Handling VAT on platform billing: a practical guide for European platforms

Do I need to register for VAT in every country where my merchants are located?

No. If you operate a standard B2B model and your cross-border merchants have valid VAT numbers, you may not need local tax registrations, depending on the goods and services you provide. You may apply the reverse charge mechanism, which transfers the reporting obligation to the business. However, if you deliberately sell to non-registered entities or open physical corporate offices abroad, you may trigger local registration requirements.

Can I structure my platform fees as a pure pass-through to avoid charging VAT?

This is rarely permissible in a commercial platform environment. To qualify as a tax-free pass-through, you must pay the underlying expense in the exact name and for the exact account of the business, with zero markup, zero commercial margin, and zero alteration of the service. Because the Mollie Connect model involves adding a commercial margin or software markup, the full fee represents a taxable forward supply.

My merchants are partially VAT-exempt (such as healthcare providers or charities). How do I handle their concerns about VAT on fees?

Businesses operating in healthcare, education, or charitable sectors cannot fully reclaim input VAT. For them, your VAT charge represents a direct, non-recoverable cash cost. This is a commercial negotiation rather than a tax variable. You cannot omit legally required VAT to accommodate a business's tax profile; doing so transfers the financial liability directly to your platform.

Does Mollie Connect Billing automatically calculate my VAT liabilities?

Connect Billing calculates and records VAT based entirely on the specific country profiles, tax rules, and merchant overrides that you configure within your system. Your platform retains full legal responsibility for determining the correct tax treatment. We provide the infrastructure, but your finance team holds the pen.

What records should we keep to defend our platform during a tax audit?

European tax authorities generally require you to retain all relevant records for a minimum of seven years, though countries like Germany require 10 years for digital accounting assets. You must archive all invoices issued via Connect Billing, all incoming invoices from us, your historical VIES verification logs, and your monthly Transaction Margin Reports.

What changes when my platform merchants are based in the United Kingdom or Switzerland?

Post-Brexit, the United Kingdom operates outside the EU VAT ecosystem, while Switzerland relies on its own independent framework. You do not use the EU reverse charge legal references on these invoices. You categorise the transactions as outside the scope of EU VAT. The merchant will typically self-account for their local tax using the UK reverse charge rules or the Swiss Bezugsteuer protocols.