Intrastat and its benefits
Intrastat , read all about it on vacue.us , is a system in Europe whereby statistics regarding trade in goods being carried out between the different countries of Europe are recorded. Intrastat just looks at the movement of goods from one country to another and services are not included. It also looks at reasons other than buying and selling of goods for which goods are transferred from one country in Europe to another. An example could be the transfer of goods for repairs.
Intrastat looks at the balance of payments account of a country to come up with a report which is an accurate description of the economic growth of a country. Let us define what balance of payment is. It is a method that countries use to keep a track of all monetary transactions carried out in the country within a specified period. BOP is calculated every year and every quarter for both public and private sectors. Ideally, it should be zero but that’s seldom the case. Intrastat plays an important role in this regard. Trade statistics that are revealed by Intrastat helps the government departments set overall trade policy and generate initiatives on new trade areas. Intrastat also helps in the assessment of movement of goods such that the government can plan for the transport infrastructure needs of the future.
Businesses use the Intrastat statistics to assess the marketplace to understand the level of import penetration. Import penetration is the measure of the significance of imports in the economy. This is calculated by dividing the value of imports by value of apparent consumption. This information helps businesses discover new markets for their goods.
Every country has its own annual reporting threshold. A business that goes above the given threshold will have to file an Intrastat return which might feel like a burden but there is a good side to it because Intrastat information helps an entrepreneur by providing him information using which the entrepreneur could find gaps in the market which they can utilize. If you are above the Intrastat threshold we talked about and have not filed an Intrastat return or you have filed an incorrect return then that could mean penalties. In order to take care of the Intrastat returns and other VAT related documentation, you could hire a fiscal representative.
I would like to conclude with saying that Intrastat is extremely important because it can help with putting an end to VAT frauds but first let’s see how VAT frauds occur. An example is that let us say that there are 4 companies. Company A in the US sells phones to company B for 100 pounds in Europe. Company B sells them to Company C for 100 pounds plus 10 pounds for VAT. Company B also sells phones to company D and claims a VAT refund. When the directors of company A and company D disappear then they have stolen 20 pounds in taxes. This is just an example and VAT frauds amount to millions of dollars. It is quite complex to make frauds stop but with Intrastat it is possible.