INTRODUCTION

Most VAT regimes require registered (or taxable) persons to file returns (and remit tax). In most cases, a firm is required to register if it makes or expects to make at least the statutory minimum level of annual taxable sales in connection with its business or economic activity.

Not all sales by a person come within the scope of a VAT. For example, in most countries, an individual's casual sales do not constitute taxable business activity and are not taxed. Hobbies and similar activities that do not rise to the level of a “business” generally are not taxed. An employee could be treated as a person rendering taxable services to her employer and therefore a VAT taxpayer, but no country has done this. This chapter discusses registration (including some required registration by nonresidents), who is liable for tax, and what economic activity subjects a seller to tax under various VAT regimes. In a significant case decided by the European Court of Justice, the court ruled that a person who, without his knowledge, participated in a carousel fraud was engaged in economic activity and was entitled to claim input tax credits.

REGISTRATION

IN GENERAL

Registration is part of a self-assessment VAT system that typically is reinforced with harsh civil and criminal penalties for noncompliance. Many VAT systems define a taxable person subject to the VAT rules as a person who is registered (a registrant) or is required to register.