Set up a hierarchy of subsidiary companies

Advice: Setting up a hierarchy of companies is completely optional for VAT. You can still achieve correct VAT reporting without setting company hierarchies.

Does your platform support holding companies and subsidiary companies that share tax-collection information or file together? If so, you can configure AvaTax to reflect this relationship by setting up child companies.

Company relationships within AvaTax are very flexible. Hierarchies in AvaTax allow you to integrate multiple companies even if they are running on different accounting, eCommerce, and ERP platforms. AvaTax supports one level deep for child companies. A child company can inherit the taxability profile of its parent company or it can be configured with its own unique taxability profile.

Specifically for VAT, some companies are set up so that the represenative company and the subsidiary companies are all part of a VAT group. In this case, the representative company will report VAT for all of their subsidiary companies under a single VAT number.

Keep in mind that not all countries have VAT groups. In addition a subsidiary could be part of a VAT group in Germany and have a German VAT number. But it could also have a VAT number in Portugal and not be related in any way to its parent company.

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