Zero VAT returns abroad — Do I need to file it if I have no sales?

VAT return obligations and two methods of VAT reporting

Every active VAT payer is obligated to file VAT declarations. Sales and due VAT amounts can be declared either locally in each EU country where sales to private customers occur or under the VAT OSS procedure. The latter allows for consolidated VAT reporting for all B2C sales across the European Union.

VAT exemptions

It is important to note that depending on the regulations in a specific country, businesses may qualify for various exemptions that affect their VAT declaration obligations. Therefore, before entering a new EU or UK market, it is advisable to consult a specialist and familiarize yourself with local regulations.

If, however, you are not exempt and are an active VAT payer in another country, let’s examine whether submitting zero VAT declarations applies to you.

Are zero VAT returns required under the VAT OSS procedure?

If there are no sales or corrections to declarations from previous reporting periods, a VAT payer using the VAT OSS procedure is still obligated to file zero VAT declarations.

Failure to submit returns and VAT OSS exclusion

Keep in mind that VAT OSS reporting periods are quarterly. Failure to submit three consecutive declarations and failure to comply after a reminder from the Head of the Second Tax Office of Warsaw-Śródmieście can result in deregistration from this procedure.

Additionally, such penalties carry an 8-quarter block during which the taxpayer cannot re-register for VAT OSS. Instead, VAT from sales to foreign customers must be reported locally in each destination country.

If you want to use VAT OSS or need support with VAT reporting, schedule a consultation and share your challenges! Our specialists will handle the rest.

For more information on VAT OSS exclusions, check out our article: Deregistration and exclusion from VAT OSS.

Which EU countries require local zero VAT returns?

When reporting VAT locally, zero VAT declarations are mandatory in most EU countries.

It’s essential to remember that deadlines and reporting periods for submitting declarations may vary between countries.

Penalties for failing to submit zero VAT returns in EU countries

Failure to submit VAT declarations, including zero declarations, may lead to fines, interest charges, or company audits.

Moreover, repeated failure to fulfill tax obligations could result in removal from the VAT register in a given country, freezing of bank accounts, or even a ban on conducting business.

In Poland, deregistration from VAT may occur after failing to submit three consecutive monthly VAT declarations or one quarterly declaration.

Consequences of regularly filing zero returns

Regular submission of zero declarations may also have consequences, such as VAT deregistration. In various EU countries, this depends on local regulations.

Since penalties differ between EU countries, it’s essential to consult a VAT compliance specialist and understand the regulations of a given country before entering a new market. Ignorance of the law does not exempt businesses from compliance.

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Do VAT taxayers in the UK need to file zero VAT returns?

VAT payers registered in the UK must file zero declarations if no sales occurred during a reporting period. This can be done electronically via the HMRC portal or submitted in paper form.

As in other countries, failing to submit zero declarations in the UK may lead to financial penalties or restrictions on deregistration if the entrepreneur wishes to cease being a VAT payer in the UK.

Penalty points system for VAT in the UK

Interestingly, as of January 1, 2023, the UK operates a penalty points system for late or missing VAT declarations. Penalties only apply once pre-set thresholds are exceeded, which are:

• 5 points for monthly filers
• 4 points for quarterly filers
• 2 points for annual filers

A fine of £200 is imposed once the threshold is reached, with additional fines for each subsequent infraction.

Penalty points remain valid for two years. After exceeding the threshold, points can only be removed by completing a “good compliance period,” during which the taxpayer files all outstanding and current VAT declarations on time.

Zero VAT declarations abroad without sales? How can Taxology help?

If you operate in the e-commerce sector and are not using the VAT OSS procedure, but had no sales in a given reporting period in another EU market or the UK, you may still need to file a zero VAT declaration. You can entrust your foreign VAT reporting to our VAT Compliance team! Simply reach out to us, describe the issue, and our team will take care of the rest—whether it’s VAT registration in another EU country or the UK, filing VAT declarations, or tax settlement. If you need support, schedule a consultation!

Do I need to file a zero VAT returns in EU countries if I have no sales? - Summary

In most EU countries and the UK, especially in the e-commerce sector, businesses are required to file VAT declarations even if no sales occurred during a reporting period. This applies to both local reporting in each country individually and using the VAT OSS procedure for consolidated B2C VAT reporting across EU member states.

Failure to comply with tax obligations may result in penalties, which vary depending on the regulations of the respective country. Typically, these include fines, tax audits, accrued interest payments, frozen bank accounts, or bans on conducting business in the affected country.

If you plan to start selling in a new market, wish to use the VAT OSS procedure, or need VAT support in EU countries or the UK, schedule a consultation and let the specialists act on your company’s behalf!