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The company acting as the Issuer / Emitter is incorporated in a jurisdiction separate from the countries where merchants operate. This is a standard structure for cross-border digital product distribution. Scheme22

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Why This Works for VAT

  • Cross-border B2B supply from a non-resident entity means the issuer does not register for VAT in the merchant’s country.
  • In the EU context, the reverse charge mechanism applies where relevant. The merchant self-accounts if applicable, but only on the value of the service they receive, not on the cheque face value they resell.
  • The issuer pays taxes only in its own jurisdiction on its own margin or revenue.
  • Merchants are responsible for their own local tax compliance. This is outside the platform scope.
Note: The platform does not classify USDC cheques as financial instruments for the purpose of this model, at least in the initial phase. The cheque is treated as a commercial product, similar to a digital prepaid card. Financial instrument classification may be revisited later as the product matures and regulatory clarity emerges in specific jurisdictions.