Freight Forwarding Services and Auxiliary Operations: How to Determine VAT Correctly?
Freight forwarding services involve not only the organization of cargo transportation but also a range of auxiliary operations, such as loading, unloading, and storage. However, from a tax perspective, VAT for these services is determined differently, which can significantly impact businesses.
🔹 Tax Authority’s Position
- If these are freight forwarding services (transportation arrangement), VAT is determined based on the client’s place of registration.
- If these are auxiliary operations (loading, unloading, warehousing), VAT is determined based on the place where the service is physically performed.
🔹 What Does This Mean for Businesses?
💡 Key Risks and Recommendations:
✔️ Clearly separate forwarding and auxiliary services in contracts – this will help determine VAT correctly and avoid additional charges.
✔️ If the client is a non-resident, forwarding services may be VAT-exempt. However, if the services involve warehousing or unloading in Ukraine, VAT applies.
✔️ Verify VAT rules for international transportation – misinterpretations can lead to significant tax risks and penalties.
🚛 Are you working with logistics and forwarding services? Ensure your contracts comply with tax regulations. Need help? We can assist you!
