(When Finance and Operations speak different languages, the company loose.)
VAT Compliance Failures are a Tangible P&L Risk
The Challenge
A U.S.-based biotech ran its European business from a Swiss subsidiary.
They used a big-name 4PL in Germany to handle warehousing and shipping.
When German VAT authorities asked about activity in Germany, the CFO said:
“We have no activity in Germany.”
That one sentence triggered two international investigations.
Here’s what went wrong:
- The U.S. supply chain team was declaring the wrong goods value at customs, sometimes up to 10x below actual value.
- They were swapping out the 4PL’s correct shipping docs with their own flawed ones.
- Germany questioned whether the company had a permanent establishment (PE) because goods were being held locally.
- UK authorities found 20 inbound shipments the company had no record of.
This wasn’t just sloppy logistics. It was a compliance nightmare.
Our Intervention
Together with legal teams in Germany and the UK, we ran a deep forensic investigation:
- Rebuilt the UK shipment history from freight carriers and insurance records.
- Filed a voluntary disclosure in Germany to fix the import value mismatch.
- Proved there was no PE risk because the goods were stored temporarily with no added value.
We closed both cases before they could blow up a new license deal.
Consult here for more information on OECD Guidelines on PE and Cross-Border Taxation, HM Revenue & Customs (UK) – Import Declarations, and European Commission – VAT Rules
The Outcome
As the product was being out-licensed to a new company, it was critical that both investigations were closed without major future risks
- UK penalty: just £50K, for the 20 undocumented shipments.
- Germany: no PE, but future VAT and customs now under a microscope.
- Built a full compliance framework to hand off to the licensee.
Medicine shortages in the EU persist because compliance failures are a major cause.
This article explores how smarter data, better systems, and proactive strategies can help life sciences companies prevent disruption before it happens.
🐐#GOATConsultants™-Level Insights:
When ops and finance don’t speak the same language, revenue turns into risk.
We are fluent in both, and can anticipate the mess before it costs millions.
Enjoy more Success Stories:
- VAT Compliance Failures Nearly Cost Biotech Millions
- Biotech customs compliance: How we saved €800K in life-saving medicine
- VAT Compliance As An Asset: How We Turned €250K into €1.9M – 660% ROI
- You cost a Customer One Million Euro in VAT penalty
- How we cut €100K/year in VAT compliance costs
- How we recovered €800K from German VAT authorities
