. It doesn’t matter if you don’t have staff or an office there. Simply holding stock overseas can create a VAT obligation.
It’s easy to miss, but the consequences can be serious: penalties, backdated bills, and disrupted sales.
Let’s break down what this means for Irish SMEs and how to stay compliant without the stress.
Why Storing Goods Abroad Can Create a VAT Obligation
VAT rules in the EU and beyond are designed to ensure that tax is collected where goods are physically located or consumed.
That means when you store goods in another country, you’re effectively creating a “tax presence” there even if you have no employees or office space. The simple act of holding inventory in a local warehouse is often enough to require a local VAT registration.
Here are some common examples:
- You use an Amazon or e-commerce fulfilment centre in Germany, France, or Spain to hold stock closer to EU customers.
- You work with a third-party logistics (3PL) provider who stores and ships your goods on your behalf.
- You drop-ship products stored in another country before delivering them to end customers.
In all of these cases, the goods are physically located abroad, and that’s what matters to the tax authorities.
What Local VAT Registration Involves
Once your goods are stored in another country, you’ll likely need to register for VAT there. That comes with a few key responsibilities:
- Apply for a Local VAT Number
You’ll need this before selling any goods from that country. Without it, you can’t issue valid invoices or reclaim input VAT on related costs.
- Charge and Report Local VAT
Sales made to customers in the same country, for example, from a French warehouse to French buyers, must be reported through a local VAT return at the local VAT rate.
- Report EU Distance Sales via VAT OSS
If you sell from your overseas stock to customers in other EU countries, include those transactions in your VAT One Stop Shop (OSS) return. (Just note: OSS doesn’t replace local registration where stock is stored.)
- File Extra VAT Returns
Each country has its own rules, formats, and deadlines — so expect to file additional returns alongside your Irish or OSS submissions.
It can seem complex, but sorting it out early is far easier than trying to fix it later.
What Happens If You Miss a VAT Registration
At Kinore, we’ve seen many Irish businesses get caught out by this one. It’s not usually intentional; it’s simply something that slips through the cracks when you’re focused on logistics, suppliers, and customers. Unfortunately, the consequences can be serious.
If a tax authority determines that you should have been VAT-registered, they can:
- Backdate your VAT registration to when you first held stock in the country.
- Charge VAT on all sales made since that date, even if you didn’t collect it from customers.
- Apply penalties and interest for late registration or unpaid VAT.
- Temporarily block imports or exports if compliance issues remain unresolved.
Even if you eventually get things sorted, the administrative burden and cost of cleaning up the issue can be significant.
The good news? These problems are completely avoidable with a bit of planning and the proper guidance.
How to Check If You Need to Register
The first step is to review your supply chain. Ask yourself:
- Do you hold stock in another country, even through a third party?
- Are you using an EU fulfilment centre (e.g. Amazon FBA)?
- Do your goods move from one EU country to another before reaching the customer?
If the answer to any of these is “yes,” it’s time to confirm whether local VAT registration applies.
The requirements vary by country, so it’s worth getting professional advice before you start shipping goods. A quick review now can save you from unexpected costs and paperwork later.
Common Misconceptions About VAT and Stock Location
Here are a few myths we often hear from clients — and the reality behind them:
“We don’t have an office abroad, so we don’t need to register.”
Not true. The VAT obligation depends on where the goods are physically located, not whether you have a physical presence.
“We’re using a third-party fulfilment centre, so it’s their responsibility.”
Unfortunately not. Even if a logistics partner manages your stock, you remain the owner, and the VAT responsibility is yours.
“We’re covered by the One Stop Shop.”
The OSS simplifies cross-border VAT for distance sales but doesn’t replace local VAT registration where stock is stored.
Clearing up these misconceptions early can make a big difference to your compliance strategy.
Staying Compliant Without the Hassle
Managing multiple VAT registrations across borders can feel daunting, especially for small and mid-sized businesses without in-house tax teams.
That’s where working with a partner like Kinore can make all the difference.
Our team supports Irish SMEs at every stage of international expansion — from determining whether you need to register to handling paperwork, returns, and ongoing compliance. We take care of the details so you can focus on growing your business confidently.
Final Thoughts: A Small Step That Prevents Big Problems
Expanding into new markets is exciting, but it comes with responsibilities that aren’t always obvious at first glance.
If you’re storing goods overseas, even through a third party, it’s worth taking a few minutes to check whether local VAT registration applies.
A short review now can prevent costly surprises later.
And if you’re unsure, you don’t have to figure it out alone.
If you’re expanding into new markets, using overseas fulfilment, or simply want peace of mind that your VAT setup is correct, our Client Services Team would be happy to chat.
