Case study: supplies of goods with installation

Supplies of goods with installation

Companies performing supplies of goods with installation are involved in the trade of goods that, due to their nature, need the supplier’s expertise for being installed or assembled at the customer’s premises.

These types of transactions can be found in industries such as the entertainment industry, the travel industry (conveyer belts), or the manufacturing industry (machines). Also in the visual merchandising industry, where a company takes care of the design, manufacturing, and installation of retail displays and other structures that help to showcase merchandise in the store.

From a VAT perspective, the supplies of goods with installation are a peculiar type of transaction in the VAT world, particularly when they take place in cross-border activity:

• They are considered a mixed supply of services and goods but a single transaction for VAT purposes.
• The place of supply rule for these types of transactions is where the goods are installed or assembled.
• The transfer of ownership from the supplier to the customer occurs after the goods are installed.

The challenge for companies involved in this type of activity is that both the definition of what is considered supplies of goods with installation and the VAT treatment change country by country.

Therefore, if you are a company performing supplies of goods with installation abroad for your customers, you must check i) if your activity meets the definition to be considered as supplies of goods with installation in the specific country, and ii) check the specific VAT treatment. Depending on the country of installation, you may have to register for VAT purposes or not. Also, many countries have introduced simplifications, so foreign companies avoid VAT registration for the supplies of goods with installation.

Following the general VAT treatment for supplies of goods with installation – i.e., as domestic supplies, foreign companies would have to comply with the following obligations:

• VAT registration in the country of installation.
• Domestic VAT must be charged on the invoice.
• Submission of VAT returns.

The challenge 

Marosa’s Client is involved in the telecom equipment industry, performing supplies of goods with installation in multiple countries in the EU. Also, the Client sends spare parts to warehouses in the countries where they have installed the goods as part of their after-sale service.

Another Marosa´s client is involved in the visual merchandising, decorating and reworking the design of retail stores using goods owned by our client and installed in retail stores across Europe.

In both cases, the challenge consists of:

• Dealing with the specific VAT treatment for the supply of goods with installation in multiple countries where our Client performs its activity,
• and also working for a Client with a multinational structure composed of several entities registered in different countries for VAT purposes.

Our solution

When facing the challenges described above, we often propose a one-off analysis followed by a tax compliance periodic project that is driven by automation.  

• We prepared an overview of the right VAT treatment of the above activity in each country, indicating when domestic reverse charge applied and when a VAT registration was required. This overview is used by our clients as a reference guide in their daily AR and AP work.
• Launch VAT registrations: Our VAT registration team handled all VAT number requests across Europe. Having a dedicated team specialized in getting VAT numbers accelerates the process and simplifies communications with your team.
• Introduce VATify as single reporting platform in all Europe. All periodic tax returns where managed by our team using our automated software. Our tech enabled solution improved visibility and control for our clients and reduced manual work on all sides.

Our approach

Marosa’s services bring benefits to these types of businesses. We can outline the following:

• We are the main contact point for all EU VAT matters. By engaging with Marosa, the Client ensured they have one single team and point of reference for all EU VAT matters for all their entities with EU VAT compliance obligations. Before, they had one major service provider but also local firms. We centralize this by enhancing performance and communication.
  • We filed more than 830 VAT returns during a quarter.
  • During Q3 2022, 100% on-time submitted return and zero late submission penalties.
• Fluent communication and 24h rule.
  • All emails are responded to within 24h.
  • We have a weekly call to catch up on all pending topics and new ones. Before having this call with the client, we do an internal meeting to organize the work for the week and list the priorities ahead of our meeting with the Client (we do our homework before meeting up with the client!).
• Easy tracking and monitoring.
  • We have one single tax calendar with all past, current, and future VAT returns with the corresponding status (pending information, pending preparation, pending approval, submitted/not due). The Client can check in real-time where we are. We also have internal deadlines to follow ahead of the statutory payment/submission deadline, so we ensure a timely payment/submission. On top, these internal deadlines help us to evaluate the performance (did we receive the information on time? Did we send out the returns for approval on time? Did we submit the return on time?).
  • We have an issue log where we record all extras not covered by our tax calendar (questions from the Client -advisory-, questions from the tax office like VAT audits, and corrections required on submitted VAT returns). All are registered in the issue log where we can also check the current status, and who’s the owner of the next step. We have more than 125 issues tracked since we engaged with this project and more than 85% are already completed.
  • We have a VAT refund dashboard to keep track of all VAT returns to know which ones are completed/refunded, which ones are outstanding, and calculate the average refund period.
  • We have a VAT registration tracker to follow up on all new VAT numbers required. This is really useful for the Client to also follow up on their side when they have pending actions.
  • We track legislative changes published on our website and others to share with the Client to keep them updated about upcoming VAT-related compliance obligations.
  • We prepare a Quarterly dashboard to show the Company all these interesting metrics.
• Knowledge
  • We also act as a source of knowledge. We have carried out several business analyses to determine the VAT implications. For example, VAT treatments, reporting requirements, invoice requirements, etc., which helped the Client to automate their systems.

The results and benefits

We can outline the following benefits for the Client after onboarding MAROSA to handle their EU VAT compliance:

• Costs:
  • The cost associated with VAT compliance was reduced by using Marosa as a single VAT compliance provider instead of having multiple local suppliers in each country of registration.
  • We help the Client receive VAT refunds quicker from the tax offices.
  • Also, centralizing all obligations in one place resulted in zero penalties caused by late submissions.
• Time:
  • We follow internal deadlines to ensure timely submission/payments
  • We are committed to extending working hours (extraordinarily) when something urgent comes up and we are behind a legal deadline.
  • We help the client to identify the list of priorities depending on the deadlines and required resources from their side.
• Efficiency:
  • One single team and point of contact for all EU VAT matters.
  • 24h reply rule
  • Internal deadlines, implemented in a tax calendar, resulted in zero late returns.
  • Weekly call to follow up on outstanding topics.
• Data Quality:
  • Two eyes review. One person prepares and one person reviews.
  • We also make use of checklists to ensure nothing is left behind during the preparation or review.
  • When expertise and deep knowledge are required, we can count on our network of local delegates for questions on country specifics.

As a result, when asked how happy they are with Marosa’s overall performance, the Client rated Marosa with the top 5 stars – meaning extremely happy!

If you need help with centralizing your VAT compliance and staying on top of technology trends, contact our team.